5 min read I Date: 22 May 2023
|MSCI Asia Pac ex-Japan||0.6%||-2.0%||
|Shanghai Shenzhen CSI 300 Index||0.2%||-4.4%||1.9%||-21.6%|
|Hang Seng Index||-0.9%||-3.4%||-1.7%||-15.5%|
|Shanghai Stock Exchange Composite Index||0.3%||-4.5%||6.3%||-15.1%|
|Bberg Barclays Global Agg Index||-1.5%||-0.9%||1.6%||-16.2%|
|JPM Asia Credit Index-Core||-0.9%||-0.0%||3.3%||-13.0%|
|Asia Dollar Index||-0.6%||-1.1%||-1.4%||-6.9%|
|Malaysia Corporate Bond Index||-0.3%||0.8%||4.0%||1.5%|
Top Performing Principal Funds (Monthly)
|Principal Global Technology USD||2.0%||0.1%||-9.5%|
|Principal DALI Equity Growth|
|Principal Asia Dynamic Bond MYR||1.1%||1.3%||-4.7%|
Source: Bloomberg, market data is as of 19 May 2023.
*As we emphasize a long-term focus, the top performing funds were selected based on their monthly 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 were generally positive over the week too, with Japan and Korea leading the gains, while the offshore market in China experienced marginal negative returns.
In Malaysia, the FTSE Bursa Malaysia KLCI (FBM KLCI) recorded a marginal gain over the week, thanks to diminishing global uncertainties and optimism over the US debt ceiling.
In the bond market, the yield on the benchmark 10-year U.S. Treasury note rose sharply over the week, possibly due to positive economic surprises in jobs and manufacturing data. (Bond prices move in the opposite direction of bond yields)
In the US, market was primarily driven by the outperformance of mega-cap technology-related stocks, chipmakers, and regional bank shares, with Google’s parent company Alphabet and Facebook’s parent company Meta Platforms recording strong gains, along with solid gains from chipmakers such as NVIDIA and Advanced Micro Devices (AMD). Additionally, there has been a positive and notable shift in tone around debt ceiling negotiations.2
In Europe, the Eurozone industrial production declined by 4.1% sequentially in March, after a 1.5% increase in February, signaling a potential recession. Similarly, year-over-year, industrial output fell by 1.4%, following a 2.0% increase in the previous month. The Bank of England (BoE), meanwhile, reiterated in a speech that monetary policy would have to tighten further in the event of more persistent inflationary pressures.3
In China, report shows sentiment remain muted amid concerns that the country’s post-COVID recovery is losing steam. Official data revealed weaker-than-expected growth in industrial output, retail sales, and fixed asset investment in April compared to the previous year. The PBOC injected RMB125 billion to the banking system through its medium-term lending facility, keeping the lending rate unchanged. The quarterly monetary policy report promised adequate credit growth and liquidity, suggesting upcoming easing measures.4
Market narratives have been constantly changing as investors evaluate the latest economic developments. Despite persistent volatility, we believe that patience among investors could potentially 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 remains focused on selectivity, prioritising the characteristics of quality, growth, and income.
On Fixed Income, we find bonds appealing as we perceive a higher likelihood that central bank hiking cycles will end soon, despite recent guidance from the US Federal Reserve (Fed). 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.
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.
We also favour income-focused approach to ride out volatilities arising from geopolitical tensions, inflationary issues, and recessionary concerns.
Click here to download the PDF format
1Bloomberg, 19 May 2023
2 Bloomberg, Bureau of Labor Statistics (BLS), US Federal Board, 19 May 2023
3 Bank of England (BOE), 19 May 2023
4 Bloomberg, National Bureau of Statistic China, 19 May 2023
5 Principal view, 19 May 2023
What to do next?
- If you need any investment assistance, please get in touch with your financial consultant. (We can help you find one). They can assist you with your investment goals and advice you on your risk tolerance.
- Alternatively, you can also manage your portfolio on-the-go, anytime, anywhere via our online investment portal.
- If you need further assistance, please leave your details here, and we will connect with you.
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.