5 min read I Date: 2 April 2023
|MSCI Asia Pac ex-Japan||-0.7%||0.2%||
|Shanghai Shenzhen CSI 300 Index||-0.1%||0.7%||4.1%||-21.6%|
|Hang Seng Index||-0.9%||0.6%||0.6%||-15.5%|
|Shanghai Stock Exchange Composite Index||0.7%||2.4%||7.6%||-15.1%|
|Bberg Barclays Global Agg Index||0.7%||0.7%||3.5%||-16.2%|
|JPM Asia Credit Index-Core||0.2%||1.6%||4.1%||-13.0%|
|Asia Dollar Index||-0.2%||-0.7%||-0.5%||-6.9%|
|Malaysia Corporate Bond Index||0.4%||1.2%||3.8%||1.5%|
Top Performing Principal Funds (weekly)
|Principal Global Multi Asset Income MYR||0.4%||0.2%||1.8%||-1.6%|
|Principal Islamic Global Selection Mdt Csv MYR|
|Principal Islamic Global Sukuk USD||0.5%||0.9%||1.8%||-8.1%|
Source: Bloomberg, market data is as of 28 April 2023.
*Top performing funds were based on weekly performance.
*Past performance is not an indication of future performance.
The global financial markets largely had a mixed performance over the week. In developed markets, Europe closed with a negative return, while United States (US) and Japan recorded positive gains.
In Asia, most Asian markets experienced modest fluctuations throughout the week, with Taiwan and South Korean shares seeing the largest drop in value.
Malaysia's trading volumes were muted for the week due to a public holiday on Monday for the Hari Raya Aidilfitri celebration, resulting in a shortened trading week.
In the bond market, the US Treasury yields modestly decreased amid volatility ahead of the following week’s Federal Reserve policy meeting, where an additional quarter-point rate hike is widely expected. (Bond prices move in the opposite direction of bond yields)
In the US, more than 50% of the companies in the S&P 500 have reported their Q1 2023 earnings, with 80% of those beating EPS expectations, according to data from FactSet. However, other market data has been concerning. On Thursday, the US Commerce Department announced that GDP growth in the first quarter of 2023 slowed to an annualised and seasonally adjusted rate of 1.1%, which was nearly half of what was expected.2
In Europe, preliminary data released on Friday showed that the eurozone economy expanded less than expected in the first quarter of 2023, indicating a sluggish start to the year. According to the data, gross domestic product (GDP) in the region ticked up by just 0.1%, which fell short of the projected growth rate.3
In China, stocks ended with a mixed performance ahead of a five-day holiday, with Beijing's reaffirmation of its supportive policy stance easing concerns about an uneven economic recovery. Meanwhile, the People's Bank of China (PBOC) extended its streak of seven-day reverse repurchase agreements for the 11th consecutive day, injecting a net total of RMB 637 billion to ensure sufficient liquidity at month-end. In other news, profits at industrial firms in China fell 21.4% from January to March from a year earlier, slightly better than the 22.9% drop recorded in the first two months of 2023.4
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 continues to be selective with focus on the themes of Quality, Income and Sustainability..
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.
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.
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.
1 Bloomberg, 28 April 2023
2 Bloomberg, US Federal Board, 28 April 2023
3 European Central Bank (ECB), 28 April 2023
4 Bloomberg, National Bureau of Statistic China, 28 April 2023
5 Principal view, 28 April 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.