Hopes and optimism were part of the key market drivers at the start of last week’s trading. Investors’ confidence grew stronger amidst central banks kept their monetary policy loose, corporates reported better than expected earnings results, as well as expectations of a wider rollout for the vaccine. The severe weather conditions in the US knocked the country off its feet when parts of its population was left without power and water– causing concerns over the eventual effect this would have on its broader economy. Scepticism and uncertainties dragged down sentiment to leave major markets to end the week on a mixed note.

In The News

  • Global financial markets had ended the week on a mixed note, though optimism that global economies will be gradually shifting back to normalcy gave stocks in the financial, and energy sector a boost.
  • The US has forecasted a wider rollout of the vaccine, and is targeting to have all Americans vaccinated by July.
  • While vaccine targets boosted confidence, economic datapoints flowing out of the US were generally weak with the exception of a surprise jump in retail sales numbers. The 5.3% jump beat the 1.3% rise forecasted by analyst, and was said to be driven by the USD 600 direct payout to the lower, and middle-income Americans.  While the recipients had rejoiced in receiving the long awaited aid, critics are pointing out the possibility that the move may lead to overheating of the economy, and a rebound in inflation.
  • Severe weather conditions hit part of the US, and caused disruption in power, and water supply.  The deep freeze that hit the US state of Texas also caused disruption in oil supply – which helped push oil price briefly above the USD60 per barrel market, before settling the week at USD59.24 per barrel.
  • After taking a break for the Lunar New Year holidays, the China market was back in action on Thursday. The China equities market ended the week on a mixed note when the PBOC decided to reduce liquidity from its financial system. The move is seen as a pre-emptive one given that the China economy has regained its footing, thus a withdrawal of earlier stimulus measures is likely to take place.
  • The New China Economy took the brunt of the hit, with the S&P New China Sectors ex A Shares sliding 1.01% lower, whilst the HSCEI emerged as the strongest performer with a gain of 1.95% in MYR terms. The strength in the performance of the HSCEI Index provided a boost for the 0832EA, which aims to provide 2X the daily performance of the Index. The HSCEI 2X Leveraged ETF rose 5.7% higher over the week.
  • The drop for the NewChina ETF (0829EA) was marginally insulated due to the CNY holiday on the 12th, leaving the performance of the NewChina ETF at 22.93% YTD.
  • The usual “migration” of local Chinese was disrupted following the government’s call to discourage travel after a resurgence in cases in the country. This had led to a big jump in delivery services, as well as telco charges, whilst sending numbers for retail and catering services higher YoY.
  • China also overtook the US to become Europe’s largest trading partner. Trade volumes reached more than USD 710 billion in 2020, as both the value of exports and imports grew, while trades between Europe and the US dwindled.
  • On the domestic front, the momentum stocks stayed resilient to lose marginal ground as compared to the broader market. The 0836EA, which provides exposure into 20 momentum movers within the domestic market has risen 6.23% since the start of the year, whilst the broader KLCI is down 2.6% in MYR terms over the same period.
  • As optimism surrounding the reopening of economies returned, we saw investors move out of safe haven’t assets. Bond yields were seen to be on the rise, while Gold price slid lower. The 0828EA tumbled 2.95% over the week in MYR terms as investors turned back towards risk assets.

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