Asian shares were down on Friday and on track for a weekly loss as investors were anxious over faltering global growth and the possibility of the US Federal Reserve raising borrowing costs this year. Data released on Thursday showed US gross domestic product increased at a 1.5 percent annual rate, just shy of the consensus forecast for 1.6 percent growth and slowing from a 3.9 percent rise in the second quarter. But solid consumer spending kept alive the possibility that the Federal Reserve could deliver an interest rate increase in December. The US central bank held policy steady on Wednesday and left the door open to hike interest rates for the first time since 2006 at its December meeting.
That signal came amid growing anxiety over a slowdown in global growth, with signs of waning momentum in China in particular stoking volatility in global markets in recent months.
For the month of October, Asian shares edged higher and were on track for their biggest monthly rise since January 2012,as global central banks kept stimulus policies intact and many hinted at further steps to re-energise their economies.
The S&P 500 was up 0.2 percent over the week. For the month, the benchmark index gained 8.3 percent. All 10 main sectors posted monthly gains, with materials, energy and technology shares leading the gainers. The Dow Jones Industrial Average rose 0.1 percent over the week while the Nasdaq Composite was up 0.4 percent for the week.
The benchmark FTSE Bursa Malaysia KLCI tumbled 2.64 percent last week. It started out the week on the positive side, however, the momentum could not be stretched, as profit-taking kicked in shortly despite regional markets putting up a fairly good show. Local investors were concerned about slowing global growth and waning demand in China.
On the currency front, the Malaysian Ringgit led a decline among Asian currencies this week with Fitch warning that Malaysia may miss its fiscal deficit reduction target. In addition, concerns of higher US interest rates may spur more capital outflows.
Investment Strategy & Focus
We have trimmed and taken profits on some of our positions as the markets rallied in October. We remain cautious as we sense that markets seem to be lacking conviction. Though our cash position remain high, we continue to look for investment opportunities which will benefit our portfolios. Currently, we favour income yielding investment instruments
Our Recommended Funds
Markets have done well in the month of October, however, we still see structural issues in the economies. As such, investors should adopt a cautious stance when investing. Exposure into funds under the Select Income series would help cushion investors’ portfolio risk.
For investors with higher risk appetite, we see pockets of opportunities in Asia. Investors can seek exposure into this region through the Select Asia Pacific (ex Japan) REITs and Infrastructure Fund, Select Asia (ex Japan) Opportunity Fund and Select Dividend Fund. For tactical investments, investors can invest into the China Growth Fund and Japan Growth Fund.