5 min read I Date: 23 January 2026
Market Data
| Asset Class | Currency | 1-wk | 1-mth | YTD | 2024 | |
| Equities | ||||||
| MSCI World | USD | -0.2% | 0.9% | 1.7% | 19.5% | |
| S&P 500 | USD | -0.3% | 0.1% | 1.0% | 16.4% | |
| Nasdaq | USD | 0.3% | 0.0% | 1.4% | 20.2% | |
| Russell 2000 | USD | -0.3% | 5.0% | 7.5% | 11.3% | |
| Stoxx 600-Europe | EUR | -1.0% | 3.4% | 2.7% | 16.7% | |
| Nikkei 225 | JPY | -0.2% | 6.9% | 7.0% | 26.2% | |
| KOSPI | KRW | 3.1% | 21.2% | 18.4% | 74.8% | |
| MSCI Asia Pac ex-Japan | USD | 0.5% | 6.8% | 5.6% | 26.9% | |
| ASEAN | USD | 1.4% | 3.4% | 3.5% | 12.0% | |
| Shanghai Shenzhen CSI 300 Index | CNY | -0.7% | 5.3% | 2.2% | 17.7% | |
| Hang Seng Index | HKD | -0.4% | 3.5% | 4.1% | 28.2% | |
| Shanghai Stock Exchange Composite Index | CNY | 0.8% | 5.4% | 4.0% | 18.6% | |
| FBM Emas Shariah | MYR | 0.0% | 1.4% | 1.5% | -3.9% | |
| FBMKLCI | MYR | 0.4% | 2.4% | 2.2% | 2.4% | |
| Fixed Income | ||||||
| Bberg Barclays Global Agg Index | USD | 0.5% | 0.3% | 0.1% | 8.2% | |
| JPM Asia Credit Index-Core | USD | -0.1% | 0.4% | 0.2% | 9.1% | |
| Asia Dollar Index | USD | 0.2% | 0.4% | -0.2% | 3.3% | |
| Top Performing Principal Funds | ||||||
| Equities | 1-mth as of (31 December 2025) | YTD as of (31 December 2025) | ||||
| Principal China Direct Opportunities USD | 5.91 | 35.60 | ||||
| Principal Malaysia Opportunities | 4.97 | 1.14 | ||||
| Principal Malaysia Titans | 4.35 | 2.03 | ||||
| Balanced | ||||||
| Principal Lifetime Balanced | 3.07 | -0.39 | ||||
| Principal Lifetime Balanced Income | 2.60 | -0.16 | ||||
| Principal Dynamic Enhanced Malaysia Income | 2.54 | -0.43 | ||||
| Fixed Income | ||||||
| Principal Conservative Bond | 0.32 | 4.94 | ||||
| Principal Lifetime Bond | 0.29 | 5.22 | ||||
| Principal Deposit | 0.28 | 3.51 |
Source: Bloomberg, market data is as of 23 January 2026.
*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 saw a mixed performance across global financial markets, as most major U.S. indices, including the Dow Jones, S&P 500, and Nasdaq, closed in negative territory. Japanese and European markets also experienced declines.
Across Asia, market activity was similarly fragmented: South Korea and Taiwan region posted strong gains, while indices in India declined. In Malaysia, the FBM KLCI managed a slight gain.
- In the bond market, the yield on the 10-year US Treasury moved higher to the 4.23% range (as of January 23rd) as investors monitored the economic outlook and fears eased around trade and geopolitics. (It’s worth noting that bond prices move inversely to bond yields)
Macro Factors
- In the United States, Trump administration initially threatened several European countries that opposed his plan to take over Greenland with new tariffs, before reversing course after securing a framework agreement with NATO for a potential future deal. While details of the agreement remain unclear, markets are speculating it could involve mineral rights and the installation of missile systems. On macro, annual PCE inflation accelerated to 2.8% from 2.7% as expected. Core PCE inflation also edged up to 2.8% from 2.7% in October and in line with expectations. The PCE index remains the Federal Reserve’s preferred inflation gauge. 2
- In Europe, industrial production increased by 0.7% month-on-month in November 2025, matching October’s pace and exceeding market expectations of 0.5% growth. Meanwhile, the Eurozone’s trade surplus narrowed to €9.9 billion in November 2025 from €15.4 billion a year earlier, below market expectations of €15.2 billion, as exports fell 3.4% while imports decreased 1.3%. Key catalysts likely to support European equity performance in 2026 include a gradual economic recovery, significant fiscal spending on infrastructure and defence, and attractive relative valuations compared to U.S. markets. 3
- In China, the central bank signalled it will maintain a moderately loose monetary policy in 2026, using tools such as reserve requirement ratio cuts and interest rate reductions to ensure adequate liquidity. Markets are also watching for fiscal stimulus as Beijing contends with deflationary pressures, weak consumer demand, and a struggling property sector. The PBOC injected CNY 900 billion (USD 128.54 billion) into financial institutions on January 23 through its one-year Medium-Term Lending Facility (MLF), aiming to maintain ample liquidity in the banking system. With CNY 200 billion in MLF funds maturing this month, the operation resulted in a net liquidity injection of CNY 700 billion. 4
- In Malaysia, Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) unchanged at 2.75%, in line with market consensus. The MPC assessed that the current policy stance remains appropriate and supportive of economic activity, while ensuring price stability. Going forward, the Committee reiterated that it will closely monitor evolving domestic and external developments and continue to assess the balance of risks to the growth and inflation outlook. 5
Investment Strategy6
Global markets staged a relief rally after US President Donald Trump dropped the threat to impose 10% tariffs on European countries after announcing he reached a “framework of a future deal” on Greenland with NATO Secretary General Mark Rutte. The latest stock rebound serves as a reminder that favorable fundamentals remain in the driver’s seat. We maintain the view that staying invested via a diversified portfolio remains the most effective way to manage market uncertainty.
The market in 2026 is projected to continue its positive performance, driven by optimism in abundant liquidity, stable macroeconomics, and the ongoing growth in digital transformation. Investors are advised to adhere to long-term principles—using diversification and a phased-in strategy—to manage timing risk, reduce emotion, and benefit from market fluctuations. Our strategy focuses on quality growth companies with domestic earnings, supplemented by quality bonds for portfolio stability during uncertainty.
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Sources:
1 Bloomberg, 23 January 2026
2 Bloomberg, Bureau of Labor Statistics (BLS), ISM, S&P Global, US Federal Board, 23 January 2026
3 S&P Global, ECB, Factset, Bank of England (BoE), 23 January 2026
4 Bloomberg, National Bureau of Statistic China, CEWC, 23 January 2026
5 Department of Statistic Malaysia, S&P Global, 23 January 2026
6 Principal view, 23 January 2026
*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
*Caixin decided to end its title sponsorship of the S&P Global China Purchasing Managers' Index (PMI) as of July 2025. This decision was part of a "strategic adjustment" for Caixin, aligning with its long-term development needs. Caixin had been the title sponsor since 2015, using it as a way to expand into the data sector and analyze China's economic transformation. Following Caixin's departure, RatingDog (Shenzhen) Information Technology Co., Ltd., a Chinese credit research and bond rating company, successfully acquired the exclusive naming rights for the "S&P Global China PMI". Starting with the August 2025 data release, the index was officially renamed the "RatingDog China PMI". S&P Global continues to be responsible for compiling and releasing the monthly report.
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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.