15 December Weekly Market Recap

5 min read     I     Date: 18 December 2023

Market Data

Asset Class Currency1-wk1-mthYTD2022

MSCI World USD2.6%5.1%20.1%-19.5%
S&P 500 USD2.5%4.8%22.9%-19.4%
Nasdaq USD3.3%5.1%52.0%-33.0%
Stoxx 600-Europe EUR0.9%4.9%12.2%-12.9%
MSCI Asia Pac ex-Japan USD3.0%2.1%2.0%-19.7%
ASEAN USD1.7%1.0%-2.6%2.4%
Shanghai Shenzhen CSI 300 Index CNY-1.7%-7.4%-13.7%-21.6%
Hang Seng Index HKD2.8%-7.1%-15.1%-15.5%
Shanghai Stock Exchange Composite Index CNY-0.9%-4.2%-4.7%-15.1%
FBMKLCI MYR1.4%-0.3%-2.2%-4.6%

Fixed Income
Bberg Barclays Global Agg Index USD2.4%5.0%4.7%-16.2%
JPM Asia Credit Index-Core USD1.7%4.7%9.3%-13.0%
Asia Dollar Index USD0.6%1.3%-2.0%-6.9%

Top Performing Principal Funds
(1 month return as of 30 November 2023)
Principal IslamicGlobal Technology Fund - Class USD   12.4%47.7%0.2%
Principal Next-G Connectivity Fund - Class USD   16.0%29.3%-43.3%
Principal Global Technology Fund - Class USD   15.4%43.1%-43.7%
Fixed Income      
Principal Islamic Institutional Sukuk Fund   1.5%5.8%1.2%
Principal Lifetime Bond Fund   1.5%6.0%1.3%
Principal Islamic Lifetime Sukuk Fund   1.4%5.7%1.1%


Source: Bloomberg, market data is as of 15 December 2023.
*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 closed the week with mostly positive performance. Developed markets like the United States (US) and Japan saw the largest gains. 
  2. In Asia, market performance was mixed. India and China’s onshore had strong performance, while China’s offshore markets declined the most.  
  3. In Malaysia, the FBMKLCI in Malaysia ended the week on a positive note, fuelled by the optimism in the regional market. 
  4. Turning to the bond market, the price of the 10-year U.S. Treasury note gained positively, with yields touching the low of the 3.95% range. This was driven by the recent shift in market expectation after the recent US Federal Reserve (Fed) meeting, which affirmed that rate hikes are likely over, and rate cuts could begin in 2024. (Bond prices move in the opposite direction of bond yields)

Macro Factors

  1. In the US, the annual inflation rate slowed to 3.1% in November, marking the lowest reading in 5 months. Core inflation, which excludes volatile items such as food and energy, remained unchanged from the previous month. On monetary policy, the Fed kept the interest rate unchanged in at 5.25% to 5.50% in the December meeting and hinted a possible shift towards a dovish stance in 2024. 2
  2. In Europe, the monthly industrial production data showed a decline of 0.7% in October, reaching the lowest level since 2020. The ECB* maintained interest rates for the second consecutive times in the December meeting and signalled an early conclusion to its last remaining bond purchase scheme to combat high inflation.3
  3. In China, both retail sales and industrial production showed growth in November, expanding by 10.1% and 6.6% respectively, surpassing the figures from the previous month. Additionally, China's banks extended CNY 1.09 trillion in new yuan loans in November, showing an increase from previous month, as the central bank seeks to bolster confidence and demand. The recently concluded Central Economic Work Conference highlights the key priorities for 2024, which include prioritizing economy recovery, stability, addressing challenges, and promoting high-quality development.4

Investment Strategy5

Our current stance is neutral on 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, 15 December 2023  
2 Bloomberg, Bureau of Labor Statistics (BLS), ISM, S&P Global, US Federal Board, 15 December 2023
3 S&P Global, ECB, Factset, Bank of England (BoE), 15 December 2023
4 Bloomberg, National Bureau of Statistic China, CEWC 15 December 2023
5 Principal view, 15 December 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.