Economy

EU: Germany private sector recovers in Jan. Germany's private sector rebounded in Jan, led by a stronger performance from the manufacturing sector. The flash composite output index rose unexpectedly to 54.3 in Jan from 49.9 in Dec. The score was forecast to fall to 49.2. A score above 50 indicates expansion. The upturn was led by the manufacturing sector, which recorded its strongest performance on the production front for five months as the incidence of lengthening lead times on inputs eased to the lowest since Dec 2020. (RTT)

EU: France private sector growth at 9-month low. France private sector grew at the slowest pace in nine months in Jan. The flash composite output index fell more-than-expected to 52.7 in Jan from 55.8 in Dec. The expected reading was 54.5. The drag on economic performance stemmed from the service sector as the production of goods rose at a slightly faster pace. The services Purchasing Managers' Index came in at 53.1 in Jan, down from 57.0 in Dec and the economists' forecast of 55.3. (RTT)

UK: Private sector growth slowest in 11 months. The UK private sector logged a slower growth in Jan as the Omicron variant continued to weigh on customer-facing parts of the economy. The Chartered Institute of Procurement & Supply flash composite output index fell to 53.4 in Jan from 53.6 in Dec. The index signaled the slowest rate of output expansion since the recovery from lockdown began last spring and remained below the economists' forecast of 55.0. However, the indicator has stayed above the 50.0 no-change threshold for the eleventh consecutive month.. (RTT)

Japan: Manufacturing PMI climbs to 54.6 in Jan. The manufacturing sector in Japan continued to expand in Jan, and at a faster rate, with a manufacturing PMI score of 54.6. That's up from 54.3 in Dec, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Both output and new order growth quickened, with the latter rising at the fastest pace for nine months.. (RTT)

Australia: Manufacturing PMI slips to 55.3 in Jan. The manufacturing sector in Australia continued to expand in Jan, albeit at a slower rate, with a manufacturing PMI score of 55.3. That's down from 57.7 in Dec, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. New order growth eased at the start of the year while manufacturing output slipped into contraction for the first time in five months. (RTT)

Thailand: Domestic car sales drop 4.2% in 2021, seen higher this year. Domestic car sales in Thailand fell 17.2% in Dec from a year earlier and dropped 4.2% in the whole of 2021, due to coronavirus outbreaks and a shortage of microchips. Car sales totaled 86,145 units in Dec and 759,119 vehicles in all 2021, slightly above target. In 2022, the FTI still forecasts car sales at 800,000 to 850,000 vehicles, or a rise of 5.4% to 12%, supported by easing of travel curbs and economic recovery. (Reuters)

Singapore: Inflation rises in Dec. Singapore consumer price inflation rose in Dec. Consumer price inflation increased to 4.0% in Dec from 3.8% in Nov. Economists had expected a 3.8% rise. This latest acceleration in inflation was largely due to a rise in core inflation and higher accommodation costs. MAS core inflation rose to 2.1% in Dec from 1.6% in the previous month. (RTT)

Markets

DRB-Hicom (Outperform, TP: RM2.18): Update on Arbitration Proceedings initiated by CSCE against MCDSB. The company update that China State Construction Engineering (M) SB ("CSCE") and Media City Development SB ("MCDSB") have agreed to resolve all disputes amicably in respect of the Contracts, including the Arbitration Proceedings. In relation to this, MCDSB and CSCE have agreed to enter into a Settlement Agreement, the terms of which, inter alia provide that the execution of the Settlement Agreement constitutes a full and final settlement of all current and future disputes. (Bursa Malaysia)

Comments : It was reported that MCDSB and CSCE have agreed to resolve all dispute amicably with the execution of the Settlement Agreement. While we are positive on this development as it enables MCDSB to focus on its current projects, we were not expecting any material impact from the Arbitration Proceedings, therefore our forecasts remains unchanged. We maintain our Outperform call on DRB-Hicom.

Maybank (Outperform, TP: RM9.30): Allegations it would face major financial trouble due to Genting HK are baseless . Malayan Banking (Maybank) stated vehemently that the allegations that it will face major financial trouble owing to exposure to Genting Hong Kong are baseless. (Bernama)

DNeX: Unit SilTerra to invest RM645m on capacity expansion . Dagang NeXchange's subsidiary SilTerra Malaysia SB is investing RM645m on an expansion plan that will increase its annual capacity by 20%. DNeX said the investment, sourced from both capital injections by shareholders and internally generated fund, would increase SilTerra's annual capacity from 8.3m mask layers as at end of July 2021 to 10m mask layers. The additional capacity is expected to be ready for production by early 2023. (Business Times)

Haily Group: Wins RM41m contract to build resort villas in Johor . Haily Group has won a RM41.28m contract to build resort villas in Iskandar Puteri, Johor. Haily said its wholly-owned Haily Construction SB has accepted the letter of award for the new job from DP Architects SB on behalf of Country View Bhd's unit Country View Resources SB to build phase one of a tourist strata development located in Aurora Sentral, Pulai. (The Edge)

Luster: To buy 8.169% stake in Aimflex for RM22m to penetrate automation industry . Luster Industries is acquiring 100m shares representing an 8.169% stake in ACE Market-listed Aimflex for a total consideration of RM22m or 22 sen per share. Luster said the company entered into a form for transfer of securities last Friday (Jan 21) with Aimflex executive chairman and shareholder Datuk Awang Daud Awang Putera. (The Edge)

Opcom: Unit gets RM26.51m contract from TM . Opcom Holdings’ subsidiary Opcom Cables SB has secured an award worth RM26.51m from Telekom Malaysia (TM) to supply fibre optic cables for the telco from Dec 23, 2021 until Dec 31, 2023. The award is expected to contribute positively towards its earnings and net assets for the period of the contract. (The Edge)

Market Update

The FBM KLCI might add a few points today after stocks on Wall Street ended higher on Monday after investors took advantage of a severe drop early in the session to snap up discounted shares. The S&P 500 index stock eked out a gain of 0.3%, reversing a midday slide of as much as 4%. At its lows, the blue-chip US benchmark was more than 10% below an all-time high hit this month, known as a correction. The shifts throughout the trading day were intense, with gauges of volatility surging to the highest levels since since October 2020, ahead of the US election and results of the effectiveness of vaccines being developed by Pfizer and Moderna to prevent the spread of the coronavirus. Between its highs and lows, the S&P 500 moved 4.4 percentage points on the day. An intraday move of that magnitude has not been registered since March 2020, when the coronavirus pandemic sent financial markets into a tailspin. The technology-heavy Nasdaq Composite index briefly fell 4.9% before rebounding to end the day in the green. In Europe, the Stoxx Europe 600 regional share index fell 3.8% to its lowest level since October.

Back home, Bursa Malaysia closed lower on continuous selling pressure in most heavyweights led by glove maker Hartalega Holdings Bhd, amid weak market sentiment. At 5pm, the benchmark FBM KLCI shed 5.2 points to 1,521.86 from 1,527.06 at Friday’s close after opening 5.34 points lower at 1,521.72. Regional markets ended mostly lower with South Korea’s tech heavy Kospi index fell 1.5% and Hong Kong’s Hang Seng Tech index dropped 2.8%.

Source: PublicInvest Research - 25 Jan 2022