5 min read I Date: 14 July 2025
Market Data
| Asset Class | Currency | 1-wk | 1-mth | YTD | 2024 | |
| Equities | ||||||
| MSCI World | USD | -0.4% | 2.9% | 9.2% | 17.0% | |
| S&P 500 | USD | -0.3% | 3.9% | 6.4% | 23.3% | |
| Nasdaq | USD | -0.4% | 4.2% | 8.4% | 24.9% | |
| Russell 2000 | USD | -0.6% | 4.0% | 0.2% | 10.0% | |
| Stoxx 600-Europe | EUR | 1.1% | -1.3% | 7.9% | 6.0% | |
| Nikkei 225 | JPY | -0.6% | 3.1% | -0.8% | 19.1% | |
| MSCI Asia Pac ex-Japan | USD | 0.2% | 1.7% | 13.9% | 7.6% | |
| ASEAN | USD | 0.7% | 0.5% | 4.2% | 7.7% | |
| Shanghai Shenzhen CSI 300 Index | CNY | 0.9% | 3.8% | 2.9% | 14.7% | |
| Hang Seng Index | HKD | 0.6% | -1.3% | 20.9% | 17.5% | |
| Shanghai Stock Exchange Composite Index | CNY | 1.2% | 3.8% | 5.5% | 12.7% | |
| FBMKLCI | MYR | -1.0% | 0.8% | -6.5% | 12.8% | |
| Fixed Income | ||||||
| Bberg Barclays Global Agg Index | USD | -0.9% | 0.4% | 6.3% | -1.7% | |
| JPM Asia Credit Index-Core | USD | -0.3% | 1.1% | 4.1% | 6.0% | |
| Asia Dollar Index | USD | -0.4% | 0.3% | 3.9% | -4.1% | |
| Bloomberg Malaysia Treasury - 10 Years | MYR | 0.3% | 0.8% | 4.4% | 4.3% | |
| Top Performing Principal Funds | ||||||
| Equities | 1-mth as of (30 Jun 2025) | YTD as of (30 Jun 2025) | ||||
| Principal Next-G Connectivity USD | 13.07 | 15.65 | ||||
| Principal Islamic Global Technology USD | 10.62 | 6.76 | ||||
| Principal US High Conviction Equity USD | 9.76 | -0.34 | ||||
| Balanced | ||||||
| Principal Heritage Balanced MYR Hedged | 3.46 | 1.70 | ||||
| Principal Islamic Global Selection Mdt Csv USD | 3.19 | 6.78 | ||||
| Principal Islamic Global Selection Moderate MYR | 2.38 | -0.08 | ||||
| Fixed Income | ||||||
| Principal Sustainable Dynamic Bond MYR | 0.33 | 2.93 | ||||
| Principal Islamic Lifetime Sukuk | 0.32 | 2.93 | ||||
| Principal Conservative Bond | 0.32 | 3.04 |
Source: Bloomberg, market data is as of 11 July 2025.
*As we emphasise a long-term focus, the top performing funds were selected based on monthly performance.
*The numbers may show as negative if there is no positive return for the period under review.
*The fund performance was referenced from the daily performance report, data was extracted from Lipper.
*The performance figures are based on the fund’s respective currency class.
*Past performance is not an indication of future performance.
Market Review1
- This week, global financial markets exhibited mixed performance. Among developed markets, Europe recorded positive gains, while the United States and Japan posted negative returns.
- Across Asia, the market showed mixed performances. South Korea led with the largest gains, while losses were driven by India market. Meanwhile, in Malaysia, the FBMKLCI ended the week with a negative return.
- In the bond market, the yield on the US 10-year Treasury note rose nearly 4 basis points to around 4.39% on Friday, following a volatile week marked by heightened trade tensions and shifting policy expectations. (It’s worth noting that bond prices move inversely to bond yields.)
Macro Factors
- In the U.S., it was reported that the Trump administration will impose a 35% tariff on imports from Canada starting August 1, and warned it could rise further if Canada retaliates. Trump also signalled plans to apply blanket tariffs of 15% to 20% on most other trade partners. The move is part of a broader escalation in his trade war, with new tariffs already targeting allies such as Japan and South Korea, as well as a 50% levy on copper. In corporate news, Nvidia added gains after becoming the first public company to surpass a $4 trillion valuation, further fueling the AI-driven tech rally.2
- In Europe, markets appeared to shrug off the latest trade measures announced by US President Trump. EU trade chief Sefcovic said that good progress had been made on a framework trade agreement, with a deal potentially achievable within days.3
- In China, the Finance Ministry is expected to issue CNY 6 billion in sovereign bonds in the Macau Special Administrative Region (SAR) on July 16, marking the fourth consecutive year of such issuance, Xinhua News reported Wednesday. In a joint statement, the Ministry and the SAR said the move underscores Beijing's support for Macau in developing its bond market and promoting economic diversification. Consumer prices rose 0.1% year-over-year in June, the first positive reading in five months and a tentative sign of stabilizing demand. However, producer prices tumbled 3.6%, the sharpest decline since July 2023, as mounting price competition and subdued domestic consumption continued to pressure the industrial sector. 4
- In Malaysia, BNM lowered its benchmark interest rate by 25 basis points to 2.75% during its July 2025 policy meeting, in line with market expectations. This marked the first rate cut in five years, underscoring the central bank's commitment to supporting domestic economic momentum amid a weaker growth outlook and rising global trade uncertainties. Headline and core inflation averaged 1.4% and 1.9%, respectively, in the first five months of the year. For the full year, inflation is expected to remain moderate, supported by subdued global cost pressures and the absence of significant domestic demand-driven inflation. On tariff front, the government officials reaffirmed its commitment to a “balanced” and “mutually beneficial” trade relationship with the U.S. despite President Trump’s announcement of a 25% tariff on Malaysian goods starting August 1.The unemployment rate dropped to 3.0% in May 2025 from 3.3% in the same month a year earlier, marking its lowest level since April 2015 for the second consecutive month.5
Investment Strategy6
- Global equities have returned to all-time highs as markets enter the second half of 2025. Over the past six months, investors have contended with shifting policy, swings in sentiment, and geopolitical events. However, beneath the surface, the foundations of a more positive environment are beginning to take shape.
- We reiterate the importance of to keeping sight of longer-term investing principles that can boost risk-adjusted rates of return through portfolio diversification and an emphasis on quality growth and income to navigate the volatility ahead. Our strategy has also emphasized focusing on companies that demonstrate the attributes of large-cap defensiveness, with earnings that are more domestically focused. Additionally, quality bonds have historically offered portfolio stability, especially in times of uncertainty.
- We remain a slight preference for equities over fixed income. Key themes for 2025 include: i) the impact of policy shifts on China's recovery; ii) the U.S. economic outlook; and iii) the influence of tariffs and geopolitical risks on asset prices.
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Sources:
1 Bloomberg, 11 July 2025
2 Bloomberg, Bureau of Labor Statistics (BLS), ISM, S&P Global, US Federal Board, 11 July 2025
3 S&P Global, ECB, Factset, Bank of England (BoE), 11 July 2025
4 Bloomberg, National Bureau of Statistic China, CEWC, 11 July 2025
5 Department of Statistic Malaysia, S&P Global, 11 July 2025
6 Principal view, 11 July 2025
*SEZ refers to Special Economic Zone
*PMI refers to Purchasing Manufacturing Index
*HCOB refers to Hamburg Commercial Bank
*NBS PMI refers to official data released by National Bureau of Statis in China
*Caixin PMI refers to data published by Caixin Media and ISH Markit. It provides alternative gauge focusing on smaller and medium-sized enterprises.
*ECB refers to European Central Bank
*PBOC refers to People’s Bank of China
*PCE refers to Personal Consumption Expenditure
*FOMC: Federal Open Market Committee
*y-o-y refers to year on year
*m-o-m refers to month on month
*UST refers to United States Treasury
*BNM refers to Bank Negara Malaysia
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Disclaimer: We have based this document on information obtained from sources we believe to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness, or correctness. Expressions of opinion contained herein are those of Principal Asset Management Berhad only and are subject to change without notice. This document should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell Principal Asset Management Berhad’s investment products. The data presented is for information purposes only and is not a recommendation to buy or sell any securities or adopt any investment strategy. This material is not intended to be relied upon as a forecast, research, or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. We recommend that investors read and understand the contents of the funds’ prospectus and product highlights sheet available on the Principal website, which have been duly registered with the Securities Commission Malaysia (SC). Registration of these documents does not amount to nor indicate that the SC has recommended or endorsed the product or service. There are risks, fees and charges involved in investing in the funds. You should understand the risks involved, compare, and consider the fees, charges and costs involved, make your own risk assessment, and seek professional advice, where necessary. This article has not been reviewed by the SC.