Highlights:

#1
Global equity continued their upward trend in September, with the S&P 500 and MSCI ACWI posting gains of +2.02% and +2.20%, respectively. Airo-BOCA outperformed both indices, closing the month with a strong +2.45% increase.

#2
Airo-BOCA’s strong performance was driven by a stellar rally in its China equity exposure.

#3
The U.S. Federal Reserve’s decisive 0.50% rate cut during its September FOMC meeting has effectively set the tone for a new cycle of global interest rate cuts. This move signals a coordinated effort by central banks to inject fresh liquidity into the financial markets, potentially paving the way for enhanced market support and growth.

#4
China has been aggressively implementing interest rate cuts, providing liquidity support for its equity markets, and introducing fiscal measures like special sovereign bonds aimed at stimulating consumption and addressing local governments’ debt challenges. These actions reflect a comprehensive approach to bolster economic growth and stabilize financial conditions.

#5
U.S. macroeconomic growth remains mixed. The Empire Manufacturing Index returned to expansion for the first time in 2024, signaling some positive momentum. However, the ISM Manufacturing Index remained in contraction territory for the sixth consecutive month, highlighting continued challenges in the manufacturing sector.

#6
While the influx of new liquidity is certainly positive for overall market sentiment, it is crucial to ensure that this liquidity injection can sustain long-term macroeconomic growth. Without durable support, the initial boost may not be enough to drive lasting improvements in the broader economic environment.

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Dear Valued Investors,

Global equities continued their upward trend in September, with the S&P 500 and MSCI ACWI posting gains of +2.02% and +2.20%, respectively. Airo-BOCA Composite outperformed both indices, closing the month with a strong +2.45% increase.

Airo-BOCA’s strong performance was driven by a stellar rally in its China equity exposure. In September, China A-Share index rallied +21% and that had contributed to the bulk of the performance in BOCA for the month.

Chart 1: China A-share Index ~ saw a +21% rally in September

As the U.S. Fed. decisively cut 0.50% during its September’s FOMC meeting, it effectively set the tone for a new cycle of global interest rate cuts. This move signals a coordinated effort by central banks to inject fresh liquidity into the financial markets, potentially paving the way for enhanced market support and growth.

Table 1: U.S Market is currently pricing-in another five consecutive of rate cuts by the end of 2025

Indeed, China has been aggressive in its liquidity-boosting measures. The People’s Bank of China (PBOC) announced several key actions, including cuts to the reserve requirement ratio, the seven-day policy rate, and existing mortgage rates, all aimed at boosting lending and reducing loan burdens. Additionally, the PBOC committed at least RMB 500 billion in liquidity support for the stock market. On top of these efforts, China’s Politburo relaxed a range of housing sector measures and plans to issue up to RMB 2 trillion in special sovereign bonds to stimulate consumption and help address local governments’ debt challenges.

U.S. macroeconomic growth remains mixed. The Empire Manufacturing Index returned to expansion for the first time in 2024, signaling some positive momentum. However, the ISM Manufacturing Index remained in its contraction territory for the sixth consecutive month. We could turn more positive towards the U.S. market if the global liquidity support could reignite the underlying demand growth globally.

Chart 2: Empire Manufacturing index is finally back to its expansion mode

Chart 3: ISM Manufacturing remained in its sixth consecutive month’s of contraction

While the influx of new liquidity is certainly positive for overall market sentiment, it is crucial to ensure that this liquidity injection can sustain long-term macroeconomic growth. Without durable support, the initial boost may not be enough to drive lasting improvements in the broader economic environment.

October 4th, 2024
​William Yii
CIO, CP Global Fintech Solutions

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Disclaimer: Airo is a brand of CP Global Fintech Solutions Sdn Bhd (“CPFS”), licensed by the Securities Commission of Malaysia as a Digital Investment Management company. CPFS is authorised to carry out the business of fund management incorporating innovative technologies into automated discretionary portfolio management services offered to clients under a license issued pursuant to Schedule 2 of the Capital Markets Services Act 2007.

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