On the 24th of February 2022, Russia launched a war on Ukraine that has been dubbed the largest war in Europe since World War II. With political uncertainties looming over global markets, investors have fled risk-on assets for commodities and safe haven assets, sending prices soaring towards the end of the month. Gold prices reversed its negative streak with the yellow precious metal seeing steady gains as political uncertainties intensified over the month. Energy and CPO prices also soared as a result of the war, as Asian markets seemed to fare better than the west, with the local bourse outperforming regional peers.
In the News
- Russia’s invasion of Ukraine in February, which was dubbed as Europe’s biggest war since World War Two dominated headlines and subsequently market sentiment as the month ended.
- Most major indices in the West ended the month in the red, while markets in Asia showed mixed performance in February.
- All major indices in the US dipped last month, with the technology centric Nasdaq Composite Index underperforming the broader S&P Index, dipping 3.17% and 2.88% respectively in MYR terms.
- The heavily concentrated FANG+ Index fared the worst in February, dipping 7.41% in MYR terms over the month. Consequently, the 0831EA, which aims to provide -100% exposure into the index saw 7.53% returns over the month, bringing its YTD performance to 14.46%.
- During the shortened trading month due to Lunar New Year celebrations, regulatory challenges remained a main driver of market sentiment in China. While it was thought that the worst was over, President Xi has called to “accelerate the pace of legislation” in multiple tech sectors.
- S&P New China Sectors ex A Share Index’s performance was heavily dragged down, seeing a dip of 4.66% in MYR terms, bringing the NAV of the 0829EA down by 4.74%.
- Broader market indices in China fared better, with the Shanghai Composite Index upping 3.90% in MYR terms, while the CSI300 Index saw gains of 1.27%, amid signals of fiscal support coming from the PBOC.
- Locally, markets defied negative sentiment arising from the Ukraine war to end in the green, supported by prospects of the opening of international borders and surging commodity prices, particularly in the energy and CPO sectors.
- The DWA Technical Leaders Malaysia Index underperformed the broader market due to its highly concentrated portfolio, sliding 0.04% over the month. The broader FBM KLCI index rose by 6.35%.
- Commodity prices rallied in February on the back of tumbling global equities, with prices approaching record high prices across the board.
- In February, our Shariah Gold ETF, 0828EA, rose by 6.53%, with YTD gains being recorded at 6.44%.
On the Economic Data Front
- Economic recovery still going strong in the US, defying Ukrainian crisis’ negative sentiment
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Inflation shows no signs of slowing down, as CPI is expected to have climbed 7.9% y-o-y in February, topping January’s record of 7.5%.
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Jobs data continued to grow in February, with 678,000 jobs added over the month, bringing the unemployment rate down to 3.8%.
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Consumer spending rose sharply by 2.1% in January, despite persistently high inflation.
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China cites various headwinds ahead for slow economic growth
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2022 GDP targets fall to 5.0% to 5.5% for the first time since 1991.
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CPI inched up by 0.9% in February, in line with expectations.
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