Economy

US: Existing home sales show another unexpected increase in Jan. A report released by the National Association of Realtors on Friday showed another unexpected increase in US existing home sales in the month of Jan. NAR said existing home sales rose by 0.6%  to an annual rate of 6.69m in January after climbing by 0.9% to a revised rate of 6.65m in December. Compared to the same month a year ago, existing home sales in Jan were up by 23.7%. (RTT)

EU: Eurozone private sector continues to contract in Feb. The euro area private sector continued to contract in Feb, as extended lockdown measures weighed on the service sector, flash survey results from IHS Markit showed on Friday. The composite output index rose to 48.1 in Feb from 47.8 in Jan. The expected reading was 48.0. The score has been below 50.0 for the fourth consecutive month suggesting contraction. (RTT)

UK: Private sector contracts marginally in Feb. The UK private sector output contracted only marginally in Feb reflecting a near stabilization in services activity amid continuing recovery in manufacturing, a closely watched survey showed on Friday. The IHS Markit/Chartered Institute of Procurement & Supply flash composite output index climbed more-than-expected to 49.8 in Feb from 41.2 in Jan. Service sector activity remained severely impacted by the Covid- 19 pandemic in Feb. (RTT)

UK: BoE might need negative rates if recovery disappoints - Vlieghe. The Bank of England might need to cut interest rates below zero later this year or in 2022 if the economic recovery disappoints, and especially if there is persistent unemployment, policymaker Gertjan Vlieghe said on Friday. Vlieghe said his central scenario was that the BoE would not need to loosen policy if the recovery took place as forecast by the central bank earlier this month, but that there was a risk of lasting labour market weakness depressing wages and prices. (Reuters)

UK: Industrial orders index rebounds in Feb - CBI. British manufacturers reported the smallest hit to their order books this month since the start of the coronavirus pandemic, and see output stabilising after a sharp drop in Jan, the Confederation of British Industry said on Friday. The CBI’s monthly industrial orders balance jumped to -24 in Feb from -38 in Jan, its highest reading since Feb 2020, before the coronavirus pandemic, though still below its long-run average of -14. (Reuters)

China: Seen keeping lending benchmark LPR steady for 10th straight month. China’s benchmark lending rate is set to stay unchanged for the 10th straight month at its Feb fixing on Saturday, a Reuters survey showed. Thirty-one traders and analysts, or 88% of all 35 participants, in a snap Reuters poll conducted this week predicted no change in either the one-year Loan Prime Rate (LPR) or the five year tenor. (Reuters)

Taiwan: Raises 2021 GDP growth forecast to 4.64%. Taiwan’s economy is expected to grow 4.64% in 2021, the statistics agency said on Saturday, upgrading a previous forecast of 3.83% predicted in Nov on the back of a strong rebound in exports. Growth in the 4Q was revised higher to 5.09% YoY from a preliminary 4.94%, the Directorate General of Budget, Accounting and Statistics said. (Reuters)

Japan: Feb factory activity expands for first time in 22 months PMI. Japan’s factory activity expanded for the first time in 22 months in Feb, a private-sector survey showed on Friday, as strong export demand helped manufacturers shake off the drag from the coronavirus pandemic. But the service sector was more pessimistic, with businesses struggling to overcome the blow from emergency measures taken to contain the COVID-19 crisis. (Reuters)

Markets

Tenaga (Outperform, TP: RM12.42): Southern Power Generation ready to supply 1,440MW electricity. Tenaga Nasional’s subsidiary Southern Power Generation SB (SPG) is ready to supply 1,440 MW electricity power into the national grid from its two 720MW combined cycle gas turbine (CCGT) power plants. With the COD of SPG's Unit 2, another 720MW was added to Peninsular Malaysia's capacity. (Business Times)

AirAsia X (Underperform, TP: RM0.01): Proposes separate restructuring scheme for aircraft lessors. AirAsia X (AAX) has proposed a separate restructuring programme for its aircraft lessors that aims to tackle their concerns, citing chance to recover rental losses. The airline has for months been trying to reconstitute RM64.15bn of debt into RM200m of debt. (SunBiz)

Genetec Technology: Secures RM56m new orders. Genetec Technology has secured new orders worth RM56m from new and existing customers. The new orders were secured for the month of Dec 2020 from 13 customers for customised machines of assembly lines and supply of component parts in electric vehicle and battery, automotive, electronic, semiconductor and hard disk drive industries. (SunBiz)

SMTrack: Buys an aircraft for its venture into cargo carriage services. SMTrack has purchased an aircraft worth USD6.7m (RM27m) from a management consultancy firm Cakerawala Solution International SB as the former ventures into cargo carriage services. (The Edge)

Pimpinan Ehsan (PEB): Inks HoA to acquire five companies under reNIKOLA group. Pimpinan Ehsan (PEB) signed a head of agreement with renewable energy company reNIKOLA SB, Boumhidi Abdelali and Tengku Zaiton Sultan Abu Bakar for the acquisition of five companies under the reNIKOLA group. The acquisition amount will be determined later and will be satisfied via issuance of new PEB shares at an issue price of RM1.07. (Business Times)

Mah Sing: To develop affordable landed property project valued at RM656m. Mah Sing has unveiled a new development project on a 100-acre land in Bandar Baru Salak Tinggi, primarily comprising of affordable homes with an estimated GDV of RM656m. The project will be a residential landed project with mainly double story terrace houses with indicative land size of 18’ x 65’ and 20’ x 70’. (SunBiz)

Careplus: 4Q net profit skyrockets to RM42m, declares two sen special dividend. Careplus Group’s net profit for the 4QFY20 skyrocketed to RM42.23m from RM783,000 a year earlier boosted by higher selling prices and strong demand. The quarterly revenue grew nearly 19% to RM129.33m. (The Edge)

Malaysia Smelting Corp: Back in the black in 4Q on higher tin prices. Malaysia Smelting Corp returned to the black in the 4QFY20, posting a net profit of RM15.86m from a net loss of RM15.95m. It has declared a dividend of 1sen. (The Edge)

Petronas Dagangan: Earnings dragged by lower sales volume mix. Petronas Dagangan net profit fell 30% to RM89.2m in the 4Q ended Dec 31, 2020 from RM126.6m a year ago. The reported drop in earnings was due to lower sales volume and warned of the tough start to the new year. (SunBiz)

Market Update

The FBM KLCI might open flat after stocks on Wall Street swung between modest gains and losses as investors mulled over the possibility of rising inflation rippling through capital markets and treasury yields climbed to the highest levels seen in a year. The blue-chip S&P 500 index fell 0.2% at the Friday close after remaining relatively flat throughout afternoon trading, while the technology-focused Nasdaq Composite ended the week 0.1% lower, having opened higher. The prospect of President Joe Biden’s $1.9tn stimulus plan has led to a sell-off in US government debt on concerns that the fiscal injection will feed through to higher inflation, which erodes the value of bonds’ coupons. That has eaten into the price of US Treasuries since November’s election, pushing up yields. In Europe, the region-wide Stoxx 600 closed up 0.5%, while London’s FTSE 100 index rose 0.1% and Frankfurt’s Xetra Dax was 0.8% higher.

Back home, the FBM KLCI closed 9.09 points or 0.57% higher, lifted by gains among component stocks including Kuala Lumpur Kepong Bhd and Nestle (Malaysia) Bhd, amid mixed performance in regional markets. Oil prices remained near their highest levels since January last year despite the recent rally losing steam. Brent crude, the international benchmark, slid 1.6% to under $63 a barrel. In the region, China’s CSI 300 index gained 0.2%, as did Hong Kong’s Hang Seng, while South Korea’s Kospi 200 added 0.8%.

Source: PublicInvest Research - 22 Feb 2021