Economy

US: Consumer confidence dips; more plan to buy big-ticket items. US consumer confidence ebbed slightly in Jan, with more consumers planning to purchase homes, automobiles and other big ticket items even as they grew less optimistic about business and labor market conditions in the short term. The survey from the Conference Board also showed consumers' inflation expectations  moderating for a second straight month, though still high. Labor market views softened a bit, likely reflecting the disruptions on businesses caused by the winter wave of COVID-19, fueled by the Omicron variant. (Reuters)

US: Business borrowing for equipment fell 3% in Dec. US companies borrowed 3% less in Dec to finance their investments in equipment, the Equipment Leasing and Finance Association (ELFA), as inflation and Omicron cloud economic outlook. Firms signed up for USD11.8bn in new loans, leases and lines of credit last month, compared with USD12.1bn a year earlier. Borrowings, however, rose 49% from Nov.. (Reuters)

EU: Easing supply bottlenecks give German business 'glimmer of hope'. German business morale improved in Jan for the first time in seven months as easing supply bottlenecks brightened the outlook for manufacturers in Europe’s largest economy, promising a strong recovery from the coronavirus pandemic in spring. Its business climate index rose to 95.7 from an upwardly revised 94.8 in Dec. A Reuters poll of analysts had pointed to a Jan reading of 94.7. (Reuters)

EU: Spain producer price inflation at record high. Spain's producer price inflation accelerated for an eleventh month in Dec to its highest level on record. The industrial producer price index climbed 35.9% YoY following a revised 32.2% increase in Nov. The inflation rate was the highest since the series began in Jan 1976. Energy prices surged 95.9%, the fastest increase since the series began, mainly because the rise in prices of the production, transportation and distribution of electrical energy was higher than a year ago. (RTT)

UK: Workers need 8% pay rises to beat living standards crunch. British workers will need pay rises of 8% on average this year to offset the living standards squeeze from higher energy bills, tax rises and broader inflation if the government does nothing to help. Analysis shows that the poorest fifth of UK workers will need a wage increase of more than 10% to compensate them for the hit to incomes. (Bloomberg)

UK: Govt borrowings stay below OBR forecast. The UK government borrowing remained below the forecast of the Office for Budget Responsibility in the financial year-to-date period. In the financial year to Dec, the budget deficit was GBP146.8bn, which was the second-highest financial year-to-Dec borrowing since monthly records began in 1993. (RTT)

China: Government spending growth weakest in nearly two decades. China’s government spending rose at the slowest pace in nearly two decades last year, suggesting limited fiscal support for an economy that’s lost momentum sharply in recent months. General fiscal expenditure came in at CNY24.63trn (USD3.9trn), up 0.3% from the previous year. That was the weakest pace since 2003, according to Bloomberg calculations based on the ministry’s data. (Bloomberg)

South Korea: 4Q GDP expands 4.1% on year. South Korea's GDP grew an annualized 4.1% on year in the 4Q 2021. That beat forecasts for an increase of 3.7% on year and was up from 4.0% in the previous three months. On the expenditure side, the growth of facilities investment and government consumption continued while private consumption and exports turned positive. On the production side, while the decline in construction was sustained, manufacturing and services reversed to an increase. (RTT)

Markets

Hibiscus (Outperform, TP: RM1.05): Completes USD212.5m acquisition of FIPC from Repsol . Hibiscus Petroleum said its indirect wholly-owned subsidiary Peninsula Hibiscus SB had successfully completed the acquisition of the entire equity interest in Fortuna International Petroleum Corp (FIPC) from Repsol. Hibiscus Petroleum noted in a statement that out of the purchase price of USD212.50m (about RM890.06m), the net amount paid at completion was USD123.65m after taking into account various adjustments, including the deposit paid of USD15m. (The Edge)

TNB (Outperform, TP: RM12.42): To issue RM500m Islamic bonds on Jan 26 . Tenaga Nasional Bhd (TNB) said it will issue RM500m worth of bonds on Wednesday (Jan 26), according to updates on the Bond and Sukuk Information Exchange's (BIX) website. According to the BIX, the bonds which mature on Jan 26, 2023 have a tenure of one year. (The Edge)

Techna-X: Subsidiary inks 5-year partnership with Borneo Eco Star to develop smart aquaculture platform. Techna-X's wholly-owned subsidiary, Wavetree Technologies SB (WTSB), has signed a five-year partnership agreement with Sabah-based Borneo Eco Star SB (BES) to jointly develop and commercialise a smart integrated aquaculture platform (SIAP) for sustainable aquafarming in Malaysia. Techna-X said WTSB will be deploying an aquaculture Internet of Things (IoT) solution worth an estimated RM2.6m for BES's planned 102 ponds at UiTM-BES Innovation and Smart Aquaculture Centre. (Business Times)

Pintaras Jaya: Secures RM34.3m earthworks contract . Pintaras Jaya has secured a contract for earthworks, piling, substructure and ancillary works in Kuala Lumpur worth RM34.3m. The group said the 18-month project will start on Feb 14. It did not disclose who awarded the project to the company. (The Edge)

Tanco: Aims to secure contracts worth RM200m in 2022 . Tanco Holdings which has secured two contracts worth a total of RM41.5m for subcontract work for the East Coast Rail Link (ECRL) project, aims to secure contracts worth some RM200m this year. “We will be aggressively pursuing more construction contracts in the coming year which includes the ECRL, and private sector works. “We aim to secure contracts worth some RM200m by the end of 2022,” Tanco group managing director Datuk Seri Andrew Tan said. Tanco’s unit, Tanco Builders SB (TBSB) has secured two contracts worth a total of RM41.5m for subcontract works from Sri Medan Holding SB for the ECRL project, of which China Communications Construction (ECRL) SB is the main contractor. (StarBiz)

XOX Networks: Grant Thornton Malaysia resigns as XOX Networks’ auditors. XOX Networks formerly known as Macpie, said Grant Thornton Malaysia PLT has resigned as the group’s auditors. The group said it has received notice in writing of Grant Thornton Malaysia’s decision to resign, adding that the auditors' term of office will end after 21 days from Monday (Jan 24). XOX Networks is in the midst of identifying new auditors, according to its filing with Bursa Malaysia. (The Edge)

Market Update

The FBM KLCI might open with a negative bias today as US stocks closed lower on Tuesday after a volatile session with investors prepared for the prospect that the Federal Reserve will signal an increase in interest rates as soon as March. The technology-heavy Nasdaq Composite stock index fell 2.3%, earlier dropping as much as 3.2%. The decline followed a wild ride on Monday when the index, which includes Apple and Microsoft, sank almost 5% before ending the day with a small gain. The broader S&P 500 index, which is on course for its worst January on record, closed 1.2% lower. Sectors of the index including tech, utilities and communication services took significant hits. The blue-chip index has lost nearly 9% of its value so far this month. Investors are grappling with a hawkish turn by the Fed, which will finish a two day monetary policy committee meeting on Wednesday. Officials there are expected to signal their willingness to raise interest rates in March to battle surging US inflation. Meanwhile, the Stoxx Europe 600 index rose 0.7%, rebounding partially from a 3.8% drop in the previous session.

Back home, Bursa Malaysia closed weaker across the board on Tuesday amid regional volatility. At the closing bell, the benchmark FBM KLCI decreased 0.85% or 12.95 points to 1,508.91 from 1,521.86 at Monday's close. The key index opened 4.77 points weaker at 1,517.09 on Tuesday and fluctuated between 1,503.34 and 1,517.09 throughout the trading session. In the region, Japan’s Nikkei 225 closed down 1.7%. South Korea’s Kospi Composite retreated more than 2.5%. Hong Kong’s Hang Seng Index shed 1.7%.

Source: PublicInvest Research - 26 Jan 2022