5 min read I Date:30 January 2023
|MSCI Asia Pac ex-Japan||USD||1.7%||10.2%||10.7%||-19.7%|
|Bberg Barclays Global Agg Index||USD||0.0%||3.3%||3.3%||-16.2%|
|JPM Asia Credit Index-Core||USD||-0.3%||3.2%||3.4%||-13.0%|
|Asia Dollar Index||USD||0.0%||2.5%||1.9%||-6.4%|
|Malaysia Corporate Bond Index||MYR||0.07%||2.08%||1.99%||1.51%|
Top Performing Principal Funds
|Principal Global Technology USD||USD||4.4%||13.9%||12.0%||-46.1%|
|Principal Next-G Connectivity USD||USD||3.4%||13.9%||12.9%||-43.3%|
|Principal Islamic Institutional Sukuk||MYR||0.1%||1.4%||1.3%||1.2%|
Source: Bloomberg, market data is as of 27 January 2023
*Top performing funds were based on weekly performance.
*Past performance is not an indication of future performance.
- Developed markets rose for the week, where the United States (U.S.), Europe, and Japan welcomed some positive signals that the global economy may achieve a soft landing (soft landing refers to an effort on the part of the central bank to slow the economy and bring down inflation, while preventing the country from entering a recession).
- Asia markets were broadly higher for the week, with Hong Kong’s Hang Seng Index adding gains on the first trading session following the New Year holidays.
- The FTSE Bursa Malaysia KLCI (FBM KLCI) ended lower for the week driven by muted trading activities after the Chinese New Year holiday-shortened trading week.
- Global bond performances were mixed for the week with the yield on the benchmark 10-year U.S. Treasury note increased moderately as a key inflation report watched by the U.S. Federal Reserve (Fed) indicated a sizable increase in prices. (Note: Bond prices and yields generally move in opposite directions).
- In the U.S., a better-than-expected fourth-quarter gross domestic product report last week (quarter on quarter: actual 2.9% vs consensus 2.6%) helped to ignite hopes that the Fed may manage a soft landing.2
- In Europe, the European Central Bank (ECB) policymakers once again signalled that they would maintain the current course of rate hikes. United Kingdom’s (U.K.) inflation slowed for a second consecutive month in December 2022 driven by lower gasoline prices.3
- Financial markets in mainland China were closed for the Lunar New Year holiday, which started on 21January 2023, and will reopen on Monday, 30 January 2023. China’s gross domestic product rose by 2.9% in the fourth quarter of 2022 and expanded by 3.0% for the full year. The annual growth pace, despite missing the official target of around 5.5% set in March 2022, surpassed the initial forecasts by economists.4
In the near term, market may still face headwinds in the form of central bank tightening, economic slowdown, and geopolitical conflict. Our broad strategy continues to favour selective approaches, and focus on the themes of Quality Growth, Income and Sustainability.
- On equities, we prefer quality factors as the macro and geopolitical backdrop remain uncertain. We are positive on Asia as sector earnings are poised to rerate supported by China’s rapid reopening.
- On Fixed Income, our preference remains on investment grade and that of longer duration. As we foresee volatility to stay elevated, we are keeping a bias for higher quality credit. We like bonds with an investment grade rating, ideally in the AA or A, and which could operate in a business that is somewhat immune to the economic cycle.
- For medium to long-term exposure, we prefer assets that offer structural opportunities. The shift towards energy, environmental, food, and technological security are likely to be among the key long-term growth drivers in the years to come.
1Bloomberg, 27 January 2023
2U.S. Bureau of Labor Statistics, 26 January 2023
3Bloomberg, 26 January 2023
4People's Bank of China (PBOC), 16 January 2023
5Principal view, 30 January 2023
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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.