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What’s Trending (3rd May 2021)

The US financial markets continued its upward climb with the support of better than expected financial results, and optimism that the economy may be gradually shifting back into gear after being clouded by virus concerns for more than 1-year. Bond yields also climbed marginally higher towards the end of the month after staying quiet for the earlier part of the month

The US financial markets continued its upward climb with the support of better than expected financial results, and optimism that the economy may be gradually shifting back into gear after being clouded by virus concerns for more than 1-year. Bond yields also climbed marginally higher towards the end of the month after staying quiet for the earlier part of the month. Conversely, the equity market in China took a hit when the government decided to crackdown on the tech sector.  On a broader scale, global financial markets had ended the month on a mixed note, while Gold price clawed back gains with the support of unresolved uncertainties.

In The News

  • Vaccination exercises has been taking place on a grand scale as governments worked together to combat the pandemic that has crippled the global economy for more than 1-year.  While many have seen a steady downward trend in number of infections since the start of the vaccination, India has made an appeal for help after suffering from record high cases, which has led to a collapse in its healthcare system. 
  • India’s equity market ended the month as one of the weakest performers in the region as it tumbled 4.9% lower in MYR terms. Its global counterparts have been banding together to provide support as the country battles with the virus – the US, Britain, and France already pledging to send in aid. 
  • Did you know that the S&P 500 Index saw its 5th consecutive monthly gain in April? Optimism surrounding earnings announcements had boosted consumers’ sentiment to push the performance of US equities higher.  There was mixed performance from the tech sector, with Facebook, and Alphabet launching ahead after reporting strong earnings and revenues.  The broader Nasdaq Index ended the month as one of the strongest performers with a 5.4% price gain in MYR terms in April. The NYSE FANG+ Index was a close runner up with a 5.1% rise over the same period, which contributed to the 0830EA’s gain of 8.9%. 
  • Global recovery is expected to continue as economies reopen their doors for business. US economist are already anticipating a double digit recovery for its consumer services. And to keep with the momentum, the US Feds have reiterated that rates will be kept low for the near-term, with no plans on pulling back the asset purchase program.
  • Over in China, crackdown on the tech sector dampened investor’s sentiment. The government imposed a wide-range of restrictions on some of the largest tech companies in China, including Tencent, Bytedance, JD.com, as well as Meituan Dianping. 
  • The consumption-focused S&P New China Sectors Ex A Share Index managed to eek out a 0.1% gain in price over the month of April, which contributed to the 0829EA ending in the green. 
  • Investors had largely stayed on the sidelines as many companies were delaying the release of their financial results – leaving investors to see a slew of suspended companies being scattered across the markets. 
  • Political uncertainties remain a stumbling block for Malaysia, with ongoing feud between fractions and parties keeping investors at bay. With more than 3,000 cases being reported daily, the rapid rise in number of cases has also left the Rakyat questioning if another movement control order would be on the cards to reduce pressure on the domestic healthcare sector. 
  • The local bourse is now down 1.6% YTD in MYR terms, while the 0836EA, which tracks 20 of the strongest momentum companies in Malaysia has managed to maintain a respectable 4.8% gain over the same period. 
  • With new strains of the virus being discovered, and global economies grappling to keep the virus at bay, uncertainties have continued to loom over global markets – leaving Gold price to steadily inch higher.  The 0828EA climbed 3.4% over the month in MYR terms as demand for Gold rose as investors took on a more cautious approach to safeguard the value of their assets. 

On the Economic Data Front

  • US economy back on track?
    • GDP for 1Q2021 was reported to have expanded at 6.4%. 
    • Unemployment rates improved with weekly jobless claims falling to pre-pandemic numbers.
  • Has China peaked?
    • China recorded a record 18.3% YoY GDP growth in 1Q2021
    • Though falling marginally, official manufacturing PMI remains in expansionary stage with a reading of 51.1 (down from 51.9 in March)
    • Caixin/Markit manufacturing PMI rises to an 11-month high of 51.9 in April – it’s strongest activity since December 2020.
    • Official composite PMI dips to 53.8 in April, from 55.3 in March

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Serba Dinamik Holdings Bhd – 25th Jun 21

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Dour trend may persist

The unabated Covid-19 spread in the country which may lead to further pressure on the economy, coupled with the concerns over the revised nation’s growth projection by World Bank have sent the FBM KLCI lower. Following a heavy selldown, we might anticipate bargain hunting activities to emerge on the local bourse. On a side note, the government has approved the licence and incentives for Risen Energy Co Ltd to manufacture solar cells and solar modules in Malaysia amounting to RM42.2bn, which would make Malaysia an integrated production hub for solar products.

Chin Well Holdings Bhd – 24th Jun 21

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market pulse

Hovering near support

The FBM KLCI failed to extend its gains amid pervasive negative sentiment and weak buying interest, bucking the regional uptrend. With the World Bank cutting Malaysia’s 2021 GDP growth projection amid slower-than-expected economic recovery, the sideways trade is likely to persist without a fresh catalyst under the current economic and public health crisis. Investors may also look at the US’s 1Q21 GDP growth rate, while Bank of England’s interest rate decision, which will be releasing tonight. Commodities wise, the oil price has risen above the USD 75 per barrel level.

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