US politics continued to dominate global headlines last week, as the attack on the US Capitol saw President Trump being banned from social media platforms, while his once allies are now calling for his immediate resignation. On the other hand, the president also made history by being the first US president in history to be impeached twice. In China, US' continued addition of Chinese companies into its blacklist dragged major indices. However, strong earnings reports from the banking sector saw the HSCEI jumping 3.51% last week. Locally, bargain hunting acitivites drove positive momentum in the banking sector, while the broader market remained cautious following the implementation of MCO 2.0 and the declaration of a state of emergency. Gold prices slid on the back of a rising US dollar, ending the week at USD 1,853.85/oz.

 

In the News

  • While vaccine distribution has been kickstarted in many parts of the world, many countries are still struggling to contain the spread of COVID-19. Worldwide number of cases surpassed 95 million, while we have passed the grim milestone of recording over 2 million deaths from the virus globally.
  • US politics remained at the forefront last week as the unprecedented attack on the Capitol that resulted in 5 deaths saw President Trump getting banned on almost all major social media platforms. His alleged role behind the attach has also led Republican party members to call for his immediate resignation. 
  • The violent event also drove Democrats to call for the invocation of the 25th amendment, while the House of Representatives impeached the president for the second time. This makes Trump the first US president in history to get impeached twice.
  • Meanwhile, incoming president Joe Biden surprised markets with a USD 1.9 trillion stimulus package announcement to combat the effects of the pandemic, which includes a USD 1,400 direct payout to majority of US citizens. However, the question remains about how quickly the package can be put into effect, and also the how much the Republican opposition will stall or reduce the package.  
  • Uncertainties on the political front saw US reversing gains from last week, with the S&P 500 index ending the week 1.32% in the red, while tech focused Nasdaq slightly underperformed the broader market sliding 1.39% in MYR terms. 
  • The FANG+ index, which includes majority of the social media companies that banned President Trump from its platforms slid by 3.59% in MYR terms. Benefitting from the drop, the -1x FANG Inverse 0831EA upped 3.51% in MYR terms.
  • In China, news of additions to the US’s stock ban list continued to drive markets, as the latter added 9 more Chinese companies to its list last week, totalling 44 companies now. As a result, major Chinese indices ended the week mixed, as the Shanghai Composite index dipped 0.05% in MYR terms while the CSI 300 shed 0.62%.
  • However, the S&P New China Sectors Ex A Share Index outperformed the broader market, continuing is gains as the index rose 1.06% last week, after news broke that the US decided not to include tech giants Alibaba and Tencent into its blacklist. The 0829EA rose 1.16% last week, as it continued to hit record high prices. The ETF ended the week with a record high NAV of RM8.7109.
  • The HSCEI index, which includes Chinese companies that are listed in Hong Kong outperformed its peers, gaining 3.51% in MYR terms as banking names rose following strong quarterly earnings. The 0832EA, which aims to provide 200% exposure into the HSCEI index rose 7.36% last week.
  • In local markets, the implementation of Movement Control Order 2.0 (MCO 2.0) dragged market sentiment, along with the declaration of a state of emergency. Over the week, the FBM KLCI index shed 0.38% over the week.
  • The Dorsey Wright Technical Leaders Malaysia MYR Index significantly outperformed the general market, as positive momentum was seen in the banking sector following bargain hunting activity as investors were convinced that the economic impacts of MCO 2.0 will be less dire than the first. Over the week, the index jumped 4.19%, while the 0836EA saw weekly gain of 4.67%.
  • Commodity wise, gold prices faced downward pressure towards the end of the week, sliding 1.83% in MYR terms following a stronger support for USD. There was also a sell-off in equities due to disappointing macro data, which saw investors scrambling for cash, resulting in a 1.80% dip in the 0828EA throughout the week.

 

On the Economic Data Front

  • US economic data disappoints as uncertainties continue:
    • Weekly jobless hit 965,000 to reach its highest levels since August 2020.
    • Retail sales fell more than expected for the 3rd month in a row, sliding 1.4% in December.
    • Manufacturing data fared better, as industrial production rose by 1.6% in December, beating consensus.

  • European economies continue to shrink following strict lockdowns:
    • German GDP contracted lesser than expected, declining 5.0% in 2020, supported by stimulus and a wave of recovery in 2Q2020.
    • UK’s economy shrank by 2.6% in November, the first monthly decline since April.

  • China economic data mixed:
    • Exports in December climbed 18.1% y-o-y in USD terms, with a 3.6% yearly growth in 2020 to a record USD 2.6 trillion.
    • CPI edged 0.2% higher in December, driven up by food and energy prices.

 

ETF strategies at TradePlus

 

A look at the performance of the TradePlus ETFs, and major global indices

 

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