5 min read I Date: 17 April 2023
|MSCI Asia Pac ex-Japan||1.1%||5.6%||4.5%||-19.7%|
|Shanghai Shenzhen CSI 300 Index||-0.3%||2.7%||5.7%||-21.6%|
|Hang Seng Index||0.5%||6.2%||3.3%||-15.5%|
|Shanghai Stock Exchange Composite Index||0.3%||2.9%||8.1%||-15.1%|
|Bberg Barclays Global Agg Index||-0.5%||1.6%||3.2%||-16.2%|
|JPM Asia Credit Index-Core||0.1%||1.9%||4.2%||-13.0%|
|Asia Dollar Index||0.1%||0.5%||0.3%||-6.9%|
|Malaysia Corporate Bond Index||0.4%||0.7%||3.2%||1.5%|
Top Performing Principal Funds (weekly)
|Principal Malaysia Opportunities||2.1%||7.3%||9.0%||-14.5%|
|Principal Islamic Small Cap Opportunities|
|Principal Institutional Bond Fund 3||0.2%||0.5%||2.3%||1.5%|
Source: Bloomberg, market data is as of 14 April 2023.
*Top performing funds were based on weekly performance.
*Past performance is not an indication of future performance.
- The global financial markets ended the week with mostly positive returns. In developed markets, the United States (US), Europe, and Japan recorded positive gains over the week.
- In Asia, the markets had a mixed performance over the week, with Korea leading the gains while China onshore experienced negative returns.
- In Malaysia, the FTSE Bursa Malaysia KLCI (FBM KLCI) experienced a marginal gain over the week, thanks to diminishing global uncertainties and better-than-expected US inflation data.
- In the bond market, the US Treasury yields rose over the week as market seemed to interpret Friday's inflation data as giving the US Federal Reserve (Fed) room to lift rates further. (Bond prices move in the opposite direction of bond yields)
- In the US, the latest consumer price index (CPI) for March slowed to 5% from a year earlier, the lowest since May 2021 and down from the peak of 9.1% last June. Core CPI, which excludes food and energy prices, increased 0.4%. Both bond and equity markets rallied after the release of the CPI.2
- In Europe, the eurozone's industrial production in February saw a stronger-than-expected rise of 1.5% sequentially and 2.0% year over year. This news led to an increase in European government bond yields as investors weighed the possibility of more policy tightening by the European Central Bank.3
- In China, inflation eased for the second consecutive month in March, with China's Consumer Price Index rising only 0.7% YoY, down from the previous month's 1% rise. Core inflation, which excludes volatile food and energy prices, increased to 0.7% in March from 0.6% in February. On the trade front, China's exports unexpectedly rose by 14.8% YoY in March, surprising analysts who had predicted a decline. This marked the first increase since September, while imports fell less than expected, at 1.4%.
Market narratives have been constantly changing as investors evaluate the latest economic developments. Despite persistent volatility, we believe that patience among investors could likely pay off in the long run. To ride through the global uncertainties, investors are recommended to consider high-quality income focus investment products. Our broad strategy continues to be selective with focus on the themes of Quality, Income and Sustainability..
- On Fixed Income, our preference remains on investment grade and that of longer duration. As we foresee volatility to stay elevated, we are keeping a bias for higher quality credit. We like bonds with an investment grade rating, ideally in the AA or A, and which could operate in a business that is somewhat immune to the economic cycle.
- On equities, we favour quality and dividend-paying stocks for their defensive qualities that can help withstand the uncertain macroeconomic and geopolitical conditions. We are positive on Asia as sector earnings are poised to be rerated supported by China’s rapid reopening.
- For medium to long-term exposure, we prefer assets that offer structural opportunities. The shift towards energy, environmental, food, and technological security are likely to be among the key long-term growth drivers in the years to come.
1Bloomberg, 14 April 2023
2Bloomberg, US Federal Board, 14 April 2023
3European Central Bank (ECB), 14 April 2023
4Bloomberg, Factset, 14 April 2023
5Principal view, 14 April 2023
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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.