It was a week of synchronised stimulus packages being rolled out by global central banks as we grappled with the impact of the coronavirus outbreak. The virus continued to spread across continents, raising alarm bells as the death toll increased. Global financial markets remained under pressure despite the rate cuts as equities and bond yields tumbled.
In the news
- Effects of the virus on the global supply chain became more apparent when the JP Morgan global manufacturing index came in at 47.2, 3.2 points lower than its previous month.
- The US state of California announced a state of emergency last week after it recorded its first fatality from the virus.
- The US equity market slid lower as the government remained unclear on how it would address the current situation, and the insufficient number of test kits to go round as the number of infected rose.
- As the outbreak persists, global economic growth is projected to slow this year. The IMF announced an emergency funding to a tune of USD50 billion, mainly set aside for its members, prioritising on emerging economies to tackle the epidemic.
- China-related indices took the lead last week as China took on better control of the virus situation. The Shanghai Composite rose 5.2%, while the S&P 500 Index shed 0.4% in MYR terms last week.
- The domestic equity market remained under pressure as weakening oil price, and political uncertainties dampened market sentiment. The KLCI eked out a marginal 0.03% gain, leaving its YTD returns at -6.7%.
- The travel and tourism sector continued to take the brunt of the hit as travel bans widens.
- On the energy front, talks by OPEC to reduce oil production fell through, leading to a slump in oil price. The WTI closed at USD 41.28 per barrel on Friday’s, sliding 8.7% lower from the previous week in MYR terms.
- Rising concerns surrounding the health of global economies, and the extend of the impact from the virus outbreak has pushed investors to continue to seek refuge in Gold. The LBMA Gold Price rose 2.66% in MYR terms over the week.
- The 0828EA, the only physically-backed Gold ETF listed on Bursa, gained 2.61% last week, bringing its YTD returns to 12.7% in MYR terms.
In other economic news
- It was a week of policy rate cutting trend as global central banks looked into measures to cushion the impact of the virus outbreak..
- The Reserve Bank of Australia started the week by lowering its official cash rates by 25bps, moving it to a record low of 0.5%.
- The US Federal Reserve then shocked markets with an emergency rate cut.
- The Feds slashed its rates by 50bps to bring its policy rates to a range of 1.00% to 1.25%.
- Though stock markets would historically climb higher after a rate cut, it merely spiked after the initial decision before tumbling lower.
- The S&P 500, and Dow Jones Industrial Average index both ended close to 3% lower for the day.
- As expected, Bank Negara also cut its OPR rates, this time by 25bps in view of the current global economic environment.
- Dragged down by the impact of the virus, China released weaker economic data:
- YoY export data fell 17.2% collectively in January, and February – a large contrast to the growth of 7.9% seen in December.
- Imports have also fallen by 4%, from the 16.5% recorded in December.
- Non-manufacturing PMI dropped to a new low of 29.6 in February, from 54.1 in January.
- US job data provided some reprice for markets, with a total 273,000 new jobs generated in February.
What to look out for ahead?
- Now that China is seeing more stability in the virus containment, we will need to look out for how the western countries address the outbreak as reports of infected persons rise.
- Italy has since announced a lockdown on 16 million people after a rapid spike in number of cases.
- S.Korea has seen improving number of infections, and have come up with a revolutionary test system to address the high number of cases.
- The US remain unclear on its plans to address the virus outbreak while reported cases continue to rise.
- All eyes will continue to remain on the development of the virus as it spreads across the globe.
- Investors would also be looking out on the direction of oil price given its large slump last week.
- To Hedge:
- 0828EA – to hedge your portfolio with some Gold exposure.
- 0833EA – a HSCEI Inverse strategy that helps hedge your portfolio against weakness from the performance of China companies listed on the HKex.
- 0831EA – the NYSE FANG+ Inverse strategy that hedges against the performance of tech stocks listed in the US.
- To Increase Position:
- 0829EA / 0829EB – a strategy that gives investors exposure into the consumer focused sector through China companies listed in HK, and the US
- 0832EA – a 2X leveraged strategy on the HSCEI that captures 2 times the performance of China companies listed on the HKex
- 0830EA – a 2X leveraged strategy on the NYSE FANG+ that captures 2 times the performance of US listed tech stocks – which has since risen by 43.6% YTD.
A look at the performance of the TradePlus ETFs, and major global indices
Learn more about TradePlus ETFs
Disclaimer: This article has been prepared by Affin Hwang Asset Management Berhad (hereinafter referred to as “Affin Hwang AM”) specific for its use, a specific target audience, and for discussion purposes only. All information contained within this presentation belongs to Affin Hwang AM and may not be copied, distributed or otherwise disseminated in whole or in part without written consent of Affin Hwang AM. 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, Affin Hwang AM 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. Affin Hwang AM 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. Affin Hwang AM 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 Affin Hwang AM 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 Prospectus is available for the TradePlus Shariah Gold Tracker and TradePlus S&P New China Tracker, while a Master Prospectus is available for the TradePlus NYSE® FANG+TM Daily (2x) Leveraged Tracker, TradePlus NYSE® FANG+TM 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”), and investors have the right to request a copy of it. Investors are advised to read and understand the contents of the Prospectus dated 28 November 2017 and Supplementary Prospectus dated 2 July 2019 (for TradePlus Shariah Gold Tracker), and Prospectus dated 15 January 2019 and Supplementary Prospectus dated 2 July 2019 (for TradePlus S&P New China Tracker), as well as the Master Prospectus dated 26 November 2019 (for the TradePlus L&I ETFs) before investing. The Prospectus / Supplementary Prospectus / Master Prospectus have been registered with the Securities Commission Malaysia, who takes no responsibility for its contents. An electronic copy of the Prospectus / Supplementary Prospectus / Master Prospectus can be obtained at Affin Hwang Asset Management Berhad’s website www.tradeplus.com.my. As with any forms of financial products, the financial products mentioned herein carries with them various risks. Investors are advised to consider the general and specific risks involved as stipulated in its Prospectus / Supplementary Prospectus / Master Prospectus before investing. There are also fees and charges involved when investing in these funds, and investors are advised to consider the fees and charges carefully before investing. 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.
Licensing Disclosure Statement & Conditions: The "S&P New China Ex A-Shares Index" is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”) and has been licensed for use by Affin Hwang Asset Management Bhd. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”) and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Affin Hwang Asset Management Bhd. TradePlus S&P New China Tracker is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P New China Ex A-Shares Index.
Licensing Disclosure Statement & Conditions: Source ICE Data Indices, LLC (“ICE Data”), is used with permission. “NYSE® FANG+™” is a service/trade mark of ICE Data Indices, LLC or its affiliates and has been licensed, along with the NYSE® FANG+™ Daily 2X Leveraged Index and NYSE® FANG+™ Daily 1x Inverse Index (“Indices”) for use by Affin Hwang Asset Management Berhad in connection with the TradePlus NYSE® FANG+™ Daily (2x) Leveraged Tracker and the TradePlus NYSE® FANG+™ Daily (-1x) Inverse Tracker (the “Product”). Neither Affin Hwang Asset Management Berhad nor the Product, as applicable, is sponsored, endorsed, sold or promoted by ICE Data Indices, LLC, its affiliates or its Third Party Suppliers (“ICE Data and its Suppliers”). ICE Data and its Suppliers make no representations or warranties regarding the advisability of investing in securities generally, in the Product particularly, or the ability of the Index to track general stock market performance. ICE Data’s only relationship to Affin Hwang Asset Management Berhad (“Licensee”) is the licensing of certain trademarks and trade names and the Index or components thereof. The Index is determined, composed and calculated by ICE Data without regard to the Licensee or the Product or its holders. ICE Data has no obligation to take the needs of the Licensee or the holder of the Product into consideration in determining, composing or calculating the Index. ICE Data is not responsible for and has not participated in the determination of the timing of, prices of, or quantities of the Product to be issued or in the determination or calculation of the equation by which the Product is to be priced, sold, purchased, or redeemed. Except for certain custom index calculation services, all information provided by ICE Data is general in nature and not tailored to the needs of Licensee or any other person, entity or group of persons. ICE Data has no obligation or liability in connection with the administration, marketing, or trading of the Product. ICE Data is not an investment advisor. Inclusion of a security within an index is not a recommendation by ICE Data to buy, sell, or hold such security, nor is it considered to be investment advice.
ICE DATA AND ITS SUPPLIERS DISCLAIM ANY AND ALL WARRANTIES AND REPRESENTATIONS, EXPRESS AND/OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, INCLUDING THE INDICES, INDEX DATA AND ANY INFORMATION INCLUDED IN, RELATED TO, OR DERIVED THEREFROM (“INDEX DATA”). ICE DATA AND ITS SUPPLIERS SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY WITH RESPECT TO THE ADEQUACY, ACCURACY, TIMELINESS OR COMPLETENESS OF THE INDICES AND THE INDEX DATA, WHICH ARE PROVIDED ON AN “AS IS” BASIS AND YOUR USE IS AT YOUR OWN RISK.