12 January 2024 Weekly Market Recap

5 min read     I     Date: 15 January 2024

Market Data

Asset Class Currency1-wk1-mthYTD2023

MSCI World USD1.5%3.3%0.0%21.8%
S&P 500 USD1.8%3.0%0.3%24.2%
Nasdaq USD3.2%2.9%0.0%53.8%
Stoxx 600-Europe EUR0.1%0.9%-0.5%12.7%
MSCI Asia Pac ex-Japan USD-0.8%1.9%-3.2%4.6%
ASEAN USD-0.1%4.9%-0.9%0.7%
Shanghai Shenzhen CSI 300 Index CNY-1.3%-4.2%-4.3%-11.4%
Hang Seng Index HKD-1.8%-0.8%-4.7%-13.8%
Shanghai Stock Exchange Composite Index CNY-1.6%-4.0%-3.1%-3.7%
FBMKLCI MYR0.0%2.8%2.2%-2.7%

Fixed Income
Bberg Barclays Global Agg Index USD0.4%2.4%-1.0%5.7%
JPM Asia Credit Index-Core USD0.8%2.0%-0.2%9.9%
Asia Dollar Index USD-0.3%0.4%-1.0%-1.5%
Bloomberg Malaysia Treasury - 10 Years MYR0.5%0.7%0.2%6.4%

Top Performing Principal Funds
(1 month return as of 31 December 2023)
Principal Biotechnology Discovery Fund - Class USD   19.3%16.7% 
Principal US High Conviction Equity Fund - Class USD   8.6%9.8% 
Principal Next-G Connectivity Fund - Class USD   6.2%37.3% 
Fixed Income      
Principal Islamic Lifetime Sukuk Fund   0.9%6.7% 
Principal Lifetime Bond Fund   0.9%6.9% 
Principal Conservative Bond Fund - Class A   0.7%5.9% 


Source: Bloomberg, market data is as of 12 January 2024.
*As we emphasise a long-term focus, the top performing funds were selected based on their monthly performance.
*The numbers may show as negative if there is no positive return for the period under review.
*Past performance is not an indication of future performance.                    

Market Review1

  1. The global financial markets concluded the week with mixed performance. In developed markets, Japan experienced the largest gains, followed by the US and Europe. 
  2. In Asia, market performance was also mixed. Korea and China’s onshore experienced the largest decline, while India and Taiwan recorded positive gains.  
  3. In Malaysia, the FBMKLCI performance was muted, fuelled by profit taking activities. 
  4. Turning to the bond market, the 10-year U.S. Treasury note had a marginally positive return, with yields stabilising around the 4% range, as investors assessed the recent inflation data in the US. (Bond prices move in the opposite direction of bond yields)

Macro Factors

  1. In the US, the annual inflation rate edged up to 3.4% in December from a five-month low of 3.1% in November, driven by higher shelter cost. Annual core inflation, which excludes volatile items such as food and energy, eased to 3.9%, lower than the previous month’s figure. Producer prices unexpectedly declined 0.1% month-over-month in December, the same as in November. Additionally, the trade gap narrowed to $63.2 billion in November from $64.5 billion in October, reflecting a decrease in trade deficit and an increase in services surplus. 2
  2. In Europe, retail sales dropped by 0.3% in November compared to the 0.4% increase in October. The seasonally adjusted jobless rate came in at 6.4% in November, aligning with June's historic low and slightly surpassing the market forecast. The recent speech by the ECB Vice President suggests the committee will maintain a date dependent approach, affirming the current tightening conditions’ potential to bring inflation back to their target.3
  3. In China, annual consumer prices fell by 0.3% in December, marking the third straight month of decline. Producer prices also declined by 2.7% in December, highlighting the persistence of deflationary forces in the economy. Trade surplus edged higher to USD 75.34 billion in December, supported by higher export activities. New yuan loan increased by CNY 1.17 trillion in December, up from November's figures but falling short of market expectations of CNY 1.40 trillion, as the central bank continues its commitment to economic support.4

Investment Strategy5

We advocate a balanced allocations in both equity and fixed income, with a preference for income-focused funds. Our strategy emphasises quality, growth, and income in stocks and credits. We are exercising caution with USD assets and believe that Asian equities and fixed income present more value in the short term.

  1. We find bonds appealing as we perceive a higher likelihood that central bank hiking cycle will end soon. We also see potential for capital gains in the event of weaker economic growth. Therefore, we maintain our preference for investment grade bonds with longer durations as our preferred investment choice. For Malaysia, the projected improvement to the budget deficit, provided in the Budget 2024, improved the outlook for domestic bonds.
  2. On equities, we prefer quality and dividend-paying stocks for their defensive characteristics, which can provide resilience in the face of uncertain macroeconomic and geopolitical conditions. Our positive outlook is focused on Asia and includes strategic positions in various areas: a) the bottoming tech hardware cycle, b) long-term growth potential driven by low penetration rates (such as India), c) recovery plays and structural themes in ASEAN, d) selective sectors benefiting from China's reopening, and e) Malaysia's growing optimism due to political stability and potential gains from the New Energy Transition Roadmap, the New Industrial Master Plan 2030 and projected improvement to the budget deficit detailed in the Budget 2024.
  3. We also favour income-focused approach to ride out volatilities arising from geopolitical tensions, inflationary issues, and recessionary concerns.  



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1 Bloomberg, 12 January 2024  
2 Bloomberg, Bureau of Labor Statistics (BLS), ISM, S&P Global, US Federal Board,12 January 2024
3 S&P Global, ECB, Factset, Bank of England (BoE), 12 January 2024
4 Bloomberg, National Bureau of Statistic China, CEWC, 12 January 2024
5 Principal view, 12 January 2024

*PMI stands for Purchasing Manufacturing Index
*ECB stands for European Central Bank
*PBOC stands for People’s Bank of China

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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.