Covid-19 infection figures in USA overtook every other country in March, handily breaking through the 100,000 mark, countermeasures such as social distancing and shelter-in-place orders were gradually adopted as cases spiked. The government was criticized for undermining the potential outbreak at the early stages and reacting too slowly. At the moment, eyes are on various economic figures, with emphasis on employment data, especially with the recent record high in initial jobless claims, which were magnitudes higher than peak figures back in 2008.

With sweeping control measures, economic activity is expected to further dampen, various studies from IMF and others predicted USA to have a flat year in economic growth, the Federal Reserve Bank of St. Louis President even predicted a peak unemployment rate of 30% in the country. The White House is now implementing an unprecedented level of fiscal stimulus, and more is expected to follow in April after the Congress returns from recess. Although the general economic outlook is far worse than how it was at the beginning of the year, valuations are at a much lower level, quality stocks could potentially offer investment opportunities in the mid to long-run.

United States

Recently, the situation in many epidemic-hit areas in Europe and the US have shown signs of easing, and global stock markets reacted and rebounded. Over the past 5 days ending Wednesday, the three major US stock indexes rose 10%. Although the covid-19 death tolls in New York and New Jersey have reached new record highs, the US government hopes that the country’s economy will resume to normal within four to eight weeks, public health specialists in the White House Public Health team are drafting a plan to safely reopen after the lockdown. In terms of monetary policy, the minutes from the Fed’s March meeting showed that the Fed was using emergency interest rate cuts to buy time for studying the feasibility of launching of new tools. US Treasury Secretary Mnuchin mentioned that the Fed will launch a loan programme for medium-sized enterprises this week to support them during the epidemic. There have been new developments in the US elections, and aspiring president candidate US Senator Bernie Sanders ended his presidential campaign, which means that former vice president Joe Biden will likely become the Democratic Party’s presidential nominee. Survey showed that Biden is expected to defeat Trump in a 49% to 41% vote. As for crude oil market news, OPEC + will hold an emergency meeting on Thursday to discuss production cuts, it was reported that Russia is preparing to cut crude oil production by 1.6 million barrels per day, the market will keep an eye on the oil price. Next week, the US will announce retail sales, economic leading index and the Beige Book.

Europe

With the growth of new cases slowing down, Italy and fellow countries are considering to relax their lockdown measures, Germany also began discussions on uplifting epidemic response measures. Over the past 5 days ending Wednesday, the UK, French and German stock indexes have rebounded about 4-8%. It was reported that the European Commission is looking at a coordinated approach to formally uplift the lockdown measures across the region, it is expected that the details will be announced after Easter. As for the UK, it was reported that the condition of the Prime Minister Boris Johnson, who is still in the intensive care unit, has improved. However, the outbreak in the country is still severe, and the daily number of covid-19 deaths has also set record highs. An official reckoned that the UK may extend its lockdown measures for another several weeks. The market will pay close attention to the European epidemic situation and the news on uplifting lockdown measures.

China

This week, Chinese and Hong Kong stock markets also made good recovery, but the rebound was slightly less than to European and American peers. The People's Bank of China announced lowering the reserve ratio for small and medium-sized banks in April 2020, releasing a total of about 400 billion yuan in long-term funds. Starting from Tuesday, the interest rate of excess deposit reserves of financial institutions in the central bank will also be lowered from 0.72% to 0.35%. Market expects that relevant measures will offer targeted help to small and medium-sized banks and enterprises affected by the epidemic. Hong Kong has also announced an epidemic relief plan of HK$ 137.5 billion, which is positive for market sentiment. In terms of economic data, China's foreign exchange reserves fell by US$ 46.1 billion in March, which is the largest decline in more than three years. China will release data such as 2020 Q1 GDP and fixed investment figures next week.

• Recent activities include : Harris Fraser held a Press Conference on “2020 Global Investment Market Outlook”, Attended Bloomberg Businessweek/Chinese Edition Top Fund Awards 2019
• Columns, media interview and online channels : “TVB News”,“TVB Big Big VIP”, “Now  FINTERVIEW”, “iCable Finance”, “iCable News”, “Capital”, “Edigest”,“SingTao Newspaper”, “Sing Tao Investment Weekly”, “Headlines News”  , “ET Net”, “Business Times”,“OrangeNews”, “Quamnet”,” stockviva”and online videos produced by Harris Fraser Group. (including but not limited to the above)

Harris Fraser Group celebrates 30th anniversary this year. During the past 30 years, the group has continued to serve our clients and business partners with our expertise in insurance, portfolio management, property investment and any other wealth management solutions to protect their wealth and health.

Throughout the years, AXA Hong Kong and Macau has been offering a wide range of life, health, property and casualty protection, as well as wealth management and retirement solutions to help customers achieve stability and prosperity. Today, over 1.3 million customers in Hong Kong and Macau, from individuals to established businesses, count on AXA Hong Kong and Macau to financially protect them, their loved ones and their future.

We dedicate this award to all of our clients, partners and staffs who made this possible!

United States

After the strong but short-lived rally last week, global stock markets faltered in the face of the widening epidemic. Over the past 5 days ending Thursday, the Dow, S&P 500, and NASDAQ fell 5.05%, 3.92%, and 3.98% respectively. Just as President Trump has signed the record $2 trillion stimulus bill in order to stop the economic bleed due to the covid-19, House of Representatives Speaker Nancy Pelosi noted that the congress is already considering the fourth response package to combat the epidemic fallout. However, Treasury secretary Steven Mnuchin and Republican representatives are not committed to drafting an additional bill before fully implementing the current package, and any further floor vote will likely take place not earlier than mid-April until the House and Senate returned from recess. The COVID-19 situation is USA continues to grow as daily number of cases continue to grow at double digit percentages daily, all 50 states in the US has taken various measures including stay-at-home orders. As jobless claims continue to grow, markets remain concerned about the extent of economic recession in the country. Next week, University of Michigan Sentiment, CPI figures, and FOMC meeting minutes will be released, markets will keep an eye on the jobless claims as a proxy for the economic health.

Europe

After the amazing rebound last week, European equities once again came under pressure this week. Over the past 5 days ending Thursday, UK, German, and French indexes went down 0.55 – 3.00%. The 2 epicenters in Europe, Spain and Italy, have exceeded the 100,000 mark in confirmed cases. With both economies innately frail and at the brink of collapse, the two countries have called for joint European responses to the ongoing epidemic. The point of controversy being the joint recovery bonds, also known as corona bonds, which are joint debt issued to member states of the EU, this allows both debt-laden countries to fund any meaningful post-crisis economic recovery programmes. However, the proposals met great resistance from better-off members of the union, in particular Netherlands, France, and Germany. The strong opposition towards the new issue from the Netherlands proves to be a great obstacle, while France and Germany raised their alternative solutions over the corona bonds. The apparent North-South divide is likely next in line to present as a challenge to the union, as the former European commission president Jacques Delors warned. Next week, we will see more data on UK and German industrial production.

China

China and Hong Kong stock markets had a fair week, the Hang Seng Index dropped 1.06% over the week, while the CSI 300 Index stayed flat, slightly rising 0.09%. Regarding the situation of the epidemic, according to Chinese official figures, the number of locally transmitted cases was close to zero over the past week, and the former Covid-19 epicentre Wuhan begins to reopen over the week, marking the beginning of the end for the outbreak in the country. The PBoC have announced 100 bps of RRR cuts for qualifying banks, implementing in 2 phases effective as of April 15 and May 15, releasing 400 billion yuan to the market. As the latest PMI figures implies a swift recovery, the Chinese economy is poised to play catch-up for the lost progress in the first quarter. Next week, China will announce PPI, CPI, and money supply M2 figures for March.

• Recent activities include : Harris Fraser held a Press Conference on “2020 Global Investment Market Outlook”, AttendedBloomberg Businessweek/Chinese Edition Top Fund Awards 2019
• Columns, media interview and online channels : “TVB News”,“TVB Big Big VIP”, “Now FINTERVIEW”, “iCable Finance”,“iCable News”, “Capital”, “SingTao Newspaper”, “Sing Tao Investment Weekly”, “Headlines News” , “ET Net”,“OrangeNews”, “Quamnet” and online videos produced by Harris Fraser Group. (including but not limited to the above)

United States

Global stock markets rebounded this week, US equities had a great week. Over the past 5 days ending Thursday, the Dow, S&P 500, and NASDAQ gained 12.27%, 9.16%, and 9.05% respectively. As for virus relief measures, the two parties in Congress are close to reaching a deal on the largest stimulus package in US history, driving the global stock market up. In particular, the Dow has recorded the largest daily gain since 1933 in the week. Market expects the House of Representatives to swiftly approve the US$ 2 trillion stimulus bill on Friday. In addition, members of both parties in Congress also wrote to Trump requesting all tariffs to be postponed for 90 days, the Federal Reserve is also expected to inject trillions of dollars to the US economy for further support. As for the COVID-19 epidemic, the United States has surpassed China and became the country with the most number of confirmed COVID-19 cases in the world. More officials have also contracted the disease globally, including Prince Charles of the UK and the Deputy Prime Minister of Spain. Outside the US, the G20 also pledged to use every means to fight the outbreak. As for the latest economic data, initial jobless claims figures in the US last week has soared to a record high of 3.28 million, which is more than four times higher than the previous record set in 1982. US and global PMI data will be released next week, which should shed more light on the global economic outlook.

Europe

European stock markets also rebounded significantly. German and French markets rose by more than 16% over the past 5 days ending Thursday, while UK equities also rose more than 12%. After multiple countries increased economy stimulus, the Bank of England also kept the benchmark interest rate at a record low on Thursday, the central bank noted that it could further increase asset purchases if necessary. As for the epidemic situation, Italy’s new COVID-19 cases on Thursday saw the largest daily increase up to date, and the situation remains severe. The UK has entered a national lockdown and demanded citizens to stay at home. Regarding economic data, the Eurozone consumer confidence index in March fell to negative 11.6 from negative 6.6 in February. European Central Bank Vice President Guindos said that the COVID-19 epidemic will send Europe into recession, but it should be short-lived and expects a rebound in the second quarter. Eurozone will release data on inflation and unemployment next week.

China

China and Hong Kong stock markets had a weaker rebound this week compared to global markets. The Hang Seng Index rose 2.99% over the week, and the CSI 300 Index rose 1.56%. It was reported that according to Chinese Ministry of Foreign Affairs officials, China is implementing a US$ 344 billion package to combat the COVID-19 epidemic, with fiscal measures as the mainstay and tax reliefs of about RMB 1 trillion. The market expects the 7-day reverse repo and a one-year MLF interest rate to further reduce by 10 bps. Next week, China will announce the official March manufacturing and non-manufacturing PMIs, as well as the Caixin Manufacturing and Services PMI Indexes for March.

• Recent activities include : Harris Fraser held a Press Conference on “2020 Global Investment Market Outlook”, AttendedBloomberg Businessweek/Chinese Edition Top Fund Awards 2019
• Columns, media interview and online channels : “TVB News”,“TVB Big Big VIP”, “Now FINTERVIEW”, “iCable Finance”,“iCable News”, “Capital”, “SingTao Newspaper”, “Sing Tao Investment Weekly”, “Headlines News” , “ET Net”,“OrangeNews”, “Quamnet” and online videos produced by Harris Fraser Group. (including but not limited to the above)

Harris Fraser always strives to provide the best service to our long-term business partners and clients. Given the increasing number of confirmed COVID-19 cases and an heightened risk of a community outbreak in Hong Kong,  in the best interests of our clients and employees, our dedicated teams of professionals will be working on shift and remotely to continue providing services to support businesses. 

Despite the imminent threat of the COVID-19 epidemic, Harris Fraser will keep the existing service level unchanged. However, we appreciate your understanding of any occasional delays in our response to your enquiries or requests due to providers' operation which is out of our control. 
 
In case of any emergency, please contact your consultant or relationship manager directly. 

Thank you for your understanding and we sincerely apologise for any inconvenience caused.

Harris Fraser Group

23^rd March, 2020

United States

The global spread of the COVID-19 epidemic has not subsided, the number of cases globally has risen sharply and exceeded 230,000, and the number of deaths globally has also broken the 10,000 mark. Europe became an epicentre of the COVID-19 epidemic, virus deaths in Italy alone surpassed Chinese figures. However, the selloff in US stocks has shown signs of easing. Over the past 5 days ending Thursday, the Dow fell 5.25%; the S&P 500 lost 2.87%; while the NASDAQ has the smallest drop of only 0.71%. US equity markets recorded the worst one-day percentage drop since 1987 on Monday, and triggered the ‘Circuit Breaker’ several times in recent weeks. Apart from stock markets falling, it was surprising that other assets classes also experienced significant selloffs, this includes traditional safe haven assets such as investment grade bonds and gold. The common consensus on the cause of the prolonged market fall was mainly driven by large-scale deleveraging factors, resulting in virtually all financial assets being sold in the market for cash. Therefore, the US dollar index which reflects the strength of the Dollar has also risen sharply. In terms of international oil prices, after Saudi Arabia insisted on increasing crude oil production, WTI Crude briefly touched the level of US$ 20.06 per barrel, before rebounding to around $26.6/barrel at the time of writing. At the moment, the fed funds rate is down to 0.00 - 0.25 %, and President Trump has signed the second epidemic relief bill of US$ 1.2 trillion, the market is still evaluating the effectiveness of the latest rescue measures.

Europe

The number of new cases of COVID-19 in the world has increased sharply, and Italy has become the epicentre of the ongoing epidemic, Prime Minister Conte will announce the extension of the national lockdown and school suspension. Britain however has rejected plans to lockdown London, and Prime Minister Johnson claimed that the government can get the situation under control within 12 weeks. In order to combat the impact of the virus epidemic on people’s livelihood and the economy, the European Central Bank announced an asset purchase plan of 750 billion euros; the Bank of England also cut interest rates by 0.15% to 0.1%, and extended the scale of the bond purchase program by 200 billion Pounds. Over the past 5 days ending Thursday, the UK, French and German indexes fell 1.64% to 6.01%.

China

The COVID-19 epidemic brought challenges to the Chinese economy, and the country’s industrial production, retail sales, and fixed investment growth figures have all seen sharp falls in February. However, the epidemic seems to be fading out in China. This week, the country reported zero locally transmitted cases, the first time since the outbreak. Over the week, the CSI 300 and the Hang Seng Index fell 6.21% and 5.11% respectively. China announced today that its one-year and five-year LPRs will not be adjusted, while the market had originally expected them to be reduced by 5 basis points each. At the moment, market expects that The two sessions will be postponed until late April or early May. Industrial profits data will be published next week.

• Recent activities include : Harris Fraser held a Press Conference on “2020 Global Investment Market Outlook”, Attended Bloomberg Businessweek/Chinese Edition Top Fund Awards 2019
• Columns, media interview and online channels : “TVB News”,“TVB Big Big VIP”, “Now FINTERVIEW”, “iCable Finance”, “iCable News”, “Capital”, “SingTao Newspaper”, “Sing Tao Investment Weekly”, “Headlines News” , “ET Net”, “OrangeNews”, “Quamnet” and online videos produced by Harris Fraser Group. (including but not limited to the above)

Over the month, the Bloomberg Barclays Global Aggregate Bond Index was up 0.67%, US Investment Grade was up 1.34%, while Emerging Markets US dollar Bonds and US High-yield bonds fell 0.20% and 1.41% respectively.

In light of the spikes in volatility at the end of February, we expect fixed income to stay positive this year. Although the FOMC members earlier claimed that there is unlikely to be any changes to the policy rates in the near future, in an attempt to calm markets and provide liquidity, Fed Chairman Powell announced a surprising emergency rate cut of 50 basis points in early March. With the COVID-19 epidemic surging across the globe, it was expected most major global central banks should follow the Fed and provide further rate cuts to boost business confidence.

As the impacts of the supply chain disruption has yet to be fully reflected in the real economy, its threat to equity markets provides upside potential for fixed income products in form of future rate cut expectations. The theme in year 2020 remains heavily dominated by exogenous risk factors and external shocks, fixed income exposure may reduce volatility in the portfolio, reducing downside risk and improving risk adjusted return.