Economy

US: Goods trade deficit widens in Dec on imports. The US trade deficit in goods widened significantly in Dec amid a continued rise in imports, suggesting that trade likely remained a drag on economic growth in the 4Q. The goods trade deficit rose 3.0% to 101.0bn last month. The report was published ahead of Thursday’s advance 4Q GDP data. Trade has subtracted from GDP growth for five straight quarters. (Reuters)

US: Federal Reserve indicates first interest rate hike coming 'soon'. Citing elevated inflation and a strong labor market, the Federal Reserve indicated that it plans to begin raising interest rates "soon." The Fed left interest rates unchanged at near-zero levels as widely expected but expects it will soon be appropriate to raise the target range for the federal funds rate The comments from the Fed were largely in line with expectations, as CME Group's FedWatch Tool currently points to a 91.4% chance of a quarter point rate hike at the next FOMC meeting in mid-March. (Reuters)

EU: Yields edge higher ahead of the Fed. Euro zone government bond yields edged up as investors braced for a potential hawkish announcement from the Federal Reserve but any sell-off was limited as tensions over Ukraine dampened risk sentiment. World equities were slightly higher after bouncing back from Monday’s slump, with investors waiting for the Fed’s updated policy plan. (Reuters)

EU: French consumer confidence weakens slightly in Jan. French consumer sentiment weakened slightly in Jan. The consumer confidence index dropped less-than-expected to 99 in Jan from 100 in Dec. The score was forecast to fall to 98.0. The households' opinion balance related to their past financial situation increased one point to -16. Likewise, the one relative to their future personal financial situation rose to -7 from -8. (RTT)

EU: Italy non-EU trade surplus rises in Dec. Italy's trade surplus with non-EU27 countries increased in Dec from the previous month. The non-EU27 trade surplus rose to EUR4.74bn from EUR4.22bn in Nov. In the same period last year, the surplus was EUR7.97bn. Exports to non-EU27 countries increased 12.6% annually, but slightly slower than the 13.4% rise in Nov. (RTT)

UK: Public's inflation expectations hit record high. The British public's expectations for inflation in 12 months' time jumped to a record high in Jan according to a monthly survey that will bolster the BoE’s concerns that the current spike in price growth will prove persistent. Year-ahead inflation expectations in the monthly Citi/YouGov survey, surged to 4.8% in Jan from 4.0% in Dec, the highest since this series began in 2006 and almost double their long-run average. (Reuters)

Japan: Leading index rises more than estimated. Japan's leading index rose more than initially estimated in Nov. The leading index, which measures the future economic activity, rose to 103.2 in Nov from 101.5 in the previous month. In the initial estimate, the reading was 103.0. The coincident index climbed to 92.8 in Nov from 89.8 a month ago. According to the initial estimate, the score was 93.6. The lagging index rose to 93.4 in Nov from 93.6 in the initial estimate. In Oct, the reading was 93.1. (RTT)

Markets

I-Berhad (Neutral, TP: RM0.26): To build Malaysia's first smart green tower with China Mobile's help . I-Bhd is stepping up its RM10bn i-City development by building the country's first smart green corporate tower in collaboration with China Mobile International (CMIM). The partnership with CMIM, according to I Bhd non-executive director Datuk Eu Hong Chew, was part of the company's plan to "reinvent i-City 2.0. (Business Times)

Jiankun: To develop Kampung Baru land into RM1.2bn GDV project . Jiankun International has entered into a JV agreement with Menara Rezeki SB and Menara Rezeki Properties SB to redevelop existing Flat PKNS Jalan Tun Razak in Kampung Baru here with a GDV of RM1.2bn. Executive director Azmi Osman said the project would include relocating existing residents into new apartments, besides comprehensive compensation payment. (Business Times)

Nextgreen: Inks MOU with Kelantan state govt worth RM2.23bn . Nextgreen Global has entered into a MoU with the Kelantan State government to develop sustainable projects in the State with an estimated valuation of RM2.23bn. Nextgreen said the valuation is subject to technical assessment, finance and certificates by the State’s One-Stop Investment Committee or any committee agreed upon by the State authority. (The Edge)

Central Global: Acquires 70% stake in RYRT International for RM30.1m . Central Global's (CGB) is acquiring a 70% stake in RYRT International SB from RYRT Holdings SB for RM30.1m. The manufacturing and construction company said the purchase would be satisfied via the issuance of shares in CGB at the price of RM1.04 per share. As part of the acquisition, the company also entered into a profit guarantee agreement whereby RYRT Holdings guarantees that it will achieve an aggregate audited profit after tax of RM43.0m for two years for the financial year ending August 31, 2022 (FY22) and FY23. (Business Times)

Toyo Ventures: Unable to release FY21 annual report on time . Toyo Ventures Holdings (TVHB) has said it is unable to release its annual report for the financial period ended Sept 30, 2021 (FY21) as it needs additional time to resolve outstanding issues. (The Edge)

CAB Cakaran: To diversify into drone business . CAB Cakaran Corp has entered into a JV agreement with MATA Aerotech SB to undertake the provision of drone spraying for the oil palm sector in peninsular Malaysia, as part of its efforts to diversify its income stream. CAB Cakaran said it will be primarily responsible for providing operational support under the partnership, in the aspect of human resource management, financial reporting and reviewing of the JV company's overall performance. (The Edge)

Lagenda Properties: In 50:50 JV with Inta Bina . Lagenda Properties is teaming up with Inta Bina Group to form a JV company, Lagenda Inta SB to carry out the construction activities of the company of the former. In a joint statement, it said the JV was synergistic as it taps into Inta Bina’s construction expertise to scale and expand Lagenda’s affordable township development nationwide in the most expeditious manner. (StarBiz)

Market Update

The FBM KLCI might open lower as US stock and bond prices swung lower on Wednesday afternoon after the Federal Reserve signalled that it would begin raising interest rates at its next monetary policy meeting in March. The benchmark S&P 500 index closed down 0.1% for the day, reversing earlier gains after Jay Powell, Fed chair, declined to rule out raising rates at every policy meeting for the rest of the year. The index’s reversal was briefly 3.4% between its high point and its nadir in late afternoon trading, the biggest downward turn since September 2020. The technology-focused Nasdaq Composite index closed unchanged, helped by a 2.2% gain for Microsoft, the index’s second-largest constituent. The tech group published an upbeat financial forecast after markets closed on Tuesday evening, providing some reassurance to investors after a weak start to earnings season by other large technology groups such as Netflix. European markets, in contrast, enjoyed solid gains. The continent-wide Stoxx 600 index rose 1.7%, while Germany’s Dax climbed 2.2%.

Back home, Bursa Malaysia ended on a higher note on Wednesday on bargain hunting in most sectors except plantation, ahead of the US Federal Reserve's decision on its monetary policy stance. At 5pm, the benchmark FBM KLCI gained 0.45% or 6.85 points to 1,515.76 from 1,508.91 at Tuesday's close. Regional stocks were also volatile on Wednesday. China’s CSI 300 index skirted a technical bear market before closing 0.7% higher. In Tokyo, the Nikkei 225 slipped 0.4%.

Source: PublicInvest Research - 27 Jan 2022