wealth management digest april 2020 - ambank · wealth management digest │ april 2020 5 _____...

Wealth Management Digest

August 2020 Exclusively for AmBank SIGNATURE Priority Banking Customers

Wealth Management Digest │ August 2020

Table of Contents

Page No.

News Topics – Business 3

News Topics – Economy 6

News Topics – Geopolitical 8

Economic Events – Graphs 10

Equity Market Performance 13

Fixed Income - Market Performance & Prices 14

Alternative Investment - Market Performance & Prices 15

Forex Performance Table 16

Asset Allocation Strategy 17

Fund Focus 18

Fund Performance Table 20

Definitions 21

Disclaimer 23

Key Take Aways

Bond funds clash in Ecuador restructuring…..

Supply cuts boost Canadian oil producers…..

Surging copper prices signal optimism on global growth…..

The South American nation was struggling financially before Covid-19 struck.

Prices of Ecuador’s government bonds are rising despite the controversy. Ecuador’s 8.875% bond due 2027 changed hands.

Ecuador announced in early July a deal with a group of mostly fund managers holding about 45% of its debt.

At issue is how Ecuador’s bonds with different due dates should be treated. The mutual-fund proposal would swap more of the country’s bonds maturing starting in 2025 into longer-term debt

Coronavirus-related shutdowns stalled business, U.S. oil refiners have started making more gasoline.

Canada’s oil industry, the world’s fourth-largest crude producer, was hard hit by the pandemic.

Canada totalled 28.6 million barrels as of June, down 214,000.

Crude inventories rose slightly to a record 538.8 million barrels at the end of June, according to the American Petroleum Institute.

There are already signs of increased drilling in Canada’s oil patch. The number of oil-drilling rigs for the week ended July.

Global investors are piling into bullish wagers on copper prices, sparking the quickest rally in the industrial metal.

The world’s second-largest economy consumes roughly half of the world’s copper, and recent data indicate a growth recovery. The coronavirus shut down Chinese manufacturing early in 2020.

“It’s just one of these environments,” said Will Rhind, chief executive of ETF provider GraniteShares, which manages a roughly US$60 million ETF tied to a basket of commodities that includes copper.

Wealth Management Digest │ August 2020 3

______________________________________________________________________________________

News Topics - Business

Hong Kong security law prompts departure of China fund adviser…..

An American-British member of an advisory body to China’s sovereign-wealth fund has stepped down from her post due to concerns over Chinese restrictions on free speech, including Beijing’s controversial new national-security law for Hong Kong.

In a letter to the fund’s chairman dated July 10 and viewed by The Wall Street Journal, DeAnne Julius said she was resigning “with regret” from the International Advisory Council of China Investment Corp.

“Recent developments in Hong Kong and the increasingly challenging relationships between China and a number of major countries” would make it difficult for her to stay in her role, she wrote.

China last month imposed a wide-ranging national-security law in Hong Kong, giving authorities sweeping new powers to punish anti-government violence, but also to quash dissent, institute tougher regulation of the international media and the internet and keep closer tabs on foreigners’ activities.

Dr. Julius is one of the first high-ranking Western aid-visers working with a Chinese institution to step down citing concerns about China’s latest policies. Her resignation comes as foreign businesses in Hong Kong expressed deep concerns about Beijing’s new national-security law in a new survey by the American Chamber of Commerce in Hong Kong.

Despite the government’s assurances that the law will make the city more secure, a majority of the 183 respondents to the survey said the law made them feel less safe, and 76% said they were somewhat or extremely concerned about the law. Just under half said it would negatively affect their business.

“The numbers speak for themselves in terms of the level of concern and the increased level of worry about how this is actually going to be implemented,” said Tara Joseph, president of the chamber. She said many respondents described the law as “vague, and frankly that makes it a little bit scary.”

A little more than a quarter of respondents said the law made them feel safer, largely for quieting the sometimes violent pro-democracy protests that rocked the city and disrupted business last year. There is a “core minority of people who do

feel that the security law is needed to bring safety back to the streets,” Ms. Joseph said.

A spokesman for the Hong Kong government said the law will help restore investor confidence. “Overseas investors and members of the public abiding by the law need not worry,” he said.

Confirming her decision to step down, Dr. Julius said in an email Monday that the new law’s extraterritorial reach “poses a risk to open discussion even by non-Chinese citizens or residents.”

Dr. Julius, a fellow at the Royal Institute of International Affairs, a think tank known as Chatham House, served on the IAC for four years.

The council is composed of industry bigwigs, government figures and academics who give advice on macroeconomic and financial affairs and guidance on investment strategies.

IAC members include John Thornton, executive chairman of Barrick Gold Corp. and former Goldman Sachs Group Inc. president; Jean Lemierre, chairman of BNP Paribas SA : said Andrew Sheng, chief adviser to China’s banking regulator.

Dr. Julius previously served on the Monetary Policy Committee of the Bank of England, as well as on the boards of BP PLC.

CIC had US$940 billion in assets as of 2018, according to the most recent figures from its website. It didn’t respond to a request for comment. Dr. Julius in the email said her decision wasn’t a reflection on the work of CIC, which she says is staffed by well-qualified professionals who make investment decisions based on non- political, commercial grounds.

Syrians vote for new Parliament amid virus outbreak, economic crisis…..

Syrians went to the polls to elect a new parliament in the midst of a coronavirus outbreak and a deepening economic crisis, as President Bashar al-Assad attempts to strengthen his political grip on the country after nearly a decade of war.

The tightly controlled vote is the third to take place in Syria since the conflict began in 2011 and is designed to confer a veneer of legitimacy on Mr. Assad.

It also seeks to project an air of normalcy as anger over surging food prices and a


______________________________________________________________________________________


depreciating currency poses a growing challenge for the regime.

Early the president and his wife were pictured casting their votes wearing face masks in a private setting.

Syrian state news agency SANA published photographs of polling stations being disinfected on the eve of the election, which was postponed twice because of the pandemic. There are around 500 confirmed cases of the coronavirus in Syria, though the outbreak is thought to be more widespread.

The Higher Judicial Committee for Elections said in a statement carried by state news that the polling results would be announced when counting of the votes is completed. The constitution doesn’t set a specific time frame for the results to be announced, the committee said.

At the ballot box, Prime Minister Hussein Arnous said the election represented a political victory against the enemies of Syria.

Many Syrians however were skeptical. “Why would I waste my time voting when we all know the results are predetermined?” said Ahmad, a 45-year-old who works in the private sector in the capital city of Damascus and declined to give his full name. He said the money candidates put toward campaigning would have been better spent helping the growing numbers of impoverished Syrians.

Syrian government forces backed by Russia and Iran have extended Mr. Assad’s control to around 70% of the country’s territory, compared with roughly 40% at the time of the 2016 election, in a bloody war that has killed hundreds of thousands of people and displaced millions.

Mr. Assad has vowed to retake the entire country.

“If the last four years were about clawing back territory, this next period is going to be about consolidating that control politically,” said Mona Yaqoubian, a senior Middle-East adviser at the U.S. Institute of Peace. She described the vote as “an exercise in entrenching authoritarianism.”

More than half the 250 seats in the assembly—officially called the People’s Council - are allocated to Mr. Assad’s Baath Party. More than 1,650 government-approved candidates are running, SANA said Sunday.

Around half the population has been displaced by the war - both internally and abroad - and are

either unable or unlikely to vote. Voting was only held in government-controlled areas.

Syria ranked fourth from the bottom in the Economist Intelligence Unit’s global Democracy Index in 2019.

The Assad regime has sought to blame U.S. sanctions for the country’s economic decline. The Trump administration in June blacklisted Syrian businessmen, officials and family members of the regime leader it said are supporting and profiting from the war.

The Syrian pound has lost so much value in recent months that some vendors in opposition-held areas in the north, near Turkey’s border, have adopted the Turkish lira instead.

Even among the regime’s own constituency, resentment is growing over the economy.

Economists say the crisis is a result of dwindling government revenue over nearly a decade of conflict that has destroyed local production capacity, making Syria increasingly reliant on imports. A financial crisis that hit neighboring Lebanon last year has also deprived Syria of a key economic lifeline. And the coronavirus pandemic has reduced the flow of remittances from Syrians abroad and damped economic activity.

OPEC and Russia-Led oil alliance agree to increase production…..

An alliance of crude producers led by Saudi Arabia agreed to increase oil production starting in August, officials in the group said, amid signs that demand is recovering following coronavirus-related lockdowns.

Key members of the Organization of the Petroleum Exporting Countries and its Russia-led allies agreed to loosen existing production caps by about US1.6 million barrels a day, partly reversing draconian output cuts enacted to stem a sharp price decline in the early days of the coronavirus pandemic.

Saudi Arabia, the world’s largest oil exporter, led a push among the 23-producer group to cut collective output by 9.7 million barrels a day, as the pandemic led to a collapse of oil demand.

The Wall Street Journal reported over the weekend that the alliance was considering an easing of those cuts.

Brent oil prices up 43 cents, or 1%, to US$43.3 a barrel.


______________________________________________________________________________________


The group officially agreed to an overall relaxation of cuts of two million barrels a day of production, but required some countries that lagged in enforcing earlier cuts to reduce their output by a net 400,000 barrels a day. Those cuts will be required until the end of October.

Producers’ relative optimism coincides with a Friday report from the International Energy Agency showing the worst effects of the coronavirus on global oil demand have passed but will continue to echo as the market slowly recovers in the second half of 2020.

In its widely read monthly report, OPEC itself said it expected that the world’s demand for oil would increase by 7 million barrels a day next year, after a forecast 8.9 million-barrel-a-day decline in 2020.

The world’s largest oil producers are attempting to mop up an oil glut and stabilize prices. West Texas Intermediate futures, the benchmark in U.S. oil markets, have traded at around US$40 a barrel since late June after falling below zero at one point in April.

The OPEC Plus alliance has gradually deepened reductions in output since 2016, as it faced competition from U.S. oil producers. Some members of the group made a rare exception mid-2018 when they temporarily increased output to make up for lost Iranian barrels because of U.S. sanctions.

Experts said the easing of reductions remained a risky bet. “Some of the more errant producers could use the easing as an excuse to revert to past practice, and overall group compliance levels could erode,” said Helima Croft, the chief commodities strategist at Canadian broker RBC.

“Given the financial distress facing many OPEC producers in a US$40 [per barrel] Brent environment, the margin for error appears rather slim in our view.”

The possible return of Libya’s oil production, which has been mostly shut since January, is another wild card. A renegade Libyan commander shut 1 million barrels a day of the country’s high-quality oil but has come under pressure from the international community to reopen oil fields and ports.


______________________________________________________________________________________

News Topics - Economy

Economic recovery is under way but fighting flare-ups is key…..

The global economy suffered a severe contraction in the three months through June, and it is becoming clear that the strength of its recovery will depend on authorities’ success in dousing continued pandemic flare-ups.

Countries’ freshest economic-growth figures, to be released in coming weeks, are likely to show the global economy entered a recession in the first half of this year and shrank in the second quarter at the fastest peacetime rate since modern records began after the Great Depression.

The global economic recovery has begun, but there are mixed signals about its health and staying power. Some sectors have sprung back to life more decisively than expected, and they include retailing and manufacturing. The flip side is it appears that, until a vaccine becomes widely available, surges in coronavirus infections will repeatedly have a damping effect on activity.

“In the absence of a medical solution, the strength of the recovery remains highly uncertain,” said Tao Zhang, deputy managing director of the International Monetary Fund, in a speech this month.

The European Commission estimates the eurozone’s gross domestic product in the three months through June was 13.6% lower than in the first three months of the year, when output dropped 3.6% - then the largest decline since records began in 1995.

In the U.S., the Federal Reserve Bank of Atlanta on July 9 estimated that U.S. GDP declined 10.3% in the second quarter compared with the first quarter.

If that were to prove accurate, the drop would be four times larger than that seen in the worst quarter for the economy after the 2008 financial crisis. At the start of June, the model was suggesting that GDP would fall by almost 18%.

Recent figures from other parts of the world also point to large declines in GDP during the second quarter. Singapore this past Tuesday said its economy shrank by 12% in the second quarter.

However, recent figures indicate that the global decline in activity largely ended in April, with May and June seeing pickups. In the U.K., which is one of a handful of countries to release monthly figures for GDP, the economy grew by 1.8% in May from April.

China is two months ahead of most other major economies, having initiated its lockdown in late January and lifted many of those restrictions in April.

The country reported that its economy grew in the second quarter and at a faster pace than expected, an outcome that other countries would be happy to see in the third quarter.

Other measures point in the same direction. The eurozone has recorded increases of 17.8% in retail sales and 12.4% in industrial production for May. U.S. retail sales rose 18.2% in May and 7.5% in June, the Commerce Department reported.

FED unveils plan to extend emergency loans to non-profits…..

The Federal Reserve formally unveiled terms that will allow non-profit organizations to borrow through its US600 billion loan program for small and midsize businesses disrupted by the coronavirus pandemic.

The central bank had earlier put forward a proposal to extend the Main Street Lending Program to schools, hospitals and other social-service organizations. The terms announced will open the program to non-profit organizations with at least 10 employees and as many as 15,000 employees.

The Fed also eased certain financial eligibility criteria to allow a wider range of non-profit operating models. The loans will be available to non-profits with endowments of no more than US$3 billion and that have been in operation at least five years.

Under the program, the Fed is buying 95% of eligible loans made by banks. Loan terms under the non-profit lending options are similar to those available to for-profit businesses. Five-year loans carry an interest rate of 3 percentage points above a widely used short-term lending benchmark rate; interest payments are deferred for one year, and principal payments, for two years.

The Main Street program has been the most difficult of the Fed’s new emergency lending operations. The program opened for lender registration last month and began processing loans last week.

The Fed said it had purchased US$12 million in loans over the week ended.


______________________________________________________________________________________

News Topics - Economy

EU Leaders deadlocked on coronavirus recovery plan…..

Negotiations among the European Union’s 27 leaders for recovery plans worth €1.8 trillion (US$2.06 trillion) were deadlocked, leading to tense exchanges and fears of a breakdown.

After three days of talks to agree a proposed spending package to lift Europe’s economy out of a coronavirus-sparked slump, EU leaders were still divided over the size of the final plan, how much of it should be available in grants and some of the conditions attached.

Failure to reach a deal could spark a negative financial markets response, weeks after European leaders said there was a basic consensus around the outlines of the plan. A number of top EU leaders have said a deal must be in place before the summer break begins at the end of July.

EU leaders had started their first face-to-face summit in five months on Friday morning, hoping to agree a multiyear budget plan pitched at over €1 trillion and an economic recovery plan that Brussels believed should be €750 billion strong.

The plans are intended to prop up the economies worst affected by coronavirus, like Italy, Spain and Greece, without sending their already high debt levels soaring further, allowing them to increase crisis spending now. The recovery plan would be funded by the European Commission raising hundreds of billions of euros of debt in the markets, an unprecedented step.

However the rifts over the size of the recovery plan and how much of it would be made up of grants proved too strong to wrap up on time, with

the Netherlands leading a group of countries who wanted to limit handouts, and France, Germany and southern countries badly hit by the health crisis pushing to maintain the proposed €500 billion in grants.

The Netherlands was pushing for a €700 billion recovery fund, half of which would be available in grants. France, Germany, Italy and Spain were insisting that grants must be no lower than €400 billion.

The leaders were also divided over other issues. There was discord over a push to reduce budget funding for countries judged to be backsliding on democratic standards.

As talks ground on, rules about social distancing and wearing masks seemed to slip as leaders huddled into side rooms for intense negotiations. The trillion-euro strong budget will cover EU spending on projects across the bloc from 2021-2027.


______________________________________________________________________________________

News Topics - Geopolitical

Wall Street turns bullish on Biden…..

Joe Biden isn’t just up in the polls. He’s up on Wall Street, too.

The Street famously hates uncertainty. But at least for the moment, institutional investors and hedge-fund managers have a consensus about the presidential election: Mr. Biden is the likely winner.

That’s a big change from the beginning of the year, when the Democratic primaries raged and before the pandemic stalled the global economy. Two big factors: Democrats have rallied around Mr. Biden and President Trump’s approval rating has been battered by the one-two punch of medical and economic crises.

It helps that Mr. Biden hasn’t veered left as much as some feared (or some of his primary opponents hoped.) Wall Street sees what generally amounts to a centrist-left economic policy. Mr. Biden is working to make some of the progressives in his party happy, but he hasn’t gone over to them entirely.

Prediction markets are expecting a sweep, giving it roughly 2 in 3 chances that a single party captures the White House and both houses of Congress. But the market sees the odds of a blue wave as more than three times those of a red wave, analysts at UBS figure.

Consider taxes. Under a Biden victory, there’s little question that taxes would rise. The 2017 tax law signed by Mr. Trump reduced taxes. Mr. Biden is proposing to erase some of that, which he stands a good chance of doing if Democrats also control the Senate.

Corporate profits would likely take a hit: Moving the corporate tax rate to 28% from 21% would reduce per-share earnings by about 5%, UBS estimates.

Goldman puts Mr. Biden’s entire tax program at roughly 12% in 2021 - reducing per-share earnings for the S&P 500 to about US$150 from about US$170.

The market may be taking the prospect of a change in power in stride now. But there are signs of uncertainty ahead, courtesy of the options market, where investors can play the election months out without making a huge bet.

Futures-market contracts show investors expect high stock-market volatility around the election—more so than in 2012 or 2016, Goldman Sachs analysts note. That, coupled with recent delays in primary vote tallies and a likely surge in voting

by mail, led them to recommend that investors structure election-related hedges to culminate not in November, but in mid-December.

For more news and analysis like this, sign up for our Election+Business newsletter here.

Bond funds clash in Ecuador restructuring…..

Days after announcing a debt restructuring with some of the largest emerging-markets bond funds in the world, Ecuador is holding talks with a separate group of investors about potentially changing the deal, people familiar with the matter said.

The second group is asking for changes to how the country’s different bonds are treated. The group also wants the new debt issued through the transaction linked to the achievement of environmental, social and governance, or ESG, objectives.

The South American nation was struggling financially before Covid-19 struck. It has been negotiating with bondholders since March to swap about US$17 billion of existing bonds into a lower amount of new bonds that pay lower interest rates and fall due later.

Prices of Ecuador’s government bonds are rising despite the controversy. Ecuador’s 8.875% bond due 2027 changed hands at 52 cents on the dollar this week, up from around 44 cents in late June, according to AdvantageData.

Ecuador announced in early July a deal with a group of mostly mutual-fund managers holding about 45% of its debt, including Ashmore Group PLC and BlackRock Inc.

But a second group, controlling 25%-35% of certain bonds, has said it opposes the restructuring as proposed. The second group includes mutual-fund managers like T. Rowe Price Group Inc. as well as hedge funds like Contrarian Capital Management LLC.

At issue is how Ecuador’s bonds with different due dates should be treated. The mutual-fund proposal would swap more of the country’s bonds maturing starting in 2025 into longer-term debt, favouring investors who hold more short-term debt.

The bondholder group with T. Rowe and Contrarian is pushing for more balanced treatment of most short-term and long-term debt, while seeking preferential treatment of a single


______________________________________________________________________________________

News Topics - Geopolitical

bond issue due in 2024, according to a counterproposal it announced this week.

It also ties reductions, or haircuts, of what Ecuador owes bondholders to its achievement of a new borrowing program with the International Monetary Fund and requires that the interest payments on some of the new bonds be tied to the country’s fulfilment of ESG goals.

Ecuador negotiated a temporary moratorium on interest payments with bondholders in March, but that standstill expires on August 15.

In U.S. government bond markets, the 10-year Treasury yield rose to 0.628%, up from the 0.611% close on Thursday, according to data from TradeWeb.

Oil prices rise on vaccine hopes, falling inventories…..

Oil prices rose, hitting a fresh 4½-month high with investors hoping for faster-than-expected corona virus vaccine development and weighing a sizable drop in domestic crude stockpiles.

U.S. crude futures added 2.3% to US$41.20 a barrel on the New York Mercantile Exchange, their highest close since early March.

Prices are well below where they started the year, with the corona virus denting demand, but have rebounded in recent weeks with some states and countries reopening and producers curtailing supply.

U.S. crude briefly fell below US$0 for the first time ever in late April due to a global oil glut.

Gains for oil came with stocks and other investments climbing after new details about the first human study of Moderna Inc.’s vaccine showed that it induced the desired immune response for all 45 people evaluated.

Researchers said the results bolstered their decision to start a large clinical trial slated to start later this month.

The Moderna shot is just one of the clinical trials planned in the coming weeks, and traders will be closely monitoring the results to gauge how

quickly a vaccine could ease the damage caused by the pandemic and support consumer confidence.

Analysts were also weighing the latest weekly U.S. crude inventory figures, which showed that stockpiles fell much more than expected last week. Inventories dropped 7.5 million barrels, compared with a 1.3-million-barrel decline projected by analysts and traders surveyed by The Wall Street Journal.

Despite rising coronavirus cases in much of the U.S., gasoline demand declined only modestly, the data showed, driving hopes that a weeklong rebound in fuel consumption could resume in the coming months.

Meanwhile, U.S. crude output stayed flat at 11 million barrels a day for the third consecutive week, easing concerns about a quick increase in domestic production in response to the crude-price recovery.

Additionally, investors were parsing the latest reports about output cuts from the Organization of the Petroleum Exporting Countries and allies like Russia.

Key OPEC members and their partners said they have agreed to loosen current supply curbs by 1.6 million barrels a day with demand rising. The announcement was less severe than some analysts expected, and reports that extra cuts from countries that haven’t been complying with the quotas are imminent have eased fears that higher OPEC supply could flood the market with oil again.

At the same time, many traders are still wary that key producers such as Saudi Arabia and Russia might increase supply too fast to maintain market share, keeping oil in its recent trading range.

“The price recovery is fragile and hinges not only upon avoiding a derailing of the demand recovery, but also OPEC+ adherence to quotas as they slowly ramp-up output in August,” Paola Rodriguez-Masiu, senior oil-markets analyst at Rystad Energy, said.

Brent crude futures, the global gauge of oil prices, added 2.1% to US$43.79 a barrel on the Intercontinental Exchange.


______________________________________________________________________________________

Economic Events - Graphs

United States: ISM manufacturing index rebounds in June

Note: Composite index in the Manufacturing Report on Business (PMI). Readings above 50% indicate an expansion in the manufacturing sector while readings below 50% point to a contraction. Source: Institute for Supply Management.

United States: Inflation increases in June

Note: Year-on-year and month-on-month variation of seasonally-adjusted consumer price index in %. Source: Bureau of Labor Statistics.

United Kingdom: Services and manufacturing PMIs surge in July

Note: IHS Markit/CIPS United Kingdom Purchasing Managers’ Index (PMI). Readings above 50 indicate an overall increase compared to the previous month, and below 50 an overall decrease. Source: IHS Markit and CIPS.

United Kingdom: Consumer confidence picks up in July but remains depressed

Note: GfK Consumer Confidence Index. Source: The GfK Group.

Eurozone: Coronavirus crisis strikes unprecedented blow to Eurozone economy in Q1

Note: Quarter-on-quarter changes of seasonally-adjusted GDP and year-on-year variation in %. Source: Eurostat

Eurozone: Inflation slumps to over three-year low in April on plunging energy prices

Note: Year-on-year and month-on-month var. of harmonized consumer price index (HICP) in %. Source: Eurostat


______________________________________________________________________________________


Japan: Services and manufacturing PMI climb further in July

Note: Jibun Bank Composite, Manufacturing and Services Purchasing Managers’ Index. Readings above 50 indicate an overall increase compared to the previous month, and below 50 an overall decrease. Source: IHS Markit and Jibun Bank.

China: Manufacturing PMI increases slightly in July

Note: Purchasing Managers’ Index. Readings above 50% indicate an expansion in the manufacturing sector while readings below 50% indicate a contraction. Source: National Bureau of Statistics of China (NBS) and the China Federation of Logistics and Purchasing (CFLP).

China: Industrial output grows at quickest pace in six months in June

Note: Year-on-year variation of industrial production index and annual average growth rate in %. Owing to seasonal factors related to the Lunar New Year, annual figures in January and February are reported together. Source: National Bureau of Statistics of China (NBS) and

FocusEconomics calculations.

India: Private sector PMI continues gradual recovery in June

Note: Purchasing Managers’ Index (PMI). Readings above 50 indicate an overall increase compared to the previous month, and below 50 an overall decrease. Source: IHS Markit.

Korea: Manufacturing PMI improves slightly in June

Note: Purchasing Managers’ Index (PMI). A reading above 50 indicates an improvement in operating conditions over the previous month. Source: IHS Markit

Malaysia: Consumer prices drop at softer pace in June

Note: Year-on-year and month-on-month variation of consumer price index in %.

Source: Department of Statistics Malaysia (DSM).


______________________________________________________________________________________


Singapore: Non-oil exports rebound sharply in June

Note: Year-on-year and seasonally-adjusted month-on-month variation of non-oil domestic exports in %. Source: Statistics Singapore (Singstat), International

Enterprise (IE) Singapore and FocusEconomics calculations.

Indonesia: Merchandise exports rise in June, trade balance records a surplus

Note: 12-month trade balance in USD billion and annual variation of exports and imports over the last 12 months in %.

Source: Statistics Indonesia (BPS) and FocusEconomics calculations.

Thailand: Manufacturing production decreases at slower pace in June

Note: Year-on-year changes and annual average variation of manufacturing production index in %.

Source: Office of Industrial Economics (OIE) and FocusEconomics calculations.

Philippines: Exports plunge again in May

Note: Year-on-year and annual average variation of exports in

%.

Source: Philippine Statistics Authority.


______________________________________________________________________________________

Equity Market Performance

Key Indices Performance as at 31 July 2020

Equity Indices Index Value

YTD (%)

1-Month

(%)

6-Months

(%)

1-Year (%)

3-Years (%)

P/E (X)

World

MSCI AC World Index (USD) 551.89 (2.4) 5.1 (1.2) 5.3 15.6 *19.9

U.S.

US Dow Jones Industrial Average 26428.32 (7.4) 2.4 (6.5) (1.6) 20.7 22.1

US S&P 500 Index 3271.12 1.2 5.5 1.4 9.8 32.4 24.3

US NASDAQ Composite Index 10745.28 19.8 6.8 17.4 31.4 69.3 32.5

Europe & Japan

MSCI AC Europe (USD) 430.25 (11.4) 3.6 (9.0) (4.2) (7.3) *15.3

Euro STOXX 600 Index 356.33 (14.3) (1.1) (13.2) (7.6) (5.7) 18.9

UK FTSE 100 Index 5897.76 (21.8) (4.4) (19.1) (22.3) (20.0) 16.9

Germany DAX Index 12313.36 (7.1) 0.0 (5.2) 1.0 1.6 20.4

France CAC-40 Index 4783.69 (20.0) (3.1) (17.6) (13.3) (6.1) 18.6

Japan Nikkei-225 Stock Average 21710 (8.2) (2.6) (6.4) 0.9 9.0 20.1

Asia Pacific

MSCI AC Asia Pacific ex Japan (USD) 551.63 (0.2) 7.5 3.7 6.3 4.2 *16.6

Australian Stock Exchange 200 Index 5927.80 (11.3) 0.5 (15.5) (13.0) 3.6 16.7

Hong Kong Hang Seng Index 24595.35 (12.8) 0.7 (6.5) (11.5) (10.0) 10.8

Hang Seng China Enterprises Index 10039.96 (10.1) 2.9 (2.0) (6.0) (7.3) 8.5

Taiwan TAIEX Index 12664.8 5.6 9.0 10.2 17.0 21.5 18.5

Korea KOSPI Index 2249.37 2.4 6.7 6.2 11.1 (6.4) **-

Indonesia Jakarta Composite Index 5149.63 (18.3) 5.0 (13.3) (19.4) (11.8) 13.7

Malaysia FBM KL Composite Index 1603.75 0.9 6.8 4.7 (1.9) (8.9) 20.1

Philippines PSE Index 5928.45 (24.1) (4.5) (17.7) (26.3) (26.1) 14.0

Singapore FTSE Straits Times Index 2529.82 (21.5) (2.3) (19.8) (23.4) (24.0) 9.7

Thailand SET Index 1328.53 (15.9) (0.8) (12.3) (22.4) (15.7) 16.0

BRIC

Russia MICEX Index 2911.57 (4.4) 6.1 (5.4) 6.3 51.7 9.4

Brazil Bovespa Index 102912.24 (11.0) 8.3 (9.5) 1.1 56.1 **-

India SENSEX 30 Index 37606.89 (8.8) 7.7 (7.7) 0.3 15.7 22.1

China Shanghai Composite Index 2821.35 (7.5) (5.5) (5.2) (3.8) (13.8) 13.4

Source: Thomson Reuters Datastream

*MSCI P/E Source: MSCI Website Data as at 30 June 2020

**Index P/E no longer provided by Thomson Reuters


______________________________________________________________________________________

Fixed Income Market Performance

Global Government Bond Yields as at the End of Each Quarter

Government Bond Yields Jun 2020 Mar 2020 Dec 2019 Sep 2019

US Treasury Yields (%)

3-Month 0.1 0.1 1.6 1.8

2-Year 0.2 0.2 1.6 1.6

5-Year 0.3 0.4 1.7 1.6

10-Year 0.7 0.7 1.9 1.7

30-Year 1.4 1.4 2.4 2.1

Developed markets 10-year bond yields (%)

Japan 0.0 0.0 (0.0) (0.2)

UK 0.2 0.4 0.8 0.5

Germany (0.5) (0.5) (0.2) (0.6)

France (0.1) (0.0) 0.1 (0.3)

Italy 1.3 1.5 1.4 0.8

Spain 0.5 0.7 0.5 0.1

Emerging markets 10-year bond yields (%)

Malaysia 3.1 3.4 3.3 3.3

Thailand 1.2 1.5 1.5 1.5

Indonesia 5.9 6.1 6.6 6.7

Singapore 0.9 1.3 1.7 1.7

China 2.9 2.7 3.2 3.2

S Korea 1.4 1.6 1.7 1.5

Australia 0.9 0.8 1.4 1.0


Bond Indices Performance as at 31 July 2020

Bond Indices Index Value YTD (%)

1-Month (%)

6-Month (%)

1-Year (%)

3-Years (%)

Barclays Asian Pacific Aggregate Bond Index 157.28 2.1 2.1 1.6 2.1 7.8

Barclays Global Aggregate Bond Index 543.74 6.3 3.2 4.9 7.8 13.5

Barclays Global High Yield Index 1410.01 (0.3) 4.5 (0.4) 2.0 10.0


*Index has been restricted by Thomson Reuters


______________________________________________________________________________________

Alternative Investment - Market Performance & Prices

Alternative Investments Data as at 31 July 2020

Commodity Unit Exchange Index Value

YTD (%)

1-Month (%)

6-Month (%)

1-Year (%)

3-Years (%)

S&P GSCI Commodity Index TR

- - 1713.46 (33.9) 3.8 (25.9) (31.2) (24.5)

Reuters/Jefferies CRB Index TR

- - 143.69 (22.7) 4.1 (15.6) (19.5) (21.3)

Gold US$/troy oz COMEX 1962.80 29.2 9.5 24.0 37.6 55.0

Silver USc/troy oz COMEX 24.19 35.7 30.5 34.6 48.0 44.4

Copper USc/lb COMEX 2.86 2.3 5.4 13.5 7.6 (1.0)

WTI Crude Oil US$/bbl NYMEX 40.27 (34.0) 2.5 (21.9) (31.3) (19.7)

Brent Crude US$/bbl ICE 43.3 (34.4) 5.2 (25.6) (33.6) (17.8)

Crude Palm Oil RM/ton MDEX 2780.00 (8.6) 16.9 5.3 37.7 4.0



______________________________________________________________________________________

Forex Performance Table

Periodic Performance (%) of the USD and MYR against Major Currencies as at 31 July 2020

Performance (%) of the USD against Major Currencies as at 31 July 2020

AUD / USD

CAD / USD

CNY / USD

EUR / USD

CHF / USD

INR / USD

JPY / USD

MYR / USD

SGD / USD

GBP / USD

1 Month (3.4) (1.2) (1.3) (4.6) (3.6) (0.8) (1.9) (1.1) (1.4) (5.2)

2 Months (4.8) (1.2) (2.1) (5.5) (5.0) (0.8) (1.6) (1.7) (2.3) (4.5)

3 Months (8.8) (3.8) (1.2) (7.0) (5.4) (0.2) (1.2) (1.3) (2.6) (3.8)

6 Months (6.3) 1.3 0.6 (5.8) (5.2) 4.7 (2.3) 3.5 0.7 0.9

1 Year (4.2) 1.7 1.3 (6.0) (8.2) 8.8 (2.6) 2.7 0.1 (7.1)

2 Years 4.0 3.1 2.5 (0.8) (7.8) 9.5 (5.4) 4.3 1.0 0.3

3 Years 12.0 7.5 3.7 0.5 (5.6) 16.8 (4.0) (1.0) 1.5 1.0

5 Years 2.3 2.5 12.3 (6.7) (5.5) 17.1 (14.6) 11.0 0.2 19.4


Performance (%) of the MYR against Major Currencies as at 31 July 2020

AUD / MYR

CAD / MYR

CNY / MYR

EUR / MYR

CHF / MYR

INR / MYR

JPY / MYR

USD / MYR

SGD / MYR

GBP / MYR

1 Month (2.3) (0.1) (0.2) (3.6) (2.6) 0.2 (0.9) 1.1 (0.3) (4.2)

2 Months (3.1) 0.6 (0.4) (3.8) (3.3) 1.0 0.1 1.8 (0.6) (2.8)

3 Months (7.5) (2.4) 0.2 (5.6) (4.1) 1.2 0.2 1.4 (1.2) (2.4)

6 Months (9.5) (2.1) (2.9) (9.0) (8.5) 1.1 (5.7) (3.4) (2.8) (2.6)

1 Year (6.8) (1.0) (1.4) (8.5) (10.6) 5.9 (5.3) (2.7) (2.6) (9.6)

2 Years (0.3) (1.1) (1.7) (4.9) (11.6) 4.9 (9.3) (4.1) (3.2) (3.8)

3 Years 13.1 8.6 4.7 1.5 (4.7) 17.9 (3.1) 1.0 2.4 2.0

5 Years (7.8) (7.6) 1.2 (16.0) (14.8) 5.5 (23.0) (9.9) (9.7) 7.6



______________________________________________________________________________________

Asset Allocation Strategy

Asset Class Review and Outlook

Equity Investment

View Remark

US Positive

GDP growth in 2020 is more optimistic on the back of better consumer sentiments and the Phase 1 deal of to US-China trade tension. Equities valuations are high but little likely to be supported due to limited negative catalysts. Unlikely to see a Fed Fund rate cut unless economic data unexpectedly & materially weakens.

Eurozone Positive Eurozone stocks generally has cheaper valuations than US stocks. Upside may also come from ECB's more easing monetary measures.

UK Positive UK stocks valuation are cheap relative to the global markets, as geopolitical uncertainty has been priced into equities.

Japan Positive Potential upside in equities following anticipated recovery in corporate earnings and more positive sentiments following the 'Phase 1' deal in the US-China trade tensions.

Global Emerging Markets Neutral

EM equities may benefit if the US-China tension sees less volatility in 2020 and US maintain easing monetary policies. However, a weaker-than-expected GDP growth in China, would see investors risk-off in EM equities.

China Neutral

In China, while concerns over slowing growth is weighing down investment appetite, policy stimulus should improves growth outlook and supports valuation. More stability in GDP growth expected in 2020, targeting 5.8% - 6% for 2020. Negative earnings revisions in China 2019 may also be bottoming, presenting a more stable equity market in 2020.

India Neutral

Relatively shielded from trade war thanks to a large domestic economy. However, sustained high oil price may widen the current account deficit, impacting GDP growth and raises the currency depreciation risk. Coupled with richer valuation relative to peers, upside could be limited.

Australia Neutral

Commodities prices are expected to be neutral to mildly bullish, while corporate earnings quality is still better than average, and corporate balance sheets are strong. Upside on equity market is anticipated, but is still subject to any commodity price volatility in 2020.

South Korea Neutral Valuations is low but lack of catalyst:- uncertainties over US-China trade war, Korea-Japan trade conflict, earnings downturn especially from the cyclical sectors.

Taiwan Neutral

Bearish outlook on semicon and Apple supply chain, ongoing trade issues. Highly exposed to trade tensions. 30% of mostly Taiwanese manufacturing activities are still based in China. But supported by good dividend yield.

Indonesia Neutral

A good and balance formation of new cabinet by Jokowi (55% technocrat/professional). Expectation of continuous good growth after election. Relatively stronger domestic demand. On the downside, flip-flopping policies and exhausted government spending after election, may cap the growth.

Source: AmInvest as of Aug 2020


______________________________________________________________________________________

Fund Focus

Source: AmBank as of Aug 2020

Geographical / Sector Equity Mixed Asset / Fixed Income

United Global Quality Equity MYR Hedged [PRR:4] Eastspring Investments Global Target Income [PRR:3]

RHB European Select [PRR:4] Affin Hwang Select AUD Income [PRR:3]

Global Multi-Asset Income MYR [PRR:5] Affin Hwang World Series-Global Balanced [PRR:4]

RHB US Focus Equity [PRR:5] Global Multi-Asset Income [PRR:5]

Aberdeen Islamic World Equity A MYR [PRR:5] US-Canada Income and Growth [PRR:4]

CIMB Principal Asia Pacific Dynamic Income [PRR:4] Affin Hwang Select Income [PRR:3]

CIMB Islamic Asia Pacific Equity [PRR:4] RHB Asian Income MYR [PRR:3]

Affin Hwang Select Asia (ex Japan) Opportunity [PRR:5] Affin Hwang Select Bond [PRR:3]

Global Emerging Market Opportunities [PRR:5] AmTactical Bond B MYR [PRR:3]

Maybank Asia Pac Ex-Japan Equity-I [PRR:5] CIMB-Principal Bond [PRR:2]

Affin Hwang Select Opportunity [PRR:4] Eastspring Investments Bond [PRR:2]

Eastspring Investments Equity Income [PRR:4] AmBon Islam [PRR:2]

AmMalaysia Equity [PRR:4] Affin Hwang Aiiman Select Income [PRR:3]

Eastspring Investments Dana al-Ilham [PRR:4] AmIslamic Balanced [PRR:3]

Eastspring Investments Small Cap [PRR:5] TA Dana Afif [PRR: 3]

Principal Bond Fund [PP: 2]

CIMB Islamic Balanced [PRR:3]

AmChina A-Share [PRR:5] Affin Hwang Select Income [PRR:3]

RHB Big Cap China Enterprise [PRR:5] Eastspring Investments Asia Select Income [PRR:3]

United Global Healthcare Fund - Class A MYR [PRR:5]

TA Global Technology [PRR:5]

CIMB-Principal Greater China Equity [PRR:5]

Robotech Fund [PRR:5]

Developed Market

Emerging Market

Local

Single country, sector or strategy


______________________________________________________________________________________

Fund Focus

Reference Portfolio

Source: AmBank as of Aug 2020

0

10

20

30

40

50

60

70

80

90

100

Very Conservative Conservative Moderate Growth Aggressive

100

75

60

30

10

25

40

70

90

Reference Portfolio (Based on Investor's Risk Profile) (% Allocation for Equity and Fixed Income)

Fixed Income Equity


______________________________________________________________________________________

Fund Performance Table

Top Performing Funds

Rank 1-month % 3-months % 6-months % 1-year %

First AmMalaysia Equity

21.54

United ASEAN Discovery Fund

54.85 RHB Gold and General

49.82 AmChina A-Shares

63.08

Second

United ASEAN Discovery Fund

20.42 AmMalaysia Equity

47.18 Precious Metals Securities

47.54 RHB Gold and General

52.03

Third RHB Gold and General

18.59

Affin Hwang Select Asia Ex Japan Quantum

45.47 AmChina A-Shares

38.47

RHB Big Cap China Enterprise

47.86

Fourth AmTotal Return

18.09 AmTotal Return

40.22


38.12


47.38

Fifth Precious Metals Securities

16.52

Affin Hwang Aiiman Growth

38.71 United ASEAN Discovery Fund

34.97

Eastspring Investments Dinasti Equity

46.80

Bottom Performing Funds

Rank 1-month % 3-months % 6-months % 1-year %

First Commodities Equity

-2.34 Commodities Equity

-5.40

AmSchroders European Equity Alpha

-18.89

TA South East Asia Equity Fund

-18.63

Second TA South East Asia Equity Fund

-1.90 AmIncome Plus

1.39

TA South East Asia Equity Fund

-14.32 Commodities Equity

-14.42

Third AmAsia Pacific REITs Plus

-1.22

Eastspring Investments Bond

1.69 RHB US Focus Equity

-12.15

AmSchroders European Equity Alpha

-13.98

Fourth Europe Equity Growth

-0.10

Affin Hwang Aiiman Income Plus

2.41

United Japan Discovery Fund MYR Hedged

-10.08

RHB Emerging Opportunity Unit Trust

-7.56

Fifth Affin Hwang Income Focus 2

-0.08

AmDynamic Sukuk - Class A

2.73 Commodities Equity

-8.56

RHB Growth & Income Focus Trust

-6.39

Sources: Performance report dated 07 Aug 2020 by Novagni Analytics & Advisory Sdn Bhd All the above funds are distributed by AmBank.


______________________________________________________________________________________

Definitions

% Percentage

AAA/BBB Currency Pair of AAA and BBB. Number of units of AAA (Base currency) that one unit of BBB (Quote currency) will buy.

AUD Australian Dollar

Bosvepa Brazil Stock Index

CAD Canadian Dollar

CHF Swiss Franc

CNY Chinese Renminbi

CPI Consumer Price Index

DAX German Stock Index

DJIA Dow Jones Industrial Average

EPFR Global Emerging Portfolio Fund Research, Inc.

ETF Exchange Traded Funds

EUR Euro

FocusEconomics FocusEconomics is a leading provider of economic analysis and forecasts for 127 countries in Africa, Asia, Europe and the Americas, as well as price forecasts for 33 key commodities.

GBP UK Pound Sterling

GDP Gross Domestic Product

German IFO German Information and Forschung (research).

HSI Hong Kong’s Hang Seng Index

IIF Institute of International Finance

IHS Information Handling Services is a company based in London, United Kingdom. IHS provides information and analysis to support the decision-making process of businesses and governments.

IHS Markit A merger between IHS and Markit Ltd.

Indonesia's JSX Indonesia's Jakarta Stock Exchange

I/B/E/S 'Institutional Brokers' Estimate System

INR Indian Rupee

JPY Japanese Yen

KOSPI South Korea's Stock Index

Malaysia’s KLCI FTSE Bursa Malaysia Index

Markit Ltd A global financial information and services company founded in 2003 as an independent source of credit derivative pricing.

MICEX Russian Stock Index

MYR Malaysian Ringgit

Philippines PSE Philippines' Stock Index

PSEi The Philippine Stock Exchange, Inc

PMI Purchasing Managers' Index

PRC People's Republic of China

Q1,Q2,Q3,Q4 Quarter 1, Quarter 2, Quarter 3, Quarter 4

SCI China's Shanghai Composite Index

SGD Singapore Dollar

Singapore STI Singapore's Strait Times Index

TAIEX Taiwan's Stock Index

Thailand’s SET Thailand's Stock Index

U.K. United Kingdom

U.S. United States of America

U.S. Fed United States Federal Reserve


______________________________________________________________________________________

Definitions

USD U.S. Dollar

YOY Year-on-year

YTD / y-t-d Year to date


______________________________________________________________________________________

Important Information for Customers: WARNING: THE CONTENTS OF THIS DOCUMENT HAVE NOT BEEN REVIEWED BY ANY REGULATORY AUTHORITY IN MALAYSIA OR ANY OTHER JURISDICTION. YOU ARE ADVISED TO EXERCISE CAUTION IN RELATION TO THE INVESTMENT AND THIS DOCUMENT. IF YOU ARE IN DOUBT ABOUT ANY OF THE CONTENTS OF THIS DOCUMENT, YOU SHOULD IMMEDIATELY OBTAIN INDEPENDENT PROFESSIONAL ADVICE.

This document is strictly confidential and is issued by AmBank (M) Berhad (“AmBank”) on the basis that it is only for the information of the particular person to whom it was provided. This document may not be copied, reproduced, distributed or published by any recipient for any other purpose unless AmBank’s prior written consent is obtained. The information, statement and/or descriptions contained in this report has been prepared strictly as general information for quick reference and illustration purposes only and is not intended to be the complete description of any products mentioned or as an offer to sell or a solicitation to buy any securities, foreign exchange or other product. In providing this report AmBank is not making any recommendation to buy any securities or other product and the information provided should not be taken as investment advice. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. AmBank has no obligation to update its opinion or the information in this report and you should independently evaluate particular investments and strategies and seek the advice of a financial adviser prior to entering into any transaction. The information herein was obtained or derived from sources that AmBank believes are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we make no representation or warranties, express or implied, as to the accuracy or completeness of the information herein and expressly disclaims any liability for any loss (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) that you or your advisors may suffer as a result of your reliance upon the whole or any part of the contents of this report or for any loss that may arise from the use of this report or reliance by any person upon such information or opinions provided in this report. Members of the AmBank Group, AmBank Group affiliates and each of their directors, officers employees and agents (“Relevant Persons”) may provide services to any company and affiliates of such companies whose securities or other products are mentioned herein, may from time to time have a position in or related to the securities or products mentioned herein and may trade or otherwise effect transactions for their own account or the accounts of customers. You should assume that the Relevant Persons may provide or may seek investment banking or other services to or from the companies in which have an interest in the securities or products discussed / covered in this report or previous reports by AmBank. You should further be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. AmBank is not acting as your advisor and does not owe any fiduciary duties to you in connection with this report and no reliance may be placed on AmBank or this report in evaluating your investment objectives, financial situation and particular needs and decisions. This document has been prepared by Novagni Analytics and Advisory Sdn Bhd, a licensed investment adviser under the Capital Markets and Service Act 2007. Facts and views presented in this report may not reflect the views of or information known to other business units within AmBank Group. The information advice discussed or recommended in this report may not suitable for all investors and no steps have been taken to ensure that the recommended strategies referred to in this document are suitable for any particular investor. Nothing in this document constitutes investment, legal, accounting or tax advice or a representation that any investment or strategy is suitable or appropriate to your individual circumstances or otherwise constitutes a personal recommendation to you. This information herein is not intended to constitute “research” as it is defined by applicable laws. This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

Disclaimer

AmBank (M) Berhad (8515-D)

A

mS

PB

/082020

wealth management digest april 2020 - ambank · wealth management digest │ april 2020 5 _____...

Documents