5 min read I Date: 6 March 2026
Market Data
| Asset Class | Currency | 1-wk | 1-mth | YTD | 2025 | |
| Equities | ||||||
| MSCI World | USD | -3.27% | -2.62% | -0.5% | 19.5% | |
| S&P 500 | USD | -2.0% | -2.7% | -1.5% | 16.4% | |
| Nasdaq | USD | -1.3% | -1.7% | -2.4% | 20.2% | |
| Russell 2000 | USD | -4.1% | -5.4% | 1.7% | 11.3% | |
| Stoxx 600-Europe | EUR | -5.5% | -2.9% | 1.2% | 16.7% | |
| Nikkei 225 | JPY | -5.5% | 2.6% | 10.4% | 26.2% | |
| KOSPI | KRW | -10.6% | 9.9% | 32.4% | 75.3% | |
| MSCI Asia Pac ex-Japan | USD | -6.2% | 1.2% | 7.2% | 26.9% | |
| ASEAN | USD | -5.8% | -2.5% | 0.6% | 12.0% | |
| Shanghai Shenzhen CSI 300 | CNY | -1.1% | 0.2% | 0.5% | 17.7% | |
| Hang Seng | HKD | -3.3% | -3.0% | 0.2% | 28.2% | |
| Shanghai Stock Exchange Composite | CNY | -1.0% | 1.3% | 3.7% | 18.6% | |
| FBM Emas Shariah | MYR | -0.1% | 0.9% | 0.8% | -3.9% | |
| FBMKLCI | MYR | 0.1% | -0.9% | 2.1% | 2.4% | |
| Fixed Income | ||||||
| Bberg Barclays Global Agg | USD | -1.8% | -0.4% | 0.3% | 8.2% | |
| JPM Asia Credit Index-Core | USD | -0.9% | 0.0% | 0.6% | 9.1% | |
| Asia Dollar Index | USD | -1.1% | -0.2% | 0.0% | 3.3% | |
| Top Performing Principal Funds | ||||||
| Equities | 1-mth as of (28 Feb 2026) | YTD as of (28 Feb 2026) | ||||
| Principal Islamic Asia Pacific Dynamic Equity MYR | 9.10 | 20.69 | ||||
| Principal Asia Pacific Dynamic Growth - USD | 8.03 | 19.18 | ||||
| Principal Dynamic Growth - USD | 8.02 | 18.13 | ||||
| Balanced | ||||||
| Principal Asia Pacific Dynamic Mixed Asset MYR | 4.04 | 9.55 | ||||
| Principal Islamic Lifetime Balanced | 3.14 | 6.43 | ||||
| Principal Heritage Balanced MYR Hedged | 2.15 | 6.16 | ||||
| Fixed Income | ||||||
| Principal Lifetime Enhanced Bond | 0.72 | 0.62 | ||||
| Principal Sustainable Dynamic Bond MYR | 0.34 | 0.61 | ||||
| Principal Sustainable Conservative Bond MYR | 0.29 | 0.58 |
Source: Bloomberg, market data is as of 6 March 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, global equity markets delivered a broadly negative performance. Major U.S. indices recorded sharp weekly losses as investors grappled with surging energy costs and geopolitical shockwaves. The primary driver was the severe escalation of military conflict in the Middle East, with strikes on Iran triggering a "risk-off" flight from equities. European markets also succumbed to selling pressure as the threat of an energy-driven inflation spike loomed.
In Asia, markets were dominated by caution this week. While China remained a focal point due to the "Two Sessions" and the unveiling of the 15th Five-Year Plan, sentiment was weighed by a realistic GDP growth target of 4.5%–5.0%. In Malaysia, the FBM KLCI experienced a mixed week but managed to edge up to 1,718 on Friday, supported by buying in the selected blue chips.
- In the bond market, the US 10-year Treasury yield climbed toward the 4.15% range (as of March 6). The rise in yields reflects heightened investor anxiety over a potential resurgence in inflation driven by oil prices, which may trigger a "higher-for-longer" interest rate environment. (It's worth noting that bond prices move inversely to bond yields)
Macro Factors
- In the United States, investors were shaken by geopolitical volatility and disappointing labor data. This coordinated decline reflects deep investor anxiety over the persistent rise in WTI crude oil prices and the unexpected loss of 92K non-farm payroll jobs in February. The resulting jump in unemployment to 4.4% reinforces fears of a stagflationary environment where rising input costs collide with cooling consumer demand. 2
- In Europe, the bond yields rose further as the rally for natural gas and crude oil prices supported the outlook that the ECB may have to respond with a rate hike, pressuring banks as higher credit costs hurt their lending outlook. Meanwhile, the economy grew 1.2% year-on-year in the fourth quarter of 2025, revised down from an initial estimate of 1.3%. The figure marks the slowest annual growth in more than a year, easing from a 1.4% expansion in the previous quarter. 3
- In China, market sentiments were largely focused on the opening of the annual "Two Sessions" parliamentary meetings, where the government officially set a 2026 GDP growth target of 4.5% to 5%. Earlier in the week, February Purchasing Managers' Index (PMI) data revealed a divergence between official and private sectors: the official NBS manufacturing PMI fell to 49.0, indicating a second month of contraction due to the Spring Festival holiday, while the private Caixin (RatingDog) manufacturing PMI unexpectedly rose to 52.1, its highest since late 2020. Meanwhile, the services sector showed resilience, with the Caixin services PMI climbing to 56.7 and official non-manufacturing figures edging up to 49.5, supported by strong holiday-related demand in travel and entertainment.4
- In Malaysia, BNM kept its key interest rate unchanged at 2.75% during its March 2026 monetary policy meeting, in line with market expectations. The Board said the current policy stance remains appropriate and supportive of economic growth while maintaining price stability. Headline and core inflation in January 2026 stood at 1.6% and 2.3%, respectively. While global commodity prices may face heightened volatility due to recent developments, the impact on domestic inflation is expected to be contained. Meanwhile, the Malaysian economy grew 5.2% in 2025, supported by strong domestic demand, higher E&E exports, and robust tourism. Growth is expected to continue in 2026, backed by solid domestic demand, rising employment, and supportive policies. The Board noted uncertainties stemming from the Middle East conflict but will continue monitoring global developments and assessing risks to Malaysia's growth and inflation.5
Investment Strategy6
Volatility has dominated global financial markets since the start of this year, with geopolitical developments, concerns over AI competition, and inflation worries weighing on investor sentiment. History suggests that while near term volatility may cause a market selloff, temporary drawdowns rarely have a lasting impact on long-term equity returns once the initial uncertainty fades.
While past performance does not guarantee future returns, history can certainly serve as a guide for navigating the future. This aligns with our view that investors' best defence against uncertain times is diversification. In this environment, 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, 6 March 2026
2 Bloomberg, Bureau of Labor Statistics (BLS), ISM, S&P Global, US Federal Board, 6 March 2026
3 S&P Global, ECB, Factset, Bank of England (BoE), 6 March 2026
4 Bloomberg, National Bureau of Statistic China, CEWC, 6 March 2026
5 Department of Statistic Malaysia, S&P Global, 6 March 2026
6 Principal view, 6 March 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.