23 February 2024 Weekly Market Recap

5 min read     I     Date: 26 February 2024

Market Data

Asset Class Currency1-wk1-mthYTD2023

MSCI World USD1.5%4.5%5.2%21.7%
S&P 500 USD1.7%4.7%6.7%24.2%
Nasdaq USD1.4%3.1%6.7%53.8%
Stoxx 600-Europe EUR1.2%5.5%3.9%12.7%
MSCI Asia Pac ex-Japan USD1.3%6.0%-0.1%4.5%
ASEAN USD-0.2%3.5%-0.3%0.7%
Shanghai Shenzhen CSI 300 Index CNY3.7%8.0%1.6%-11.4%
Hang Seng Index HKD2.4%8.9%-2.0%-13.7%
Shanghai Stock Exchange Composite Index CNY4.9%8.4%0.9%-3.7%
FBMKLCI MYR1.0%3.6%6.4%-2.8%

Fixed Income
Bberg Barclays Global Agg Index USD0.4%-0.2%-2.7%5.7%
JPM Asia Credit Index-Core USD0.2%0.8%0.2%9.9%
Asia Dollar Index USD0.0%-0.2%-1.8%-1.5%
Bloomberg Malaysia Treasury - 10 Years MYR-0.1%0.2%0.5%6.4%

Top Performing Principal Funds
(1 month return as of 31 January 2024)
Equities   1-mth as of (31 Jan 2024)YTD as of (31 Jan 2024) 
Principal Next-G Connectivity Fund - Class USD   7.6%7.6% 
Principal Malaysia Titans Plus Fund - Class MYR   7.0%7.0% 
Principal Malaysia Titans Fund   7.0%7.0% 
Fixed Income      
Principal Islamic Lifetime Sukuk Fund   0.6%0.6% 
Principal Lifetime Bond Fund   0.5%0.5% 
Principal Conservative Bond Fund - Class A   0.5%0.5% 


Source: Bloomberg, market data is as of 23 February 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.
*The fund performance was referenced from the daily performance report, data was extracted from Lipper.
*Past performance is not an indication of future performance.                    

Market Review1

  1. The global financial markets concluded the week with majority experiencing positive returns. In developed markets, Europe and the United States witnessed the largest gains, followed by Japan. 
  2. Across Asia, overall market performance was positive, with China onshore and offshore leading the gains, followed by Taiwan and India. In Malaysia, the FBMKLCI also recorded positive gains, driven by optimism in the regional market.  
  3. Turning to the bond market, the10-year U.S. Treasury note had a relatively muted return, with yields stabilising around 4.2% range. This comes as investors assessed the future path of interest rates following recent comments from Federal Reserve speakers. (Bond prices move in the opposite direction of bond yields)

Macro Factors

  1. In the US, the initial jobless claims decreased by 12,000 to 201,000 for the week ending February 17th, well below market expectations of 218,000. The data, combined with a strong jobs report from January, gives the Federal Reserve more flexibility to hold rates higher if inflation remain high. The S&P Global Flash Manufacturing PMI* rose to 51.5 in February from 50.7 in January, indicating growth in factory output. Meanwhile, the services PMI* eased to 51.3 in February from 52.5 in the earlier month, missing market expectations of 52. 2
  2. In Europe, headline inflation was confirmed at 2.8% in January, slightly lower from December's 2.9%. Core inflation, which excludes volatile energy and food prices, cooled for the sixth consecutive month to 3.3%, reaching its lowest point since March 2022. The HCOB manufacturing PMI decreased to 46.1 in February from 46.6 in January. Meanwhile, the services PMI increased to 50 in February, higher than January’s 48.4.3
  3. In China, the PBOC* reduced its reference rate for mortgages, specifically the 5-year loan prime rate, by 25bps to 3.95% at the February fixing. It was the first rate cut since June 2023 and the largest since that rate was introduced in 2019. Meanwhile, the 1-year rate was maintained at 3.45%.4
  4. In Malaysia, the annual inflation stood at 1.5% in January, holding steady for the third straight month while staying at its lowest since February 2021. Trade surplus narrowed to MYR 10.1 billion in January from MYR 18.1 billion in the same month of the previous year, as imports surged due to higher purchases from all sectors.

Investment Strategy5

We advocate a balanced allocation 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 that the central bank’s hiking cycle may have reached its peak. 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, 23 February 2024  
2 Bloomberg, Bureau of Labor Statistics (BLS), ISM, S&P Global, US Federal Board, 23 February 2024
3 S&P Global, ECB, Factset, Bank of England (BoE), 23 February 2024
4 Bloomberg, National Bureau of Statistic China, CEWC, 23 February 2024
5 Principal view, 23 February 2024

*PMI stands for Purchasing Manufacturing Index
*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

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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.