The OnePlatform MPF Equity Index fell by 6.13% in March under Banking Crisis

As of 20 March, The OnePlatform MPF Composite Index (compiled by OnePlatform Wealth Management, Member of AGBA Group) was 229.28, with a 3.57% month-to-month decrease.

In March, Banking Crisis in US and Europe has risen concern. Financial and banking stocks underwent sell off for a while, and the performance of MPF Equity was therefore under pressure. OnePlatform MPF Equity Index dropped the most, with a 6.13% month-to-month decrease; OnePlatform MPF DIS Core Accumulation Index decreased by 1.48%; But OnePlatform MPF Bond Index and OnePlatform MPF DIS Age 65 Plus Index increased by 1.91% and 0.9%.

Overall, the OnePlatform Composite Index recorded a 1.02% increase so far this year.

Summary of MPF Fund Performance in March

Although markets began the month cautiously optimistic, banking failures in the United States and Europe created panic as headlines began to remind investors of the 2008 financial crisis. Yields on fixed income dropped and bond funds gained from the flight to safety. Global Equity Fund dropped 3.42%, while Asia Bond Fund increased by 1.35% and Global Bond Fund increased by 1.89% in March.

Equity Funds:

US equity markets were dragged by a sell-off in financial stocks. The S&P 500 fell 3.13% over the month, with its financial segment falling 14.09%. Financial stocks dropped while big techs gained, and the index’s information technology component rose 2.80%. Indeed, the tech-heavy Nasdaq 100 bucked the negative trend in markets, climbing 1.65%, boosted by increases in prominent names such as Meta (14.42%), Alphabet (7.28%) and Microsoft (5.49%). Overall, United States Equity Fund fell by 2.68% in March.

European stocks were affected by ongoing strikes, banking failures in the US as well as the news of Credit Suisse’s financial problems and acquisition by UBS. The Euro STOXX 50 and 600 indices fell by 3.55% and 5.17% respectively. Regional indices also battled, with the DAX (-3.52%), CAC 40 (-4.36%) and FTSE 100 (-7.62%) all falling in March. In line with market returns, Europe Equity Fund fell by 4.34%.

Asian markets were negatively impacted by fears over a potential banking crisis. In China, sentiment was also dulled when the annual growth target of 5% was announced, coming in lower than anticipated. the CSI 300 and Hang Seng indices dropped by 4.70% and 9.03% respectively, while Japan’s Nikkei and TOPIX indices fell by 2.13% and 3.52%, respectively. Asian Fund returns for the region were negative: Japan Equity Fund, China Equity Fund, Greater China Equity Fund, Hong Kong Equity Fund and Asian Equity Fund dropped by 2.02%,8.95%,6.92%,9.31% and 6% respectively.

Mixed Assets Funds & Money Market:

Mixed-asset investments were dragged by negative performance in equities, although fixed interest-heavy funds benefitted by the overall better performance of bonds. Accordingly, Mixed Assets Fund (21% to 40% equity) returning decreasing by 0.6% and Mixed Assets Fund (81% to 100% equity) reducing by 5%.

Meanwhile, money market sectors – predominantly comprising short-term borrowings and deposits – continued to show relatively little movement, with returns of 0.19%.

Market review in March

Silicon Valley Bank and Signature Bank had failed, and it reminded investors all too well of the banking crisis in 2008. US President Joe Biden and Treasury Secretary Janet Yellen were quick to assure the public that history would not repeat itself, with the latter telling the Senate Finance Committee that “Americans can feel confident that their deposits will be there when they need them”. However, the market was impacted by the financial difficulties of Credit Suisse, which faced financial woes and was forced to be sold to fellow Swiss banking giant UBS. Tensions in Ukraine are also worsening as a US drone was reportedly brought down by a Russian fighter jet and the International Criminal Court issued an arrest warrant for Russian President Vladimir Putin. Meanwhile, gold climbed 7.15% – highlighting a turn to safer pastures amid ongoing political and economic turmoil.

Inflation remains Fed’s key focus

Following the February rate increase, the US Federal Reserve’s Jerome Powell suggested the central bank would continue on the inflation warpath. Speaking to the Senate Banking Committee, the Fed Chair said there is “a long way to go to get prices under control and that the eventual level of interest rates is likely to be higher than previously anticipated”. The debt ceiling is also weighing on investors’ minds. Despite stubborn opponents, President Biden released a fiscally accommodative budget, proposing higher taxes for the wealthy and larger investments in climate and health care. Otherwise, the inflation outlook continued to improve, falling to 6% in February – the lowest since September 2021 – and producer price increases dropped from 5.7% in January to 4.6%.

ECB and Bank of England raises rates half a point

In March, Bank of England and the European Central Bank raised respective interest rates by another half-point. Inflation fell to 10.1% in the UK and 8.5% in the euro area, but core inflation rose to 5.8% and a record-high 5.6%, respectively, suggesting interest rates will continue to rise for the foreseeable future. The continent continues to be affected by unrest, with unions striking against pay conditions in the UK and the retirement age in France. However, on the bright side, consumer confidence in the UK rose significantly from -45 to -38 in March, and economic sentiment in Europe climbed from 16.7 to 29.7.

China Cuts RRR to consolidate economic recovery

China’s manufacturing and services activity has picked up recently, but diplomatic strains between China and the US continue to worsen, negatively weighing on sentiment. The People’s Bank of China eased policy further by dropping the reserve requirement ratio by 25 bps and injecting RMB 481 billion into the financial system. Japan’s large-scale annual wage negotiations saw companies agree to a wage hike of more than 3%, which could mean an end to the Bank of Japan’s ultra-loose monetary policy.