5 min read I Date: 9 June 2025
Market Data
| Asset Class | Currency | 1-wk | 1-mth | YTD | 2024 | |
| Equities | ||||||
| MSCI World | USD | 1.3% | 6.3% | 5.8% | 17.0% | |
| S&P 500 | USD | 1.5% | 7.1% | 2.1% | 23.3% | |
| Nasdaq | USD | 2.0% | 10.1% | 3.6% | 24.9% | |
| Russell 2000 | USD | 3.2% | 7.6% | -4.4% | 10.0% | |
| Stoxx 600-Europe | EUR | 0.7% | 3.3% | 9.9% | 6.0% | |
| Nikkei 225 | JPY | -0.6% | 2.5% | -5.5% | 19.1% | |
| MSCI Asia Pac ex-Japan | USD | 2.3% | 4.7% | 9.6% | 7.6% | |
| ASEAN | USD | 0.5% | 1.1% | 4.2% | 7.7% | |
| Shanghai Shenzhen CSI 300 Index | CNY | 1.0% | 1.8% | -1.4% | 14.7% | |
| Hang Seng Index | HKD | 2.3% | 5.5% | 19.5% | 17.5% | |
| Shanghai Stock Exchange Composite Index | CNY | 1.2% | 2.2% | 1.1% | 12.7% | |
| FBMKLCI | MYR | 0.6% | -1.2% | -7.6% | 12.8% | |
| Fixed Income | ||||||
| Bberg Barclays Global Agg Index | USD | -0.1% | -0.1% | 5.2% | -1.7% | |
| JPM Asia Credit Index-Core | USD | 0.3% | 1.5% | 2.9% | 6.0% | |
| Asia Dollar Index | USD | 0.2% | 0.2% | 3.6% | -4.1% | |
| Bloomberg Malaysia Treasury - 10 Years | MYR | 0.1% | 1.1% | 3.7% | 4.3% | |
| Top Performing Principal Funds | ||||||
| Equities | 1-mth as of (31 May 2025) | YTD as of (31 May 2025) | ||||
| Principal Next-G Connectivity USD | 11.35 | 2.29 | ||||
| Principal Global Technology USD | 11.11 | -0.58 | ||||
| Principal Islamic Global Technology USD | 10.89 | -3.48 | ||||
| Balanced | ||||||
| Principal Islamic Global Selection Moderate USD | 4.63 | 2.58 | ||||
| Principal World Selection Moderate Aggressive USD | 4.34 | 4.00 | ||||
| Principal World Selection Moderate USD | 3.12 | 3.71 | ||||
| Fixed Income | ||||||
| Principal Lifetime Bond | 0.77 | 2.84 | ||||
| Principal Conservative Bond | 0.70 | 2.70 | ||||
| Principal Islamic Lifetime Sukuk | 0.69 | 2.58 |
Source: Bloomberg, market data is as of 6 June 2025.
*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, global financial markets exhibited mixed performance. Among developed markets, the United States and Europe experienced positive gains, while Japan experience marginal decline.
- Across Asia, market performance was largely negative. South Korea experienced the largest gains, whereas Thailand posted the largest decline. In Malaysia, the FBMKLCI closed the week marginally green.
- In the bond market, the U.S. 10-year Treasury yield ticked higher into the 4.5% range on the back of hotter-than-expected U.S. jobs data, as investors breathed a sigh of relief that the U.S. economy remains on solid footing. (It’s worth noting that bond prices move inversely to bond yields.)
Macro Factors
- In the U.S., market sentiments remained capped by the recent public feud between President Trump and Elon Musk, renewed US-China trade uncertainty, and growing signs of labor market weakness. Trump criticized Musk over his opposition to a major tax-and-spending bill, suggesting he might revoke government contracts and subsidies for Musk’s companies. Earlier optimism from a phone call between Trump and China’s President Xi Jinping faded as no concrete progress was reported, despite plans for further trade talks. Meanwhile, unemployment claims rose to 247,000 last week.2
- In Europe, ECB delivered its eighth interest rate cut in the recent meeting. The ECB lowered borrowing costs by 25 basis points and revised its inflation forecasts downward for both 2025 and 2026. While the rate cut had been largely priced in, the sharper-than-expected downward revision to the 2026 inflation outlook caught some market participants by surprise. ECB President Lagarde acknowledged that the inflation outlook remains more uncertain than usual.3
- In China, sentiments are dampened by the resurface of heightened uncertainty on Sino-US trade relations. The Caixin China General Composite PMI dropped to 49.6 in May 2025 from 51.1 in the previous month, signalling the first contraction in private sector activity since December 2022. While the services sector saw a slight uptick, a sharper decline in manufacturing dragged the overall index down.4
- In Malaysia, the S&P Global Malaysia Manufacturing PMI rose slightly to 48.8 in May 2025 from April’s four-month low of 48.6, though it remained below the 50-mark for the 12th consecutive month, signalling continued contraction in factory activity.5
Investment Strategy6
- Market volatility is likely to remain elevated in the weeks ahead as investors assess rapidly shifting tariff developments and consider the potential implications for growth, inflation, central bank policy, and financial markets. Nevertheless, we believe incremental news flow could become more supportive as we approach the second half of the year, as clarity emerge with countries beginning negotiation and offering concessions.
- We reiterate the importance of to keeping sight of longer-term investing principles that can boost risk-adjusted rates of return through portfolio diversification and an emphasis on quality growth and income to navigate the volatility ahead. Our strategy has also emphasized focusing on companies that demonstrate the attributes of large-cap defensiveness, with earnings that are more domestically focused. Additionally, quality bonds have historically offered portfolio stability, especially in times of uncertainty.
- We remain a slight preference for equities over fixed income. Key themes for 2025 include: i) the impact of policy shifts on China's recovery; ii) the U.S. economic outlook; and iii) the influence of tariffs and geopolitical risks on asset prices.
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Sources:
1 Bloomberg, 6 June 2025
2 Bloomberg, Bureau of Labor Statistics (BLS), ISM, S&P Global, US Federal Board, 6 June 2025
3 S&P Global, ECB, Factset, Bank of England (BoE), 6 June 2025
4 Bloomberg, National Bureau of Statistic China, CEWC, 6 June 2025
5 Department of Statistic Malaysia, S&P Global, 6 June 2025
6 Principal view, 6 June2025
*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
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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.