Demand For USD Has Been Reignited【CSOP Fixed Income Weekly】

Weekly Performance Checkpoint

【SRT】

$CSOP S-REITs INDEX ETF(SRT.SI)$ ’s losses were led by hotel REITs by subsector and FLT and CLAR by individual REITs. UBS reported a mixed Q3 2024 for SREIT. Despite a narrowing difference between signing and passing rents, rent reversion in Singapore sectors remained robust overall.

【MMF】

Last week, core CPI rose 0.28% m/m in October, softer than JPM's prediction but matched consensus, driven by unexpected weakness in core goods excluding vehicle prices possibly due to weather distortions given hurricanes in Southeast and unusually warm temperatures in Northeast. Data supports a potential Fed cut in mid-December, and swaps traders raised the probability to ~80% from 56% earlier.

Core PPI rose +0.3% m/m in October, higher than anticipated, leading to JPM's revision of their core PCE forecast from 0.22% to 0.31%.

Furthermore, Powell's comments, suggesting no rush to lower rates and acknowledging higher inflation, hint at a slower easing pace from January, despite an anticipated Fed cut next month. JPM's language model rated Powell's remarks as the most hawkish since August.

Initial jobless claims eased -4k to 217k in week ending Nov 9, under 220k that of consensus estimates, indicating temporary cooling. Meanwhile, continuing claims, though lower by -11k to 1873k in week ending Nov 2, is above last year’s level. This suggests that unemployed persons are taking more time to land a job, a clear indicator of a cooling labor market; though, given low initial claims hints at gradual cooling.

Given higher core PPI and Powell’s seemingly hawkish remarks, we expect $CSOP US Dollar Money Market ETF Unlisted Share Class P(HK0000503836)$ to continue to deliver stable yield in the near term. As of 20241115, the fund has net yield at 4.65%. ^

Source: CSOP, Bloomberg, JP Morgan as of 20241115. ^ 7-day net yield is calculated based on calendar days and NAVs in 5-decimal.

【CN】

Moving to economic data released, China's CPI growth rate unexpectedly slowed to 0.3% in October, and the PPI fell for the 25th consecutive month, suggesting ongoing deflation. Meanwhile, upside surprise observed in retail sales at 4.8% y/y vs 3.8% y/y that was expected but industrial production missed slightly at 5.3% y/y vs 5.6% y/y that was expected.

Last week, CGB price was gained slightly in CNY but fell slightly in USD terms. YTD as of 20241114, the $ICBC CSOP CGB ETF SGD(CYC.SI)$ / $ICBC CSOP CGB ETF US$D(CYB.SI)$ rose +5.42% in CNY and gained +3.25% in USD*.

Source: CSOP, FTSE Russell, Bloomberg as of 20241114. * CYC/CYB/CYX USD NAV is converted based on benchmark FX, subject to rounding error ** Pro rata of annual TER (26bp) is added back to ETF based on actual days/365.

Global Market Outlook

【CN】Announced a 10 Trillion Yuan Local Government Debt Plan

• Last week, China announced a 10 trillion yuan local government debt plan to stimulate economic growth, with PBOC pledging to maintain a supportive monetary policy and ensure sufficient liquidity in the banking system.

• Henan Provincial Department of Finance has issued a notice for refinancing special bonds for "replacing existing hidden debt“ while China's Ministry of Finance and 3 other ministries also announced a reduction in the tax rate for homebuyers and developers.

• Next week, China’s commercial lenders will be setting their LPR. No change is anticipated following LPR cuts in October, further supported by the maintenance of a steady policy rate by the PBOC after reductions in September.

【SG】A Favorable Environment for S-REITs

• Rate cuts could create a favorable environment for S-REITs to execute deals and divest mature assets, reducing gearing and increasing debt capacity. Knight Frank reported a slight uptick in property investment activity in September.

【US】Anticipated a 25bp Cut in December

• Following Trump’s election victory, demand for USD has been reignited due to concerns about inflation from Trump's fiscal policies.

• Financial institutions like BlackRock and JPMorgan Chase predict the bond market selloff is not over yet.

• JPMorgan's economists anticipate a 25bp cut in December and quarterly 25bp rate cuts in 2025, instead of every meeting. A higher terminal rate should position money market funds as attractive liquidity investments, thereby keeping AUMs elevated.

Disclaimer

The investment product(s), as mentioned in this document, is/are registered under section 286 of the Securities and Futures Act (Cap. 289) of Singapore (the “SFA”). This material and the information contained in this material shall not be regarded as an offer or solicitation of business in any jurisdiction to any person to whom it is unlawful to offer or solicit business in such jurisdictions. This document is not to be construed as recommendations to buy/sell any above-mentioned securities, or any securities in the above-mentioned sectors or jurisdictions.

CSOP Asset Management Pte. Ltd. (“CSOP”) which prepared this document believes that information in this document is based upon sources that are believed to be accurate, complete, and reliable. However, CSOP does not warrant the accuracy and completeness of the information and shall not be liable to the recipient or controlling shareholders of the recipient resulting from its use. CSOP is under no obligation to keep the information up to date. The provision of this document shall not be deemed as constituting any offer, acceptance, or promise of any further contract or amendment to any contract. The information herein shall not be disclosed, used, or disseminated, in whole or part, and shall not be reproduced, copied, or made available to others without the written consent of CSOP.

Advice should be sought from a financial adviser regarding the suitability of the investment and/or investment product before making an investment. Investment involves risk. The value of investments, and the income from them, can go down as well as up and an investor may get back less than the amount invested. Past performance is not necessarily indicative of future performance. Investor should read the prospectus and product highlights sheet, which can be obtained on CSOP website or authorized participating dealers, before deciding whether to invest. This document has not been reviewed by the Monetary Authority of Singapore.

Index Provider Disclaimer

SRT

The CSOP iEdge S-REIT Leaders Index ETF is not in any way sponsored, endorsed, sold or promoted by Singapore Exchange Limited and/or its affiliates (collectively, “SGX”) and SGX makes no warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the iEdge S-REIT Leaders Index and/or the figure at which the iEdge S-REIT Leaders Index stand at any particular time on any particular day or otherwise. The iEdge S-REIT Leaders Index are administered, calculated, and published by SGX. SGX shall not be liable (whether in negligence or otherwise) to any person for any error in the CSOP iEdge S-REIT Leaders Index ETF and the iEdge S-REIT Leaders Index and shall not be under any obligation to advise any person of any error therein. “SGX” is a trademark of SGX and is used by CSOP under license. All intellectual property rights in the iEdge S-REIT Leaders Index vest in SGX.

CYC/CYB/CYX

The ICBC CSOP FTSE Chinese Government Bond Index ETF (the “ETF”) has been developed solely by CSOP Asset Management Pte. Ltd. The ETF is not in any way connected to or sponsored, endorsed, sold, or promoted by the London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). FTSE Russell is a trading name of certain of the LSE Group companies. All rights in the FTSE Chinese Government Bond Index (the “Index”) vest in the relevant LSE Group company which owns the Index. FTSE® is a trademark of the relevant LSE Group company which own the Index and is used by any other LSE Group company under license. The Index is calculated by or on behalf of FTSE International Limited or its affiliate, agent, or partner. The LSE Group does not accept any liability whatsoever to any person arising out of (a) the use of reliance on or any error in the Index or (b) investment in or operation of the ETF. The LSE Group does not accept any liability whatsoever to any person arising out of the use of the ETF or the underlying data. The LSE Group makes no claim, prediction, warranty, or representation either as to the results to be obtained from the ETF or the suitability of the Index for the purpose to which it is being put by CSOP Asset Management Pte. Ltd.