What are you looking for?

As many of us are aware, the government has recently announced its directive to extend the Movement Control Order (“MCO”) to 14 April 2020. In view of this, all of our branches will continue to be closed throughout the duration of the MCO or until further notice.

However, you can be assured we are committed to ensuring that your financial needs are looked after while we do our best to safeguard the health of our employees and investors.

Meanwhile, we will continue to accept transaction requests/enquiries by means of email at [email protected] so that our services can continue with minimal interference.

As an investor, we understand that you may have some pressing questions for us especially as there are new developments occurring almost every day. Let us help you alleviate some of the concerns that you may have during this trying time.

It’s barely three months into 2020 and there are already a multitude of developments to keep investors on their toes. If you had asked anyone back in December about their biggest concerns for the year ahead, chances are they would have said the US-China trade war, Brexit, the US presidential election, and Europe’s slowing growth, among other things. Who would have thought a new virus would be added to that list?

Avoid the herd mentality in fearing the market. All these are cyclical in nature and at this moment the flows expected is more in line with the decline in stock market and investors getting jittery with the above multitude of events.

We think markets will continue to be highly volatile with a downward bias in the short term as the global economy grapples with the twin crisis of COVID-19 and the oil crash. Hence we will adopt a defensive positioning by raising cash but also remain selective buyers of quality stocks where we see value emerging.We have already adjusted positioning by reducing some exposure to high beta oil and gas names. However, minor positions are still maintained given the already sharp fall in share prices and the possibility of a future agreement between OPEC and Russia. Additionally, some of the stocks we own in this sector are more defensively positioned such as oil & gas transport, logistics and storage and hence will be less impacted by a fall in oil prices. 

Other oil stocks that are less impacted from under a low oil price environment include asset owners that have long term fixed payment contracts which are not entirely tied to volatility in spot prices. Hence, we would only focus on reducing the high beta oil names at more favourable levels. Overall we have tweaked our investment strategy to reduce commodity exposure and increase exposure to exporters and dividend yielders.

We are cautious and will continue to monitor the spill-over risks to the region from COVID-19, such as in China (consumption and services, among other direct impacts), Thailand (tourism) and South Korea (supply-chain disruption). But we are heartened by the policy space available to Asian authorities and the decisive steps taken so far. In conjunction with the monetary policy, we expect fiscal policy levers to kick in. This will, of course, come from China directly, while Malaysia has introduced and continues to plan more measures to provide budget support to the economy.

Mainstream Asian economies have learnt their lessons from past crises and have built strong sovereign balance sheets, which are meant to be deployed to cushion their economies in the face of external shocks.

With news-flow on central bankers’ commitment to save economies and markets, equity markets rebounded sharply during the week, along with a moderation in fund redemptions. With the evolving landscape and volatility, the market backdrop is basically very supportive for long-term beta trade.

If the market keeps sinking, remember that, for many investors, this is okay: You are investing your money for the long term, not for this week or even this year. Unless you’re near retirement, you will likely have time to recover. Future gains are never guaranteed, but the stock market reflects the economy, which will eventually recover from COVID-19. History shows that if you can ride out market lows, stocks should gain in value over time.

Our assessment is that impact on global growth from the outbreak will be significant but relatively short-lived. There is still long-term value in many businesses regionally and locally which would continue to grow, despite the short term pain of the crisis.

We have no idea how long this volatility will last, nor does anyone else. Therefore, it’s important to stay calm. In the meantime, though, you should still consistently invest for retirement and other financial goals. This strategy is called dollar-cost averaging.

The length of the downturn would thus depend on 2 issues: 1) how long the virus infection continues to escalate, and 2) the duration of the price war by Saudi Arabia and Russia. With regards to the first issue, some analysts are of the opinion that the virus outbreak could moderate towards the end of 1H as governments impose strict measure to curb its spread.Positively, the effectiveness of the Chinese government’s measures to ensure recovery can be seen, if so (although the situation is still dynamic), oil demand could start to recover back in 2H 2020.

Meanwhile, a resolution to issue No.2 remains harder to forecast, as it depends on both countries’ willingness to tolerate low oil prices. Industry observers are divided, with some stating that both countries will see large increases in budget deficits at these oil price levels and would thus be keener to strike up a deal after some time. Meanwhile, others have pointed to Russia’s willingness to withstand low oil prices in pursuit of more strategic goals. Should both situations start to ease, the equity market could see a recovery towards the 2H.

There have been recent reports of emerging scams seeking to take advantage of the COVID-19 situation by using fraudulent websites, phone calls, emails and text messages claiming to offer “help” but may be trying to trick people into providing personal details, bank account numbers and other valuable details. As such, do not divulge your bank or credit card numbers or other personal information over the phone to a third party, unless you can verify that they are indeed calling from a legitimate source. Avoid accessing unknown hyperlinks from websites or social media as they may be masquerading as software and utilities websites relating to COVID-19 cases. Be wary of callers claiming to be government representatives or volunteers asking for personal financial information for donations.

We are seeing more investors moving to safe havens/passive assets in a panic rather than due to financial constraints. At our firm we are seeing our money market, fixed income and leveraged and inverse products recording net inflows. Based on this, we gather as of now most our investors are looking at all options when it comes to choosing the right instrument and exposure for their portfolios and with the MCO in place they are spending more time reviewing their portfolios. There are also great opportunities in the decorrelated returns and risk profile that can be found in alternative asset classes and the diversification offered by multi-asset solutions. 

The withdrawal allowance by KWSP and many measures introduced are likely to provide a welcome relief to those who are affected by the coronavirus (COVID-19). As these measures are meant to alleviate financial challenges, we suggest that this should be one of your last resorts, same goes with taking out from your investment portfolios.

If it is really due to financial constraints and to avoid anxiety-induced decision making, we would advise you to have a good withdrawal strategy to control outflow; eg amount, frequency etc. You may also speak to licenced Financial Planners or our advisors who can help you come up with a withdrawal schedule that works best for you.

Rest assured that we will always be keeping you informed of any latest developments to our services, products and the market via our website. If you have further queries, please do not hesitate to email us at investorservices.com.my, call us at Toll Free: 1-800-88-3737 or speak to your servicing adviser.