Economy

US: Fed seen taking a step toward March rate increase. Jerome Powell and his fellow Federal Reserve policy makers are expected to signal their first interest-rate hike since 2018, paving the way for a March move as the US central bank tries to extinguish red-hot inflation. Financial markets in the coming week will get another read on US inflationary developments when the government issues employment cost data for the fourth quarter. Economists project another solid increase in wages and benefits after the index jumped by a record 1.3% in the prior three months. (Bloomberg)

US: Leading economic indicator rises strongly in Dec. A gauge of future US economic activity increased solidly in Dec, suggesting the expansion would continue despite challenges from the COVID- 19 pandemic and anticipated interest rate increases from the Federal Reserve to tame high inflation. Its Leading Economic Index rose 0.8% last month after advancing 0.7% in Nov. Last month's increase was in line with economists' expectations. (Reuters)

EU: Consumer confidence falls less than expected. Eurozone's consumer confidence weakened for a fourth month in a row in Jan, but the decline was less than expected. The flash consumer confidence index eased to -8.5 from -8.4 in Dec, revised from -8.3. Economists had forecast a fall to -9.0. The latest reading remained the worst since March, when the score was -10.8. The corresponding indicator for the EU dropped to -10.0 from -9.6 in the previous month. (RTT)

UK: Retail sales decline at fastest pace in 11 months. UK retail sales declined more-than-expected in Dec as the Omicron outbreak dampened Christmas sales. Retail sales fell 3.7% on a monthly basis in Dec, reversing the 1% increase a month ago. Sales were forecast to fall 0.6%. This was the biggest decline since Jan 2021. Likewise, sales volume excluding auto fuel, decreased 3.6% after rising 0.7% in Nov. This was also much bigger than the economists' forecast of -0.5%. Still retail sales were 2.6% higher than their pre coronavirus Feb 2020 levels. (RTT)

UK: Consumer sentiment weakens in Jan. UK consumer confidence weakened in Jan amid concerns over higher inflation and interest rate hikes. The consumer confidence index fell to -19 in Jan from -15 in the previous month. All five measures of the index were down in comparison to the 17 th December data. The index measuring the past personal financial situation dropped slightly to -6 in Jan from -5. (RTT)

China: PBOC’s pledge to open tool box puts focus on less known options. A pledge by China’s central bank to open its monetary policy tool box wider to spur an economy under strain has fueled debate over its next move. With the PBOC having already cut interest rates and the ratio of cash banks must hold in reserve, economists are betting authorities will turn to some of their lesser known tools and adopt structural policies to boost credit expansion and domestic demand. (Bloomberg)

Japan: Inflation climbs 0.8% on year in Dec. Overall consumer prices in Japan were up 0.8% on year in Dec. That was in line with expectations and up from 0.6% in Nov. Core CPI, which excludes volatile food prices, was up an annual 0.5% - unchanged but shy of forecasts for 0.6%. Individually, prices were up for food, housing, fuel, clothing, education and recreation; they were down for furniture, medical care and communications. (RTT)

Markets

TAFI: Approves proposed bonus issue of shares, warrants and new shareholders’ mandate . TAFI Industries announced that it has received approval for the proposed two-for-one bonus issue of 252.95m new ordinary shares in the company. The furniture maker has also received approval for the proposed bonus issue of warrants on the basis of one warrant for every two existing TAFI shares held on the entitlement date. (The Edge)

THHE: OHP Ventures sign MoU to explore renewable energy sector. TH Heavy Engineering (THHE) and OHP Ventures SB (OHP) have signed a MoU to explore opportunities in the renewable energy sector. THHE said this would be conducted via the injection of OHPV's renewable energy assets, which mainly consists of hydropower plant development. The MoU is part of an exercise by the company to build capacity and capability by having a new stream of assets to strengthen its financial footing via diversification of revenue stream. (Business Times)

PUC: Inks JV agreement to undertake digital insurance business . PUC is partnering with Cover Touch SB (CTSB) and KH Lim Capital SB (KLCSB) to undertake online general and life insurance aggregation service business. PUC said the JV agreement was inked among its wholly-owned subsidiary Presto Universe SB (PUSB), CTSB and KLCSB. (The Edge)

Eupe: To acquire freehold land in Kedah for RM40m . Eupe Land Development SB (ELDSB), an indirect subsidiary of Eupe Corp (ECB), has entered into a sale and purchase agreement with Sing Ta Nian Development SB (STN) to acquire a parcel of freehold land in Kedah for RM40m. The group said it has also entered into a JV agreement with STN to develop the 21.7- hectare land in Kuala Muda. (Bernama)

Woodlandor: Slapped with UMA query after share price hits limit up. Woodlandor Holdings has been slapped with an unusual market activity query by Bursa Malaysia on the sharp rise in its share price and volume on Friday (Jan 21). Shares in Woodlandor hit limit up and soared 35 sen or 29.66% to RM1.53, making it the second top gainer in the local bourse. (The Edge)

Jerasia Capital: Subsidiary defaults on RM26m loan . Jerasia Capital (JCB) said its subsidiary has defaulted on its repayment of principal and interest in financing facilities worth RM26.39m. JCB said that it is the corporate guarantor for the financing facilities granted by RHB Bank Bhd. Its wholly-owned subsidiary Canteran Apparel SB defaulted on its payment on Friday (Jan 21), according to JCB. (The Edge)

CTOS Digital: 4Q net profit slips 8.6% on higher admin expenses, declares 0.33 sen dividend . CTOS Digital saw its net profit for 4QFY21 ended Dec 31, 2021 fall slightly by 8.62% to RM11.78m from RM12.89m in the previous year due to higher administrative expenses. The credit reporting agency said its quarterly revenue grew 12.5% to RM38.79m against RM34.47m in the same period in the previous year as Bank Negara Malaysia allowed free access to its Central Credit Reference Information System (CCRIS) database. (The Edge)

Market Update

The FBM KLCI might open lower today after all three major indices on Wall Street fell Friday, ending a holiday shortened four-day trading week. The S&P 500 fell 84.79 points, or 1.9%, to 4397.94, while the Dow industrials lost 450 points, or 1.3%, to 34265.37. The Nasdaq was off 385.1 points, or 2.7%, to 13768.92. For the week, Nasdaq fell 7.55%, while the S&P 500 dropped 5.7% and the Dow lost 4.6%. Global equities suffered their biggest declines in more than a year as heavy losses in Netflix shares accentuated a sell-off in tech stocks that spilled into other sectors. Investors have raced out of speculative corners of the market as the Federal Reserve moves to tighten financial conditions. Share declines have been particularly extreme in the US, where many of last year’s high-flying tech companies are listed. Among the hardest hit US stocks was Netflix, which tumbled 22% on Friday after the streaming group warned subscriber growth would slow substantially. The decline shaved about USD49bn from its valuation, or roughly the market capitalisation of foods group Kraft Heinz. Stock markets also fell across Europe, with the regional Stoxx 600 equity gauge falling 1.4% for the week, its third consecutive weekly loss.

Back home, Bursa Malaysia ended the week lower, with the key index easing by 0.05% amid cautious investors’ sentiment. At 5pm, the benchmark FBM KLCI shed 0.69 of-a-point to 1,527.06 from 1,527.75 at Thursday’s close after opening 1.06 points higher at 1,528.81. Regionally, key indices closed broadly lower as Wall Street took a knock overnight, hurt by lingering concerns over the US Federal Reserve’s tightening and weaker-than-expected economic and earnings data. Hong Kong’s Hang Seng Index added 0.05% to 24,965.55 and Japan’s Nikkei 225 fell 0.9% to 27,522.26.

Source: PublicInvest Research - 24 Jan 2022