The month of June saw most major indices dipping back into the red, as the US Feds’ measures to curb inflation continues to spook investors as recession pressures rise. In June, the US Feds increased interest rates by another 75 b.p, bringing the YTD interest rate hike to 1.5%. In China, sentiment was the complete opposite as all major indices continued its recovery momentum, ending the month with gains. Outside of China and Hong Kong, Asian markets including Malaysia trailed the sentiment in the US, dipping into the red amid recession worries. Commodity wise, gold prices fared the best, while crude oil prices slipped from recent highs amid negative outlook on economic growth.
In the News
- Global markets slid back into the red as we closed the first half of the year, with most major indices ending June with monthly losses.
- The US Federal Reserve’s hawkish stance remained, as markets saw another 75 b.p hike in interest rates last month, its steepest hike since 1994.
- Economic indicators show that inflation may have peaked as intended by the Feds, but market sentiment was then dragged down by fears that said measures may push the economy into a recession.
- In the last month of 1H2022, all major indices in the US ended lower. The S&P 500 Index was down 7.84% in June, while the tech-focused Nasdaq Composite Index dipped 8.16%. The FANG+ Index fared better, only sliding 5.65% over the month.
- The 0831EA, which provides -100% daily exposure into the index managed to see 3.21% of gains in June.
- Market sentiment in China was the complete opposite from its western counterparts, as the world’s second largest economy continues to recover from previous lockdowns.
- Over the month of June, the Chinese government announced more measures to aid economic recovery, including policy support for the property sector, relaxing quarantine measures for inbound travellers and reviving Ant Financial Group’s IPO plans.
- All major Chinese indices ended in the green last month, with the CSI300 and the Shanghai Composite index gaining 9.83% and 6.86% respectively in MYR terms.
- The S&P New China Sectors Ex A Share index also continued its upwards momentum last month, gaining 8.90% in MYR terms in June, while the 0829EA upped 9.16%. The continuous recovery saw this ETF gaining 12.37% over 2Q2022.
- The rest of Asia did not fare as well, as all major Asian markets outside of China and Hong Kong fell into a sea of red in June, echoing the sentiment of recession fears in the West.
- Locally, the Dorsey Wright Technical Leaders Index fared better than the broader FBM KLCI Index, as the former slid 6.15% while the latter dipped 8.02% over the month.
- In commodities, gold prices fared the best, with only 1.61% of losses in MYR terms in June, while the Bloomberg WTI Cushing Crude Oil Spot Index dipped 7.21% in MYR terms as prices cool off from recent highs, alongside recession concerns.
On the Economic Data Front
- Data suggests that US economy might be slowing down
- PCE data shows that consumers are pulling back as purchases fell 0.4% in May
- The Atlanta Federal Reserve GDPNow forecast slid 2.1% year-on-year for 2Q2022, putting the US into a technical recession.
- China economic activity regains footing but may not hit GDP target
- Both manufacturing and services PMI transitioned into expansion territory, with the former recording 50.2 while the latter came in at 54.7 in June.
- China’s economic growth is set to be lower than targeted at 4.1%, from its 5.5% official target.
ETF strategies at TradePlus
A look at the performance of TradePlus ETFs
Learn more about TradePlus ETFs
Disclaimer: This article has been prepared by AHAM Asset Management Berhad (“AHAM Capital”) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to AHAM Capital and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of AHAM Capital. The information contained in this presentation may include, but is not limited to opinions, analysis, forecasts, projections and expectations (collectively referred to as “Opinions”). Such information has been obtained from various sources including those in the public domain, are merely expressions of belief. Although this presentation has been prepared on the basis of information and/or Opinions that are believed to be correct at the time the presentation was prepared, AHAM Capital makes no expressed or implied warranty as to the accuracy and completeness of any such information and/or Opinions. As with any forms of financial products, the financial product mentioned herein (if any) carries with it various risks. Although attempts have been made to disclose all possible risks involved, the financial product may still be subject to inherent risk that may arise beyond our reasonable contemplation. The financial product may be wholly unsuited for you, if you are adverse to the risk arising out of and/or in connection with the financial product. AHAM Capital is not acting as an advisor or agent to any person to whom this presentation is directed. Such persons must make their own independent assessments of the contents of this presentation, should not treat such content as advice relating to legal, accounting, taxation or investment matters and should consult their own advisers. AHAM Capital and its affiliates may act as a principal and agent in any transaction contemplated by this presentation, or any other transaction connected with any such transaction, and may as a result earn brokerage, commission or other income. Nothing in this presentation is intended to be, or should be construed as an offer to buy or sell, or invitation to subscribe for, any securities. Neither AHAM Capital nor any of its directors, employees or representatives are to have any liability (including liability to any person by reason of negligence or negligent misstatement) from any statement, opinion, information or matter (expressed or implied) arising out of, contained in or derived from or any omission from this presentation, except liability under statute that cannot be excluded.
Warning Statement: A copy of the Prospectus / Supplemental Prospectus for the TradePlus Shariah Gold Tracker and TradePlus S&P New China Tracker, the Prospectus for the TradePlus DWA Malaysia Momentum Tracker and TradePlus MSCI Asia Ex Japan REITs Tracker, as well as the Master Prospectus for the TradePlus NYSE® FANG+™ Daily (2x) Leveraged Tracker, TradePlus NYSE® FANG+™ Daily (-1x) Inverse Tracker, TradePlus HSCEI Daily (2x) Leveraged Tracker and TradePlus HSCEI Daily (-1x) Inverse Tracker (collectively known as the “TradePlus L&I ETFs”) can be obtained at Affin Hwang Asset Management's (“AHAM Capital”) website at www.tradeplus.com.my. Investors are advised to read and understand the contents of the Prospectus dated 28 November 2017 and Supplemental Prospectus dated 2 July 2019 (for TradePlus Shariah Gold Tracker), Prospectus dated 15 January 2019 and Supplemental Prospectus dated 2 July 2019 (for TradePlus S&P New China Tracker), Prospectus dated 9 July 2020 (for TradePlus DWA Malaysia Momentum Tracker), Prospectus dated 9 July 2020 (for TradePlus MSCI Asia Ex Japan REITs Tracker), as well as the Master Prospectus dated 26 November 2019 (for the TradePlus L&I ETFs) before investing. There are fees and charges involved when investing in the funds stated herein. Investors are advised to consider and compare the fees and charges as well of the risks carefully before investing. Investors should make their own assessment of the risks involved in investing and should seek professional advice, where necessary. The price of units and distribution payable, if any, may go down as well as up and past performance of the funds should not be taken as indicative of their future performance. The Securities Commission Malaysia has not reviewed this material and takes no responsibility for the contents of this material and expressly disclaims all liability, however arising from this material.
You may refer to the relevant Licensing Disclosure Statement & Conditions at the respective webpages for each fund available on www.tradeplus.com.my.