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PublicInvest Research Daily - 15 Jan 2021

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Economy

  • US: Import prices accelerate on higher energy costs. US import prices increased more than expected in Dec, boosted by higher prices for energy products and a weak dollar, suggesting inflation could pick up in the near term. The Labor Department said on Thursday import prices jumped 0.9% last month after rising 0.2% in Nov. Economists polled by Reuters had forecast import prices, which exclude tariffs, accelerating 0.7% in Dec. In the 12 months through Dec, import prices slipped 0.3% after dropping 1.0% in Nov. Fuel prices shot up 7.8% after increasing 4.8% in Nov. Imported food prices slipped 0.2%. Excluding fuels and foods, import prices increased 0.4% after being unchanged in Nov. (Reuters)
  • US: Weekly jobless claims climb to highest in over four months. First-time claims for US unemployment benefits climbed by much more than expected in the week ended Jan 9, according to a report released by the Labor Department on Thursday. The report said initial jobless claims rose to 965,000, an increase of 181,000 from the previous week's revised level of 784,000. Economists had expected jobless claims to inch up to 795,000 from the 787,000 originally reported for the previous week. With the bigger than expected increase, jobless claims reached their highest level since hitting 1m in the week ended Aug 22. (RTT)
  • EU: ECB policymakers concerned pandemic second wave would prolong crisis, minutes show. ECB policymakers were concerned that the resurgence in the coronavirus pandemic that has led to restoration of lockdown in several countries could prolong the economic crisis, minutes of the latest policy session showed on Thursday. "Members considered that the impact of positive news regarding the availability of vaccines on the medium-term outlook needed to be weighed against the impact of the more negative latest news on infection rates and containment measures in the short term," the minutes showed. (RTT)
  • EU: Eurozone house price inflation steady at 4.9%. The euro area house prices grew at a steady pace in the 3Q, data published by Eurostat showed on Thursday. House prices advanced 4.9% annually, the same rate of growth as posted in the 2Q. On a quarterly basis, growth in house prices slowed to 1.3% from 1.6% a quarter ago. In the EU27, house prices advanced 1.4% sequentially, taking the annual growth to 5.2%. Among the member states for which data are available, the highest annual increases in house prices were recorded in Luxembourg, Poland and Austria, while prices fell in Cyprus and Ireland. (RTT)
  • EU: German economy to grow less strongly than expected in 2021 - Altmaier. German Economy Minister Peter Altmaier said on Thursday the economy was likely to grow less strongly this year than previously forecast as the current situation in the Covid-19 pandemic was much worse than anybody had expected. The government’s latest estimate from Oct sees Europe’s largest economy growing by 4.4% in 2021. Berlin will update its forecast later this month. GDP data released earlier on Thursday showed the economy shrank by 5.0% in 2020, less than expected and a smaller contraction than during the global financial crisis as unprecedented government rescue and stimulus measures helped lessen the shock of the Covid-19 pandemic. (Reuters)
  • UK: Housing market boom starts to fade, survey shows. A boom in Britain’s housing market has started to fade, dampened by new Covid-19 lockdowns and the coming expiry of a temporary tax cut for buyers, a survey showed on Thursday. The Royal Institution of Chartered Surveyors’ monthly gauge of new buyer enquiries fell in Dec to a seven-month low of +15% from +26% in Nov. Only London showed weak house price growth, RICS said. Britain’s housing market rebounded strongly after the first Covid-19 lockdown as buyers sought bigger houses with gardens. BOE shows mortgage approvals in Nov topped 100,000 for the first time since 2007. (Reuters)
  • China: Exports continue to expand strongly in Dec. China's exports continued to log robust growth in Dec driven by higher global demand for pandemic-induced goods, official data revealed Thursday. Exports grew 18.1% on a yearly basis in Dec, faster than the expected growth of 15.0%, data from the General Administration of Customs, showed. Nonetheless, the rate of increase slowed from 21.1% posted in Nov. Driven by domestic demand, imports growth advanced to 6.5% from 4.5% a month ago. This was also faster than the economists' forecast of +5.0%. (RTT)
  • Japan: Nov core machinery orders rise 1.5% MoM. Japan's core machinery orders rose 1.5% in Nov from the previous month, up for the second straight month, government data showed on Thursday. Compared with a year earlier, core orders, a highly volatile data series regarded as an indicator of capital spending in the coming six to nine months, declined 11.3% in Nov, the Cabinet office data found. (Reuters)
  • Japan: BOJ lifts economic assessment of 3 out of 9 regions. The Bank of Japan upgraded its economic assessment of three out of nine regions and downgraded one, according to the latest Regional Economic Report, released Thursday. Many regions, while noting that their economy had been in a severe situation due to the impact of the novel coronavirus, there were signs of picking up. However, the impact of a resurgence of Covid-19 had been pointed out recently, primarily in the services industry, the bank noted. The bank raised the assessment of Hokuriku, Shikoku and Kyushu- Okinawa regions and lowered its view on Hokkaido. (RTT)
  • India: Wholesale prices rise in Dec. India's wholesale prices increased at a softer pace in Dec, data from the Ministry of Commerce & Industry showed on Thursday. The wholesale price index rose 1.2% YoY in Dec, after a 1.5% increase in Nov. Economists had expected a 1.3% rise. The primary articles price index declined 1.6% annually in Dec, after a 2.7% growth in the previous month. Food price inflation eased to 0.9% in Dec from 3% in the previous month. Fuel and power prices declined 8.7% in Dec, following a 9.9% fall in the prior month. Prices of manufactured products grew 4.24% in Dec, following a 3% gain in the previous month. The wholesale prices rose 1.3% in Oct. (RTT)

Markets

  • AirAsia X (Underperform, TP: RM0.01): Shows court creditors' support for restructuring plan. Most of AirAsia X (AAX) lessors support a restructuring plan, and it has received interest from potential investors for fundraising after reorganization, court documents filed this month show. Supportive lessors said they wanted to continue discussions with AAX and potential new investors, seeking more equitable terms and new commercial arrangements. The affidavits come after more than a dozen creditors filed to intervene with its proposed court-supervised restructuring, with lessor BOC Aviation Ltd and airport operator Malaysia Airports arguing that AAX is "hopelessly insolvent". (Reuters)
  • Pharmaniaga: In talks with MoH over Covid-19 vaccine purchase. Pharmaniaga said it is in the midst of negotiation with the Ministry of Health (MoH) for the purchase of the Covid-19 vaccine from China’s Sinovac Life Sciences Co Ltd (Sinovac LS) for distribution in Malaysia. "The pre-submission meeting with the NPRA has been completed and the company will be submitting the vaccine dossier to the NPRA soonest [possible]. There shall not be any clinical trials in Malaysia, and the company will rely on clinical data from China, Indonesia, Turkey and Brazil for registration of the vaccine in Malaysia," it added. (The Edge)
  • See Hup: Disposes of land in Penang for RM46.96m. See Hup has entered into a conditional SPA for the disposal of a parcel of land in Seberang Perai Tengah, Penang, to Wangsaga Industries SB and Tek Seng Properties & Development SB for a cash consideration of RM46.96m. The price of the land parcel translates to RM55 per sqft, and an estimated 3.9% premium over the RM45.2m market valuation. The rationale behind the decision is that the market value of the property has appreciated over the year and it is part of its plans to monetise investments in property assets. (The Sun Daily)
  • Jiankun: Plans private placement to fund property project. Jiankun International has proposed to undertake a private placement of up to 20% of the total number of issued shares to raise RM23.03m, which will partly fund the group’s planned land acquisition in Melaka and development costs of the tract. The land was approved for the development of a hotel and service apartments. However, the said development order has lapsed on 2 June 2016. It intends to apply for a new development order, for the development of two blocks of 20-storey serviced apartments. (The Edge)
  • JCY: Major customer cuts order, to eventually stop purchases. JCY International said a major customer has decided to reduce and eventually stop purchases of one of the company's component products, which will have negative impacts on JCY's financial standing. This comes as HDD producers are embarking upon a rationalisation of their supply chain, which in turn affects HDD component suppliers. "This is expected to have negative impacts on JCY’s revenue, cost of production and possibly result in impairment provisions for the company’s FY21," JCY said. (The Edge)

MARKET UPDATE

  • The FBM KLCI might open weaker today as US stocks ended lower on Thursday after the Dow and Nasdaq hit record highs earlier in the session as investors focused on US President-elect Joe Biden’s pandemic aid proposal, while the US dollar weakened. The Dow Jones Industrial Average fell 68.95 points, or 0.22%, to 30,991.52, the S&P 500 lost 14.3 points, or 0.38%, to 3,795.54 and the Nasdaq Composite dropped 16.31 points, or 0.12%, to 13,112.64. European shares gained for a third straight session. The pan-European STOXX 600 index rose 0.72%.

Back home, the FBM KLCI closed down 0.98 points or 0.06% at 1,635.71 while Bursa Malaysia’s Technology Index rose over 3% to become the top percentage gainer among bourse gauges as investors weighed the economic impact of the nation’s reinforced Covid-19-driven Movement Control Order (MCO) across several states and federal territory. The Hang Seng gained 0.93% and the Nikkei 225 rose 0.85%. The Shanghai Composite lost 0.91%.

Source: PublicInvest Research - 15 Jan 2021

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