5 min read I Date: 23 June 2025
Market Data
| Asset Class | Currency | 1-wk | 1-mth | YTD | 2024 | |
| Equities | ||||||
| MSCI World | USD | -0.6% | 0.2% | 4.7% | 17.0% | |
| S&P 500 | USD | -0.2% | 0.5% | 1.5% | 23.3% | |
| Nasdaq | USD | 0.0% | 1.2% | 2.9% | 24.9% | |
| Russell 2000 | USD | 0.4% | 0.2% | -5.4% | 10.0% | |
| Stoxx 600-Europe | EUR | -1.8% | -3.9% | 5.9% | 6.0% | |
| Nikkei 225 | JPY | 1.5% | 2.3% | -3.9% | 19.1% | |
| MSCI Asia Pac ex-Japan | USD | -0.1% | 2.7% | 10.3% | 7.6% | |
| ASEAN | USD | -2.7% | -3.9% | 0.4% | 7.7% | |
| Shanghai Shenzhen CSI 300 Index | CNY | -0.4% | -1.0% | -1.9% | 14.7% | |
| Hang Seng Index | HKD | -1.6% | -0.2% | 18.3% | 17.5% | |
| Shanghai Stock Exchange Composite Index | CNY | -0.4% | -0.3% | 0.6% | 12.7% | |
| FBMKLCI | MYR | -1.0% | -2.9% | -8.4% | 12.8% | |
| Fixed Income | ||||||
| Bberg Barclays Global Agg Index | USD | -0.1% | 1.5% | 6.0% | -1.7% | |
| JPM Asia Credit Index-Core | USD | -0.1% | 1.0% | 3.1% | 6.0% | |
| Asia Dollar Index | USD | -0.2% | 0.6% | 3.5% | -4.1% | |
| Bloomberg Malaysia Treasury - 10 Years | MYR | -0.1% | 0.4% | 3.6% | 4.3% | |
| Top Performing Principal Funds | ||||||
| Equities | 1-mth as of (31 May 2025) | YTD as of (31 May 2025) | ||||
| Principal Next-G Connectivity USD | 11.35 | 2.29 | ||||
| Principal Global Technology USD | 11.11 | -0.58 | ||||
| Principal Islamic Global Technology USD | 10.89 | -3.48 | ||||
| Balanced | ||||||
| Principal Islamic Global Selection Moderate USD | 4.63 | 2.58 | ||||
| Principal World Selection Moderate Aggressive USD | 4.34 | 4.00 | ||||
| Principal World Selection Moderate USD | 3.12 | 3.71 | ||||
| Fixed Income | ||||||
| Principal Lifetime Bond | 0.77 | 2.84 | ||||
| Principal Conservative Bond | 0.70 | 2.70 | ||||
| Principal Islamic Lifetime Sukuk | 0.69 | 2.58 |
Source: Bloomberg, market data is as of 20 June 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, Japan posted gains, while Europe and the United States experienced declines.
- Across Asia, most market struggled. South Korea recorded the largest gains, whereas Thailand posted the largest decline. In Malaysia, the FBMKLCI ended the week with a negative return.
- In the bond market, the yield on the 10-year US Treasury note held around 4.39%, staying within a narrow range as investors weighed rising geopolitical risks and an uncertain economic outlook. Demand for safe-haven assets kept yields under pressure this week, driven by escalating tensions between Israel and Iran and the possibility of US involvement. (It’s worth noting that bond prices move inversely to bond yields.)
Macro Factors
- In the U.S., market sentiments remained cautious. On the monetary policy front, the Federal Reserve kept interest rates unchanged earlier this week and reaffirmed its cautious, data-dependent stance. Chair Jerome Powell warned that inflation could rise in the coming months due to the impact of new tariffs, while the Fed’s updated projections included two 25 basis point rate cuts in 2025, alongside weaker growth forecasts. Retail sales declined 0.9% month-over-month in May 2025, following a downwardly revised 0.1% drop in April.2
- In Europe, investor sentiment was weighed down by escalating tensions in the Middle East. On the monetary policy front, the Bank of England held interest rates steady as they continue to navigate persistent inflation and global uncertainty. In contrast, central banks in Norway and Switzerland moved to cut borrowing costs in a bid to support their economies. Eurozone consumer price inflation was confirmed at 1.9% year-on-year in May 2025, down from 2.2% in April and dipping below the European Central Bank’s 2.0% target he annual core inflation rate in the Euro Area, which excludes prices for energy, food, alcohol and tobacco, fell to 2.3% in May 2025 from 2.7% in the previous month, aligned with preliminary estimates.3
- In China, as widely anticipated, the central bank kept its key lending rates at historic lows during the June rate-setting. The one-year loan prime rate was left unchanged at 3.0%, while the five-year LPR remained steady at 3.5%, following last month’s 10 bps rate cut and deposit rate reductions by major state-owned banks. Industrial production rose by 5.8% yoy in May 2025, easing from April's 6.1% growth. Retail sales increased by 6.4% yoy in May 2025, accelerating from 5.1% in the previous month.4
- In Malaysia, retail sales increased by 4.7% year-on-year in April 2025, easing from 6.6% in the previous month.5
Investment Strategy6
- Market volatility is likely to remain elevated in the weeks ahead as investors assess rapidly shifting tariff developments and consider the potential implications for growth, inflation, central bank policy, and financial markets. Nevertheless, we believe incremental news flow could become more supportive as we approach the second half of the year, as clarity emerge with countries beginning negotiation and offering concessions.
- 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, 20 June 2025
2 Bloomberg, Bureau of Labor Statistics (BLS), ISM, S&P Global, US Federal Board, 20 June 2025
3 S&P Global, ECB, Factset, Bank of England (BoE), 20 June 2025
4 Bloomberg, National Bureau of Statistic China, CEWC, 20 June 2025
5 Department of Statistic Malaysia, S&P Global, 20 June 2025
6 Principal view, 20 June 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.