Big picture of 2020 market perspectives

By ANIS FARHANAH MALEK
anisfarhanah@dagangnews.com

KUALA LUMPUR 19 Feb. - Rife with risk and opportunity, 2020 was a year that will be entrenched in the memories of investors for decades to come.

The overarching market narrative was dominated by the still ongoing COVID-19 pandemic.

Franklin Templeton said, stricken with anxiety, the markets were drained of liquidity and hit rock bottom towards the end of first quarter of 2020 (1Q20).

The firm said, emerging markets (EM) beat developed markets with a head scratching 18.3% return.

“Most of the outperformance was driven by health care and technology in China and Korea.

“Selective EM consumer names also soared in tandem with the world’s changing consumption patterns.

“In the United States (US), Technology and Consumer Discretionary were once again the top performing sectors. Style-wise, US growth beat US value by almost 37% over 2020!” said the firm in a statement today.

It added, US Investment Grade Bonds was the first fixed income asset class to show resilience in the face of COVID-19.

Backed by the US Fed, investors never lost confidence in the asset class which returned over 11% in 2020, said Franklin Templeton.

“In contrast, high yield bonds returned just 4.7%. EM and Asian local bonds too, had a good year as the search for yield increased demand while local currencies gained against the US dollar.

“The greenback lost significant ground against major trading partners towards the end of 2020. Investors eventually accepted that the risk rally was in full swing while the political, fiscal, and monetary circumstances of the U.S. all pointed to a weaker dollar.

“A relatively stronger Chinese economy and a Brexit resolution also worked against the dollar,” it further explained.

Copper and gold ended 2020 as the best performing assets with a return of more than 24% each, according to the firm.

It further said that gold benefited from the global malaise while copper rose on resumption of economic activity and the push towards copper intensive, greener energy.

“Oil, on the other hand, fell by more than 20% as supply exceeded demand despite fa number of oil cuts by the OPEC Plus group,” it noted. – DagangNews.com