The continued surge in COVID-19 cases worldwide has put many countries around the world under lockdown again, as global number of cases are steadfastly approaching the 100 million mark. However, US markets rose during the first week of Joe Biden’s presidency, shouldered by hopes of higher stimulus and a better response to the pandemic. The Chinese market also fared well despite a resurgence in the virus, as investors turned to technology and pharmaceutical stocks in anticipation of restrictions being reintroduced, while markets locally ended in the red due to the extension of MCO 2.0. Last week, 3 of TradePlus ETFs, the 0829EA, 0830EA and 0836EA ended at record high prices. Gold prices benefitted marginally from hopes of a significantly larger stimulus package, ending the week at USD1853.60/oz.

In The News

  • Global count of COVID-19 infection is fast approaching the 100 million mark, indicating that even with the start of vaccine distribution, things might look worse before it can get better.
  • The drastic change in COVID-19 response in the US could be felt as Joe Biden started his presidency, as the president reiterated his goal to distribute 1 million vaccine doses a day in his first 100 days in office, while also reversing the decision to withdraw from the World Health Organisation (WHO).
  • Hopes that the pandemic could be better handled, coupled with a potentially higher stimulus plan under the Biden presidency contributed to the positive sentiment last week, as all major indices ended in the green.
  • The tech sector drove performance in US markets as tech-focused Nasdaq significantly outperformed other indices, gaining 4.36% as the S&P500 index rose by 2.11% over the week in MYR terms.
  • The FANG+ index, which consists of 10 of the largest tech stocks listed on the NYSE jumped 7.54%, driven by Netflix which reported a jump in new subscribers in its 4Q2020 earnings report. Facebook & Google’s parent company Alphabet also reported strong earnings. Consequently, the 0830EA rose 14.87% in MYR terms, ending the week at a record high NAV of RM13.6551.
  • In China, a resurgence of COVID-19 cases in the country saw rotation back into technology and pharmaceutical stocks. Additionally, green economy stocks also rose last week, as the latest installation numbers released from the National Energy Administration gave evidence to the country’s commitment to carbon neutrality.
  • During the week, the S&P New China Sectors Ex A Share Index which seeks to capture China’s focus into domestic consumption and a sustainable economy significantly outperformed the broader market, rising 7.61% over the week while the CSI 300 and the Shanghai Composite index rose 2.19% and 1.28% respectively in MYR terms.
  • The 0829EA, which tracks the S&P New China Sector Ex A Share Index upped 6.57% last week, as the ETF continued to hit record high NAV. By Friday, the ETF reached RM9.2835, with YTD gains of 12.98%.
  • The HSCEI index, which includes Chinese companies that are listed in Hong Kong continued its rally as a record influx of Chinese investors was seen in Hong Kong markets last week through the Connect Program, which allows Chinese investors to invest into the Hong Kong market using their domestic trading account and vice versa.
  • As a result, the index gained another 3.34% in MYR terms last week, while the 0832EA, which aims to provide 200% daily exposure into the HSCEI index rose 6.08% throughout the week.
  • Locally, sentiment was further dragged down by the extension of Movement Control Order 2.0 (MCO 2.0) to the 4th of February 2021. Despite BNM maintaining OPR rates, anticipation over a possible rate cut throughout the week also drove markets down as profit taking activity ensued after the announcement. Over the week, the FBM KLCI index shed 1.86%.
  • The Dorsey Wright Technical Leaders Malaysia MYR Index defied market sentiment, ending the week in 1.28% in the green, while the 0836EA upped 1.53% to end at a record high NAV of RM1.0895.
  • Gold prices saw marginal gains last week as a significantly larger stimulus package is expected under the Biden presidency. Over the week, gold prices upped 0.15% in MYR terms to end at USD1853.60/oz while the 0828EA gained 0.12%.

On the Economic Data Front

  •  US reports mixed economic data
    • Housing market regained momentum, as homebuilding projects jumped 5.8% in December from the prior month.
    • New jobless claims saw slight dip but remains at elevated levels of 900,000.
  • Eurozone PMI shows worsening contraction as lockdown continues.
    • Composite PMI fell to 47.5 in January from 49.1 last December.
    • Manufacturing PMI dipped to 54.5 while services PMI dropped fell further to 45.0.
  • China economy regains pre-virus trend.
    • China’s economy officially grew by 2.3% in 2020, while 4Q GDP growth expanded by 6.5% y-o-y.
    • Retail sales rose by 4.6% in December, indicating steady consumer demand.

 

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