Happy New Year!

Global financial markets ended the year on higher ground despite a challenging year. The passing of a USD900 billion Coronavirus relief bill in the US lifted sentiment, but failed to maintain momentum as trading volume tapered off in the final week of the year as we headed into the holiday period. The rapid spread of the pandemic has continued to ravage global economies, leaving many in lockdown despite a vaccine. Gold price remained well supported on the back of the uncertainties to end the year with a respectable return despite the marginal dip last week.


In the News

  • Investors’ sentiment improved at the start of the year after President Trump signed a USD 900 billion Coronavirus relief bill that will see its citizens receive USD600 to ease their burden.  
  • The bill remained controversial as legislation to increase the pay-out to USD2,000 was objected by the Republican-led senate.
  • Vaccines started to be distributed into economies, with the UK population to be amongst the first to be vaccinated with the AstraZeneva and Oxford University vaccine after receiving an approval last week. 
  • However, economies remained on high alert as the discovery of a new strain of the virus is believed to spread more rapidly, heightening concerns amongst the medical professionals, where hospital capacities are reaching its maximum.
  • The delay in distributing the vaccine had kept investors on their toes, leaving tech-related stocks to continue its run. The NYSE FANG Index, which tracks 10 of the most renown tech names listed in the US rose 2.65% in MYR terms to end the year with a whopping 99.41% gain. The 0830EA, which aims to provide 2X the daily performance of the said index saw its NAV rise more than 160% in 2020 after rising more than 7% last week.
  • After prolonged debate, the UK and the EU finally reached a Brexit agreement – which saw stock prices, and the GBP currency strengthening.
  • At the same time, the EU had also reached an investment treaty with China which would give the bloc better access to China’s markets.  This will include sectors like automotive, private health care, cloud computing, and air transport services to name a few. 
  • China’s ability to be the first to contain the virus also boosted investors confidence, pushing the domestic equity indices higher on optimism that the economy will see even stronger growth in the coming year. 
  • However, tensions between the US and China continued to put pressure on markets. The NYSE had indicated that it would halt the trading of 3 China telco companies by 11 January, namely China Mobile, China Unicom, and China Telecom.
  • Nevertheless, China’s major indices climbed strongly, with the New China Economy Index (gauged by the S&P New China Sectors Ex A Share Index) rising 3.84% in MYR terms to end the year with a 41.79% gains. This benefitted the 0829EA, which tracks the Index – allowing the NewChina ETF to rise 3.48% last week to see a NAV-to-NAV rise of 35.68% in MYR terms for the year. In comparison, the Shanghai Composite Index rose 19.4% last year, while the CSI300 Index climbed 33.39% higher.
  • On the local front, performance of sectors were mixed, allowing the 0836EA to see a gain of 0.82% with the support of momentum stocks, while the broader KLCI slid 0.85% lower. 
  • The uncertainties that have continued to hover over global economies provided an opportunity for the safe haven Gold to see its price rise by more than 22% this year in MYR terms, as indicated by the LBMA Gold Price Index which ended the year at USD 1,891.10 per ounce. Despite the marginal dip last week, the 0828EA bagged a return of 20.5% for the year in MYR terms.  


On the Economic Data Front

  • US economy picking up on improved sentiment:
    • Home prices were seen rising faster than expected, despite the drop in home sales.
    • Jobless claims had also feel to its lowest level in almost a month at 787,000.

  • China expected to see steady growth for 2020 despite the challenges:
    • Official manufacturing PMI continued to expand in December, with a reading of 51.9.
    • Strong economic data flowing out of China has left analysts forecasting an economic growth of 1.9% - 2.1% for 2020.


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