5 min read I Date: 10 April 2023
|MSCI Asia Pac ex-Japan||-0.3%||-0.2%||3.3%||-19.7%|
|Shanghai Shenzhen CSI 300 Index||1.8%||1.8%||6.5%||-21.6%|
|Hang Seng Index||-0.3%||-1.0%||2.8%||-15.5%|
|Shanghai Stock Exchange Composite Index||1.7%||1.3%||7.7%||-15.1%|
|Bberg Barclays Global Agg Index||0.7%||4.3%||3.7%||-16.2%|
|JPM Asia Credit Index-Core||1.3%||1.9%||4.1%||-13.0%|
|Asia Dollar Index||0.0%||1.0%||0.2%||-6.9%|
|Malaysia Corporate Bond Index||0.3%||1.0%||2.7%||1.5%|
Top Performing Principal Funds (weekly)
|Principal Commodity USD||2.4%||1.2%||2.4%||-20.8%|
|Principal Heritage Growth SGD|
|Principal Asia Dynamic Bond MYR||0.2%||0.9%||0.3%||-4.7%|
Source: Bloomberg, market data is as of 7 April 2023.
*Top performing funds were based on weekly performance.
*Past performance is not an indication of future performance.
- The holiday-shortened week saw global financial markets clocking in a mixed performance. In developed markets, Europe closed marginally higher, whereas the United States (US) and Japan recorded declines over the week.
- In Asia, majority of the markets rallied over the week. Chinese equities advanced as investor optimism was buoyed by a rebound in services activity and a recovery in the property sector.
- In Malaysia, the FTSE Bursa Malaysia KLCI (FBM KLCI) remained muted over the week despite easing concerns over the global uncertainties and central bank monetary policy.
- In the bond market, the US Treasury yields initially fell but then increased on Friday during a holiday-shortened trading session after the March jobs report showed a resilient economy and moderate inflation. (Bond prices move in the opposite direction of bond yields)
- In the US, the latest labour data reported that the country added 236,000 jobs in March, which was roughly in line with expectations. The unemployment rate also fell to 3.5% from 3.6% the previous month. Meanwhile, both manufacturing and services activity continued to decline, with the ISM manufacturing index falling to a nearly three-year low of 46.3, below expectations of 47.5. Additionally, the ISM services index came in at 51.2, which was below expectations of 54.4.2
- In Europe, the European Central Bank (ECB) indicated that inflationary pressures may require further interest rate hikes. Additionally, European home prices fell for the first time in 8 years, while producer prices fell for a fifth consecutive month, surpassing expectations in February, mostly due to the decrease in energy prices.3
- In China, markets in Hong Kong and China were closed on Wednesday in observance of the Qingming festival. Meanwhile, there are signs of recovery in China's property sector, with new home sales surged 55.7% in March, up from 31.9% in February, according to a private survey conducted across 14 cities.4
The equity and fixed-income markets just completed a volatile but positive first quarter. We believe that investors’ patience could potentially be rewarded despite market volatility. 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 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.
- 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, 7 April 2023
2 Bloomberg, US Federal Board, 7 April 2023
3 European Central Bank (ECB), 7 April 2023
4 Bloomberg, Factset, 7 April 2023
5 Principal view, 7 April 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.