The Covid-19 pandemic raged on and spread

to almost all countries worldwide. The

newly infected number seem to be the only

datum investors care now. Confirmed cases

in the U.S. has reached 180,000, surpassing

China and has become the most infected

country globally.

To combat with the impact on the global

economy, governments and central banks

have launched massive monetary and fiscal

policies. For instance, the U.S. Federal

Reserve has unleashed an unprecedented

unlimited-size quantitative easing program

in effort to protect the economy from

falling apart.

Nonetheless, worries of a worldwide deep

economic recession remain.

Yet, the dominating factor of such concern

still lies on the development of the

pandemic which is unfortunately beyond

anyone’s predictions.

Basically, the sooner the virus can be

contained and people’s lives can return to

normal, the faster the economy can recover

and less chance we will be entering into a

deep recession.

Seeing the high volatilities now, we

recommend maintaining a lower

risk-exposed portfolio.

Such approach not only helps protect us

against any short-term sharp market

drawdown, but gives us more flexibility to

re-enter the market when we see an

opportunity.

The baseline scenario now is we might see

the recovery within this year. For now,

despite the massive selloffs accumulated,

equity markets are still prone to risk-off

nature in following months.

Currently, we are seeing signs of a

slowdown of pandemic spread. If so, fund

flows back into equity and bond markets

would gradually increase.

GLOBAL STOCKS

COMMODITIES & CURRENCIES

-13.47%

-13.74%

-12.51%

-10.12%

-17.21%

-16.44%

-13.81%

-21.18%

-10.53%

-15.61%

-21.95%

-29.90%

-4.51%

-23.05%

-24.90%

-16.76%

-16.01%

-8.89%

-12.24%

-14.03%

-17.60%

-9.67%

-11.69%

MSCI World

Dow Jones

S&P

Nasdaq

France

Germany

UK

Australia

Japan

MSCI EM

Russia

Brazil

China

India

Vietnam

Indonesia

Thailand

Malaysia

MSCI Asia ex Japan

Taiwan

Singapore

Hong Kong

South Korea

-0.54%

-54.24%

-16.53%-12.08%

8.33%

Gold Crude Oil Platinum Copper Wheat

0.93%0.05%

0.53%

-3.14%

-5.89%-4.79%

-1.52%

0.10%

-14.09%

-3.71%

-1.27%

USD EUR JPY GBP AUD CAD KRW TWD BRL INR CNY

The Wuhan coronavirus outbreak has cost the

United States 30,980 of lives, pressing on the

need for an emergency budget of $2T fiscal

stimuli. Till this day of writing, the country is

still under threat of the deadly virus. As of 16/4

12:46 GMT+8, worldwide reported cases

reached 2M, U.S. alone had 639,628.

I admit it’s tedious to look at news headlines

and find the same topic day after day but in the

end of the day, our economy judges primarily on

this. Either to the financial markets or growth

factors, the pandemic has made a historical

fight, not to mention the wearing-out medical

system in many countries.

The IMF found that G20 government have spent

3.5% of GDP on this fight till April 8, much

higher than the three financial crises as shown.

The IMF also highlighted the >10% of GDP

public-sector liquidity support including loans

and guarantees for firms in France, Germany,

Italy, Japan and U.K”.

Thanks to World Health Organization, whose

chairperson Tedros Adhanom refused to address

the severity at early stages, a lot of countries in

which the virus now spreads drastically had lost

the chance to react in time when they still

could. The failed responsibility has caused

actual lives and dollars. Yesterday Trump

announced that he would cut U.S.’s funding for

the WHO.

The WHO’s budget’s around $6B per annum and

America contributed $400M, ten times to

China’s (2nd biggest financial backer). Under U.S.

Federal budgetary law, Trump may temporarily

halt the funding and send a rescission message

to Congress who has the following 45 days to act.

Else, Trump’s threat stays verbal, but it was

enough to have changed Adhanom’s arrogant

attitude. Let us hope that the WHO can at least

do its best to help contain the pandemic in the

future.

This does not just stressed Adhanom but could

worsen the already-under-trade-war U.S.-China

relation if you haven’t forgot. Furthermore, the

pro-conservatives FOX news lately quoted an

unnamed source that suggested, ‘“Patient Zero”

of COVID-19 was from a bio-weapon lab in

Wuhan and the claim about the seafood market

was just a distraction’. Trump responded that

they are investigating into these claims. As such,

we imagine the U.S.-China relationship could

hardly improve much this year.

Growth all went down and economy focus went

back to the basics: necessities posted record

sales surge especially for food and beverage

stores in the U.S. (+25.6% compared to -26.5%

for restaurants and bars).

Also “work-from-home, stay-at-home” became

major, we expect to see stamina in e-commerce,

takeaway and delivery businesses. Investors are

mostly drawn to the obvious defensives like

healthcare and property stocks but then

innovative and fast-growing sectors like

biotechnology R&D, 5G/ smart-tech, are also

their favorable picks as looking for cure is

essential and that everything goes online now.

The technology business is transforming, saying

Apple is launching its first 5G model this year.

As long as the upcoming earnings aren’t too bad,

sometimes, chances come from chaos. Rather

than sitting idle at home, why not look closer

and find yourself some timely investment

opportunities to add positions.

Annualized consumer prices YoY %

Core inflation rose 2.1% year-on-year, compared to the consensus of 2.3%. It was

the lowest level since June 2019. Meanwhile, the annual inflation rate fell to

1.5%, from 2.3%, mainly due to gasoline costs (-10.2%) and apparel prices (-1.6%).

Adjusted retail & food services sales SA total MoM %; Factory output MoM%

Retail sales fell by the most (-8.7%) since 1992 as coronavirus containment

measures escalated, almost every state has issued a stay-at-home order. Factory

output suffered the largest drop (-6.3%) since the aftermath of World War II!

Weekly continuing jobless claims & jobless rate; Non-farm payrolls MoM

Jobless claims hit 7.5M in the week of 28 March, the highest level on record, also

bringing March’s unemployment rate to 4.4%. Non-farm jobs lost 701K in March,

much worse than the expected 100K cut and was the first decline since Sep 2010.

March finished with continued selloffs in U.S. equity market but we see the

momentum picking up lately and expect rebound of medium strength in

upcoming weeks.

The risk-off sentiment across the market pushed S&P 500 index long way down

to the lowest level against 10-year U.S. Treasuries since 1983. The sharp

sell-offs were historically evident, suggesting a possibility that the bear market

might already be over before we realize. A little bit of peaking signs of the

pandemic is more than enough to trigger rebounds right now.

But then on the economic aspect, presumably the hardest hit is still yet to

surface. Economist Joshua Shapiro from Maria Fiorini Ramirez Inc. points out,

“… economy starts to reopen you’re going to get a bounce, but the bounce is

not going to come anywhere close to replacing what was lost for a long, long

time… may not start to recover until the end of the year at best…”

That means, even if household consumption comes back after the pandemic

peaks, business capital investment will take time to recover and its downturn

will linger.

IHS Markit Manufacturing PMI index for Euro area and Germany

In the Euro area aggregate, the index for March was revised downwardly to

44.5, making the steepest contraction since Jul 2012. In Germany, the index

was revised lower to 45.4 which pointed to 15th straight month of decline.

Expected consumer prices in the Euro area YoY%; Germany wholesale prices YoY%

Core inflation rate is likely to ease to 1% whereas inflation rate is expected to

slow to 0.7%. Meanwhile, wholesale prices in Germany dropped by 1.5% in

March, following the 0.9% decline in February.

New passenger vehicle registrations in Germany; ZEW indicator for Euro area

New car registers contracted by 20% in 2020Q1, recorded a mere 215K in

March compared to around 350K in March of 2018 and 2019. The indicator of

economic sentiment for Euro area dropped by 59.9 points to -49.5 in March.

The COVID-19 outbreak in Europe is still underway. Above all, case numbers

have climbed to more than 200,000 in many nations in the region. As of

17/4/2020 15:30 GMT+8, 184,948 have been infected in Spain, 168,941 in Italy.

Remember the crying faces we saw on news when HSBC (0005.HK) canceled

their dividends? An interesting fact discovered by a Paris-based research firm,

AlphaValue, found that even at rough times like now, family influence seems to

hold on strongly in keeping their investors paid.

Their analysts shortlisted these firms out from the STOXX 600 index Among the

mother index’s companies, over a quarter have cancelled or postponed their

dividends last month but only 4% in the shortlist did so.

Market crisis is always a time to learn. Here provide more insights especially

risk-adverse investors who like to get regularly paid. Next time when you pick a

stock for buy-and-hold, we suggest you finding a company that have similar

beliefs as yourself other than profitability, we believe in this way you can save

yourself much time panicking.

Industrial production YoY%; Caixin Manufacturing and General Services PMI index

Output reading posted three declines in a row, fell 1.1% in March.

Manufacturing PMI level climbed back to hang on the expansionary boundary

to 50.1 whereas services PMI rose from record low at 26.5 to 43.

Year-on-year inflation (producer prices, core consumer prices, food prices)

Producer inflation stood at -1.5% in March, worse than the previous -0.4%.

During the month, core consumer inflation rose from 1% to 1.2% with eased

pork inflation at 116.4%.

GDP annual growth rate YoY%

The economy has suffered tragic losses in various sectors shrinking the

aggregate size by 6.8% in the first quarter. This is the first GDP contraction on

record, since records began in 1992.

The broad equity market saw a sell-off in almost all countries in March, and

the overall performance of emerging markets was slightly worse than the

developed markets.

For comparison, the MSCI World Index fell about 13% on the month while the

MSCI Emerging Markets Index fell about 16%. Among the BRIC countries, all

three stock markets except China suffered a decline from 20% to 30%.

Oil prices fell sharply by more than 55% in the single month and dragged Brazil

down to be the worst performing stock market in March. The Brazilian market

once hit the biggest single-day decline since 1998, which was on the 7th worst

day in history. Petrobras’ preferred stock market value has evaporated over USD

20 billion. The IBOV index fell year-to-March-end by nearly 37%.

Meanwhile, Russia Finance Minister admitted that the total revenue in 2020 will

decrease far more than previously predicted, by USD 39.5 billion, and that the

budget is bound to a deficit.

Broadly in Asia, after the selloffs, low valuations made it tempting for

bottom-fishing fund inflows into the market, pushing at least seven Asian

markets to rebound more than 20% from their March lows. The region’s

benchmark quickly neared its technical bull zone, just 3% from the boundary

now.

Rebound is easy on the technical side but the true challenge to face is the

upcoming earnings which would tell whether these stocks could keep or lose

their upside momentum. After all, the damage done to business by the

coronavirus is rock hard fact. Therefore, it’s still not time to let guards down,

be smart and brace for the possible volatilities.

While all attention’s on the coronavirus impact, our mother earth is indeed

under multiple attacks. Look at the surge in financial costs and you might

wonder why fires keep haunting us.

Right now as we speak, forest fires are still raging in northern Thailand, Ukraine,

even the Australian Bushfire which has begun in June 2019 is still going on (burnt

18.6M hectares of land and counting).

Tropical drying seasons were “natural” cause but the alarmingly increasing

frequency, length and devastating are highly related to human activities. Say for

example, drought has been worsened in Thailand and other downstream countries

of the Mekong Mainstream due to dam constructions. Deforestation depleted

forests’ self-defense mechanism which led to 2019 Amazon rainforest wildfires

that burnt 906,000 hectares of land and destroyed habitats to a wide variety of

animals including highly endangered species.

Another proof comes in handy. Worldwide photographers have captured beautiful

sceneries that have lost long to be restaged recently as human activities have been

forcibly stopped due to anti-pandemic measures. Funny that a disaster to us might

just be blessings to the nature.