5 min read I Date:31 March 2023
|MSCI Asia Pac ex-Japan||1.9%||2.5%||3.6%||-19.7%|
|Shanghai Shenzhen CSI 300 Index||0.6%||-0.5%||4.6%||-21.6%|
|Hang Seng Index||2.4%||3.1%||3.1%||-15.5%|
|Shanghai Stock Exchange Composite Index||0.2%||-0.2%||5.9%||-15.1%|
|Bberg Barclays Global Agg Index||-0.4%||3.2%||3.0%||-16.2%|
|JPM Asia Credit Index-Core||-0.7%||1.0%||2.8%||-13.0%|
|Asia Dollar Index||-0.1%||1.1%||0.2%||-6.9%|
|Malaysia Corporate Bond Index||-0.1%||0.5%||2.5%||1.5%|
Top Performing Principal Funds (weekly)
|Principal Global Sustainable Growth MYR-H||2.7%||3.5%||6.0%||-18.8%|
|Principal Biotechnology Discovery USD||1.9%||-0.2%||-0.3%||-12.7%|
|Principal Institutional Bond 4||0.1%||0.1%||0.9%||-0.4%|
Source: Bloomberg, market data is as of 31 March 2023.
*Top performing funds were based on weekly performance.
*Past performance is not an indication of future performance.
- The global financial market posted solids gain over the week, led by receding concerns over the recent banking sector turmoil and increase in confidence that the peak in bond yields has passed and won't rise much more. In developed markets, the United States (US), Europe, and Japan closed marginally higher over the week.
- In Asia, majority of the markets rallied over the week. China stocks gained ground as robust economic data, along with supportive comments from Beijing, bolstered confidence in the country's growth outlook.
- In Malaysia, the FTSE Bursa Malaysia KLCI (FBM KLCI) made marginal gains for the week, supported by easing concerns over the global uncertainties and US Federal monetary policy.
- In the bond market, performance was flat over the week as US Treasury yields took a breather from the worst of the elevated volatility. The benchmark 10-year U.S. Treasury saw a small rise in yield. (Bond prices move in the opposite direction of bond yields)
- In the US, bank stocks rebounded after the decline caused by the collapses of Silicon Valley Bank and Signature Bank, with the KBW Bank Index outpacing the broad market's gains. The US core personal consumption expenditure (PCE) price index data (excluding food and energy) for February was positive, coming in below the expected 4.7%.2
- In Europe, the annual consumer price growth slowed to 6.9% in March from 8.5% in February, lower than the consensus forecast of 7.1%, due to a decrease in energy costs.3
- In China, Premier Li Qiang, who recently became the country's second-ranking official, reiterated China's dedication to opening its economy and implementing reforms that promote international business and stimulate consumption. China's official manufacturing Purchasing Managers' Index (PMI) for March came in at 51.9, surpassing expectations, while the nonmanufacturing PMI reached 58.2, the highest since May 2011.1
The equity and fixed-income markets completed a volatile but positive first quarter, and while the coast is not yet clear, it is likely that investors’ patience will be rewarded. In the wake of recent global uncertainties, investors may also consider focusing on high-quality income to weather these uncertain times. Our broad strategy continues to be selective with focus on the themes of Quality, Income and Sustainability.
- On equities, we prefer quality names as the macro and geopolitical backdrop remain uncertain. We are positive on Asia as sector earnings are poised to be rerated 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.
1 Bloomberg, 31 March 2023
2 Bloomberg, US Federal Board, 31 March 2023
3 Bloomberg, FactSet, 31 March 2023
4 Principal view, 31 March 2023
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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.
31 March 2023