Weekly Market Update - 17 August 2015

Market Outlook

Equity Market Outlook

• Global investors are risk-adverse after a surprise move by the People’s Bank of China (PBoC) to weaken the yuan to reflect the market price.
• Asian currencies weakened against the USD across the board. The ringgit has weakened over 14% this year against USD. 
• Sentiment remains weak as investors focused on currencies and the potential US rate hike in September.
• Expect market to remain volatile in near term until the Federal Open Market Committee’s (FOMC) decision on interest rate.
• Our funds remain invested in companies that will benefit from the strong USD. 

Fixed Income Outlook

• The sovereign bond market traded weaker on the depreciation of the ringgit. Over the week, yields rose across the curve between 7-22 bps with the 3 and 5-year benchmark yields rising the most. The ringgit continued to drop sharply last week on falling fuel price, yuan depreciation and the sell down in the local equity market. Last week, the Chinese central bank announced the change of its fixing mechanism of the yuan, in a move to liberalise the exchange rate. Investors speculated on the motive of the central bank and promptly sold off the yuan.  Most Asian emerging currencies fell in tandem with the yuan depreciation due to China being a major trade partner within the region. 
• Second quarter GDP grew 4.9%, better than the expected 4.5%. However this positive release failed to lift market sentiment.

Source: Lipper for Investment Management, as at 14 August 2015
 

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