United States 

The novel coronavirus pneumonia continued to rage across the globe. According to China officials and the World Health Organization (WHO) data, confirmed cases have exceeded 9,800 with more than 210 deaths. The WHO has decided to list the new pneumonia epidemic as a Public Health Emergency of International Concern. The global spread of the epidemic drove up anxiety in the investment market, we saw a slight correction in US equities earlier in the week, but the Indices managed to rebound on Thursday as corporate earnings surpassed market expectations. Major technology giants, including Amazon, Facebook, Apple, and Microsoft alike, announced their latest quarterly results this week, all of them beat market estimates, Paypal, MasterCard and Tesla also reported earnings beat. The US Federal Reserve announced no change in interest rates after the FOMC meeting, in line with market expectations. The FOMC policy statement claimed that the current inflation remains low and the economy is still growing at a "moderate rate". US economic data this week was satisfactory, as the 2019 Q4 GDP growth of 2.1% was slightly better than market expectations of 2%. Next week, US January data on ISM manufacturing and non-manufacturing PMI, non-farm payroll data alike will be released.

Europe

European stock markets declined over the week; the German DAX index fell 1.7% over the past 5 days ending Thursday. The Bank of England kept interest rates unchanged at 0.75% as expected, the Bank also maintained the same asset purchase scale. After the meeting, the Bank lowered its economic growth forecast, reducing the GDP growth forecast for 2020 from 1.2% in November 2019 to the current 0.8%. In addition, the central bank expects CPI to stay below the 2% target level until the end of 2021. Carney pointed out that British economic activity has increased significantly, and the economic growth rate in the first quarter of this year could reach 0.2%. If the economic recovery fell in line with expectations, a mild policy tightening might even be needed. On the other hand, the European Central Bank stated that it was ready to take any action on market fluctuations resulting from Brexit. Eurozone and German manufacturing PMI data will be released next week.

China

Confirmed cases of the novel coronavirus pneumonia in Mainland continued to increase, Asian stock markets suffered hefty setbacks. After the market opened on Wednesday, Hong Kong stocks plummeted more than 700 points for two consecutive days, totalling to a sharp drop of 5.4% over the period. After approval by the China Securities Regulatory Commission, the mainland stock market decided to extend the Lunar New Year holiday until 2nd February, and only open by 3rd February (next Monday). However, the Chinese economic data released was not excessively pessimistic. China’s manufacturing PMI dropped to 50 in January, a 0.2 drop from last month, in line with market expectations. The non-manufacturing PMI rose to 54.1 over the same period, increasing by 0.6 MoM, which was also better than the market expectation of 53.0. However, in the face of the severe epidemic situation, the offshore yuan (CNH) continued to weaken, falling below the 7 level against the US dollar for the first time this year. Service PMI figures will be released 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)

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United States 

The epidemic of new coronavirus pneumonia further spread over the week, many regions in Asia reported new infection cases. As the spread has been rapid, panic hit Asian stock markets. However, US stocks have continued to rise, with the World Health Organization (WHO) not yet listing the new coronavirus epidemic as a Public Health Emergency of International Concern. As of Thursday, the three major US stock indexes rose between 0.45% and 1.55% over the past 5 days. US companies continue to report Q4 corporate earnings, 72% of the 82 companies that have announced results reported earnings beat, showing a satisfactory performance. In particular, tech stocks such as Netflix and Intel also beat Q4 market expectations. Important data to be released next week include the 2019 Q4 US GDP and the consumer confidence index in January 2020. In addition, the US Federal Reserve will hold an interest rate meeting next week, market expects the rates to remain unchanged. On a side note, the US-Mexico-Canada Agreement should be officially signed at the White House next Wednesday.

Europe

European stock markets followed Asian markets and dropped over the week. Over the past 5 days ending Thursday, equity markets in UK, France, and Germany fell between 0.31% and 1.34%. After this week’s interest rate meeting, the European Central Bank kept the policy rate and asset purchase scale unchanged. The statement after the meeting mentioned a reevaluation of the policy objectives, ECB President Lagarde added that she will also inspect the policy toolbox and external communication policies. As for Brexit, the Brexit agreement was voted through in Parliament, awaiting sign off by Her Majesty before taking effect. Next up, the UK should reach the official Brexit Agreement with the EU and leave the Bloc before 31^st January. Afterwards, the UK will enter a transitional period which ends at the end of 2020. Next week, the Bank of England will discuss interest rates, important European data such as GDP, CPI and unemployment rate will also be released.

China

The new coronavirus epidemic continued to spread, affecting market sentiment. The Chinese and Hong Kong stock markets fell sharply this week. The CSI 300 Index fell 3.63% this week, and the HSI fell 3.95%. Throughout the Year of the Pig, the HSI fell 0.1%, while the Shanghai Composite rose 13.68%. As for Sino-US trade matters, mainland officials pointed out that there is no timetable for the second stage of trade negotiations at the moment, the market will keep a close eye on the development. On Monday, China announced that the 2019 Q4 rose 6.0% YoY, and the 2019 GDP increased 6.1% YoY, in line with the government's growth target of between 6% and 6.5%. Next week China will release the official January manufacturing and services PMI figures.

• 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 

China and the United States signed the first stage trade deal this week, driving the equity market up, 3 major US stock indexes rose 1.18-1.67% over the past 5 days ending Thursday. The other market focus is the commencement of the 2019 Q4 earnings season, the financials led the charge with a majority having satisfactory report cards. In particular. JP Morgan Chase and Citibank's fixed income businesses have rebounded significantly in Q4. At the time of writing, about 64% of the 38 companies reporting in recorded better-than-expected net profit, indicating that corporate profits remains relatively healthy. Although the non-farm payroll figures in December missed market expectations, and wage growth was at the lowest point since 2018, with the satisfactory corporate earnings and the easing tensions between China and the United States, US equity indexes continued to set new record highs. The US Senate will kick off the President Impeachment process next Tuesday. In addition, the United States will also announce the manufacturing PMI for January 2020.

Europe 

European stock markets underperformed global markets over the past 5 days ending Thursday. Apart from the UK FTSE, both the French CAC and German DAX recorded declines. On Thursday, the European Central Bank (ECB) released the minutes of the first Interest Rate Decision after Lagarde became the president of the ECB. Members emphasized paying attention to the possible side effects of the current monetary policy, indicating some members have reservations about the current loose monetary policy. This cooled down the market sentiment in the Eurozone equities, limiting the performance over the week. As for economic data, the December UK consumer price index released this week in rose 1.3% YoY, which is lower than both the market expectation and previous value. The ECB will hold an interest rate meeting next week, and Germany will announce the January ZEW economic sentiment figures.

China

As for the Chinese and Hong Kong stock markets, the mainland stock market fell slightly over the week, while the Hong Kong stock market slightly rose. In light of easing tensions in the Middle East and the US's reversing China’s currency manipulator status, the Hang Seng Index continued its upward trend over the week. However, the first-phase Sino-US trade agreement was signed in Washington on Wednesday, and China promised to increase purchases of at least US$ 200 billion in US goods and services over the next two years. The general market is worried about China's ability to fulfill its commitments, the ambiguousness of the second-phase trade deal, coupled with profit taking in the market, the Chinese and Hong Kong stock markets narrowly edged up. In addition, the PBOC stated that it will continue to adopt a prudent monetary policy in 2020 to maintain the growth of money supply (M2) and financing scale. M2 in China increased by 8.7% YoY, exceeding market expectations. China also released December import and export data this week, exports grew by 9% YoY while imports grew by 17.7% YoY, both beating market expectations, the 2019 figure also set new record highs for the annual import and export figures. 2019 China GDP data was released this week, a YoY increase of 6.1% is in line with market growth expectations.

• 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)

The overall economic outlook continued to stabilize, the official December manufacturing PMI came in at 50.3, remaining above the 50 level. Industrial production remained resilient, industrial profits rebounded, but PPI stayed negative for 6 consecutive months, casting a shadow over the outlook of exporting sectors. Although the Politburo has called for an increase in infrastructure spending earlier in December, the economic growth in China should continue to slow down amidst global uncertainty.

On 1^st Jan, the PBoC announced that RRR cuts will be adopted starting from 6^th Jan. The 800 billion RMB released to small and micro corporations should provide support to the private sector. This provides much needed boost to the market sentiment, especially with the current likelihood of signing the 1^st stage trade agreement, market momentum is expected to improve on the short to mid-term, even though the long term outlook remains less certain, as we do not expect the trade conflict to resolve in 2020.

The dispute between Japan and South Korea continued to cast uncertainties on the 2020 outlook. Although the two leaders emphasised preventing the situation from spiraling out of control during the Christmas meeting, the Korean court ruling afterwards called the 2015 deal unofficial and non-binding, driving tensions higher. Those who wanted to avoid such political uncertainties should consider limiting their exposure to the concerned regions.

Disregarding the continued political uncertainty, we are positive over the economic outlook of Japan in 2020. Although weakness remains present in the December economic figures, the Olympic Games to come, and the huge fiscal stimulation plan of PM Shinzo Abe should provide much needed driving force for the Japanese markets.

More importantly, the ongoing quantitative easing policy of the Bank of Japan in purchasing ETFs provides downside protection. As Olympic Game Hosts’ stock markets tend to outperform global equities during the Olympic year, investors could consider holding a tactical allocation in the market, as the outlook is positive.

As expected the Conservatives has regained control of the parliament, which reduced the level of uncertainty in UK. The Brexit Bill has passed the Second Reading at the Commons, but it remains to be seen whether the amended bill will be passed with Boris Johnson’s latest addition of ‘no further transition period extension’. Trade commissioner Phil Hogan dismissed Johnson’s idea of no extension claiming that the UK-EU trade deal negotiation will be impossible within 11 months.

Fundamentals remained weak. Eurozone manufacturing PMI improved yet stayed in the contraction zone for eleven consecutive months, the Euro Area Economic Sentiment Indicator, further recovered to 101.5 in December, showing the slightest signs of revitalization. Even though Brexit matters seemed to straighten out, the more complicated problem of negotiating a post-transition trade deal would follow the official Brexit, bringing more uncertainty to the region. Thus, with weaker fundamentals and more volatility, we see limited upside for the European markets in the short term.

At the moment, it is widely anticipated that the 1^st stage trade deal will be signed within January, even though the details are yet to be confirmed as of now. Both sides might seek temporary truce until the November elections.

The Presidential impeachment process continued, the Congress has passed articles of impeachment against Trump and officially impeached him. Nevertheless, with a Republican majority, the Senate is unlikely to remove Trump from office. Gallup found that the impeachment process likely fueled better support for Trump, possibly playing into Trump’s hands in the key swing states in the November election.

The fundamentals remain moderately stable. Although December consumer confidence missed market expectations, the record sales figures for Christmas shopping provided much needed market confidence, PMI figures also came in mostly exceeding expectations and staying well into the expansionary zone. Given the apparent relative stability in the US political landscape before the November elections, with the support from the dovish policies of the Fed lasting until 2020 Q2, we still see the US market as a relatively attractive investment option in 2020.

United States 

Recently, the situation in the US and Iran came under spotlight, yet US stayed relatively unaffected. Over the past 5 days ending Thursday, the three major US stock indexes rose 0.3% to 1.2%. Although Iran launched rockets and missiles at US bases in Iraq early in the week, in retaliation for the death of the Quds Force commander, the situation in the Middle East showed early signs of de-escalation. The subsequent speech by US President Trump hinted that economic sanctions would be imposed on Iran, but no further military action would be taken. The increased geopolitical risks early in the week triggered capital inflows into safe-haven assets, such as the Japanese yen, gold, and US Treasury bonds.
Gold prices also rose to a six-year high. In addition, crude oil prices also benefited from the increase geopolitical risk, with the WTI crude oil breaking through the US$ 65 level. However, as the anxiety ebbed out, the prices of safe-haven assets retreated. At the time of writing, US equities are still hitting new record highs. Next week the US will release December inflation and retail sales data, the US economic outlook and corporate earnings in 2020 will be in focus.

Europe 

In Europe, the three major indexes had varied performance over the past 5 days ending Thursday. The British FTSE 100 fell 0.08%, the French CAC slightly increased by 0.02%, while the German DAX was further up at 0.82%. In the UK, Prime Minister Boris Johnson’s Brexit agreement was endorsed by the British House of Commons, the Bill has now been submitted to the House of Lords for the final vote, and the market atmosphere has improved. EU officials remained less optimistic over the whole Brexit matter, the EU representative stated that it is unlikely that post-Brexit negotiations on the trade deal could be completed within the 11 months of transition. Regarding the Bank of England’s monetary policy, Governor Carney pointed out that there is still plenty of room for adjustment, this includes “at least doubling” the central bank’s 60 billion pound asset purchase plan in August 2016. Next week, the UK and the Eurozone will release December inflation data.

China

As for the Chinese and Hong Kong stock markets, the mainland stock market steadily rose, while Hong Kong stocks have experienced large fluctuations. Due to the turn of events in the Middle East since last Friday, the HSI fell by more than 200 points on Monday. Subsequently, as geopolitical tensions eased, the Index rebounded over the week. Overall, both China and Hong Kong stock markets recorded gains this week. Regarding Sino-US trade relations, Chinese Deputy Prime Minister Liu He will lead a delegation to Washington D.C. to sign the first phase of the trade agreement on the 13th to 15th. Trump said that he would start the second phase of negotiations with China immediately. However, he added that relevant negotiations might drag on well until the US elections are over. China’s December CPI rose 4.5% YoY, which was lower than the original expectation of 4.7%. China will release Q4 GDP, December exports and fixed asset investment data 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)