Global & Regional Equities
US
US equities closed lower with the S&P 500 falling 1.6% as investors grew increasingly uneasy about labour market softness and renewed concerns over frothiness in artificial intelligence (AI) related spending. The ongoing US government shutdown has severely constrained access to official economic data, leaving markets to rely on private surveys and alternative indicators. The Bureau of Labor Statistics would normally have released non-farm payrolls (NFP) last Friday, but for the second consecutive month, the data could not be published due to the shutdown.
In the absence of official statistics, markets turned to private-sector datasets. ADP reported a modest rebound in private payrolls, rising by 42,000 after a revised decline of 29,000 in the prior month.
Conversely, Challenger, Gray & Christmas—a global outplacement and executive coaching firm, reported a sharp surge in announced job cuts, totaling 153,074 in October. That’s up 183% from September and marks the highest October level since 2003.These mixed signals underscore an uneven cooling in the labour market, leaving investors with limited clarity in the absence of government statistics.
However, there are early signs that the government shutdown may be nearing resolution. The US Senate is looking to advance a stopgap funding bill, raising hopes that the historic 40-day shutdown could soon end. Pressure has escalated on the government to act as the Federal Aviation Administration (FAA) has begun reducing air traffic flights.
Over the weekend, several Democratic lawmakers indicated willingness to support a negotiated package to reopen the government, reportedly in exchange for a mid-December vote on extending Affordable Care Act tax credits. These developments signal growing political incentive to break the deadlock.
Treasury yields initially spiked mid-week before retracing, leaving the US 10-Year Treasury yield broadly unchanged around 4.1%. Bond markets are pricing in a 60% probability of one final rate cut this year. CPI is scheduled for release this week, though publication remains unlikely if the shutdown persists.
Asia
In Asia, markets mirrored the weakness on Wall Street, with the MSCI Asia ex-Japan index falling 1.5% as valuation jitters in the AI sector spilled over. Tech-heavy markets bore the brunt of the losses with Korea’s benchmark index down 3.7% and Taiwan declining 2.1%, driven by a sharp pullback in AI- and semiconductor-linked names.
The correction stemmed from renewed investor anxiety about whether the aggressive capital expenditure in AI will translate into commensurate economic returns. This concern is not new. At the start of the year, following a spectacular rally in 2024, questions around AI sustainability and over-crowded positioning were already emerging, but strong earnings growth helped the sector power ahead.
With valuations now elevated and positioning still crowded, the market is wrestling with whether this latest pullback represents healthy profit-taking or the start of a deeper reassessment.
Despite the turbulence in North Asia’s tech sector, China equities held up relatively better, supported by more defensive parts of the market including state-owned enterprises (SOEs), banks and utilities, where high dividend yields and stable earnings provided a buffer.
On the currency front, the US dollar softened against the Japanese yen and the euro, reversing some of its strength from the prior week. Asian currencies also strengthened modestly, with both the Malaysian ringgit and Thai baht gaining ground against the USD.
Updates on Malaysia
The FBM KLCI rose 0.62% last week, driven mainly by gains in IOI Corporation Berhad and Maxis Berhad, both of which reached new 52-week highs. In contrast, the broader small-cap market saw declines of 2% to 3%, reflecting continued selective trading and a cautious risk appetite among investors.
Across sectors, transport and plantation outperformed, supported by better-than-expected corporate results from Westport as well as Sime Darby Gutherie. Meanwhile, technology and healthcare lagged the market.
Foreign investors recorded a net outflow of RM85 million for the week. Year-to-date, cumulative foreign outflows stand at approximately RM19.2 billion. However, this has been largely absorbed by steady domestic institutional inflows, and the recent recovery in the Ringgit is not driven by equity flows at this stage.
In corporate developments, ChemOne’s Pengerang Energy Complex (PEC) project is facing higher development costs, as the Engineering, Procurement, Construction and Commissioning (EPCC) contractor has raised its pricing. ChemOne is now evaluating alternative Chinese contractors, which could push the project timeline beyond early next year. This has implications for DIALOG Group Berhad, which was expected to provide around 1 million cubic metres of storage capacity for PEC. Any delay may postpone the earnings contribution from this project.
Separately, Gamuda Berhad signed a non-binding Memorandum of Understanding with the Perak and Penang state governments for a proposed 40-year inter-state water supply arrangement, with water transfer targeted to begin in the first quarter of 2031. Gamuda is well-positioned to secure a major role in the associated construction works as the potential project scope is estimated at around RM5 billion, which could support Gamuda’s order book visibility.
From a portfolio perspective, the Malaysian equity funds remain highly invested, with cash holdings maintained in the low single-digit range. Trading activity last week was relatively limited, and there were no significant changes to portfolio positioning.
Fixed Income Updates & Positioning
Regional Fixed Income
Asia investment grade (IG) credit spreads widened by around 1 basis point (bps) week on week, while Asia high yield (HY) widened by approximately 19 bps. The widening was influenced by higher global yields and a stronger United States dollar environment.
In contrast, the United States corporate credit markets were relatively stable. Both US IG and US HY spreads were little changed week on week. However, the US IG primary market remained active, with around USD 57 billion priced last week. The most notable issuance was from Alphabet Inc., which priced USD 17.5 billion across eight tranches, drawing a total order book of approximately USD 90 billion. The longer-dated 30-year and 50-year tranches performed strongly in the secondary market, tightening by around 20 bps from issuance.
In the Australian market, several corporates tapped the United States dollar space. QBE Insurance Group Limited priced a USD 300 million subordinated issue at around US Treasury +135 bps, supported by order books exceeding USD 4 billion. Meanwhile, Santos Limited issued a USD 1 billion 10-year bond at approximately US Treasury +168 bps, with strong demand of about USD 6 billion. Our funds participated in the Santos deal and have since traded tighter in the secondary market.
In Europe, we took part in two primary issuances. Verizon Communications Inc. priced its debut hybrid instrument, issuing in both euro and sterling markets. The euro tranche was priced at around 4 percent, while the sterling tranche was priced at about 5.75 percent, with both tranches roughly two times covered. We also participated in Orange S.A.’s multi-tranche euro issuance, where the company raised EUR 5 billion across five maturities. Investor demand was strong with order books exceeding EUR 15 billion, although secondary pricing remained largely flat due to broader yield movements.
In Asia, the highlight was the People’s Republic of China sovereign dual-tranche USD offering totalling USD 4 billion across three-year and five-year maturities. The three-year tranche priced around US Treasury +0 bps and the five-year tranche at US Treasury +2 bps. Both tightened by approximately 25 bps from initial guidance, supported by very strong demand, with combined order books reaching approximately USD 121 billion. We participated in the five-year tranche and have since taken profit after the spread tightened to around US Treasury –40 bps.
Australian dollar primary markets also saw increased activity following the Reserve Bank of Australia meeting. Westpac Banking Corporation issued a AUD 5 billion five-year senior transaction and a AUD 1 billion 20-year Tier 2 deal. We participated in the 20-year Tier 2 issuance as valuations appeared compelling, and the bonds have since tightened by around 2 to 3 bps. In addition, Goodman Australia Industrial Partnership issued a six-year AUD 500 million bond at around 4.89 percent, supported by demand of nearly AUD 1.9 billion.
Across portfolios, we continued to recycle gains from existing holdings into selected new issuances. Cash levels remained in the 3 to 5 percent range, with funds generally fully invested.
Domestic Fixed Income
The Malaysian Government Securities (MGS) curve ended the week mixed. Shorter-tenor government bonds such as the seven-year and shorter-tenor segment saw yields moved slightly lower, while long-tenor bonds were more stable. On a weekly basis, the five-year MGS closed at 3.23 percent (down 2 bps), the ten-year MGS held at 3.50 percent, and the thirty-year MGS edged slightly higher by 1 bp to 4.01 percent.
There was no government bond issuance last week. The upcoming issuance will be the reopening of the Government Investment Issue (GII) 10-year benchmark with a total size of RM 5 billion.
At the final Monetary Policy Committee meeting of the year on 6 November 2025, Bank Negara Malaysia left the Overnight Policy Rate unchanged at 2.75 percent, noting that the current policy stance remains consistent with supporting sustainable growth and price stability, with risks to inflation and growth broadly balanced.
In the corporate segment, there was a single primary issuance from Bank Rakyat (rated AA2), totalling RM 600 million for three-year and five-year tenors. The three-year tranche was priced at around 3.68 percent, while the five-year tranche was priced at around 3.73 percent.
Portfolio activity remained focused on rebalancing. Funds selectively participated in primary issuances while also taking profit on certain government securities and corporate bonds. Cash holdings are currently maintained in the range of 1 to 5 percent.
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