Economy

US: Consumer sentiment drops more than initially estimated in Jan. Consumer sentiment in the US deteriorated by more than initially estimated in the month of Jan. The consumer sentiment index for Jan was downwardly revised to 67.2 from a preliminary reading of 68.8. Economists had expected a more modest downward revision to a reading of 68.7. With the downward revision, the index was further below the final Dec reading of 70.6, dropping to its lowest level since hitting 93.7 in Nov 2011. Although their primary concern is rising inflation and falling real incomes, consumers may misinterpret the Fed's policy moves to slow the economy as part of the problem rather than part of the solution. (RTT)

US: Personal income rises less than expected, personal spending slumps. Personal income in the US increased by less than expected in the month of Dec. The personal income rose by 0.3% in Dec after climbing by an upwardly revised 0.5% in Nov. Economists had expected personal income to advance by 0.5% compared to the 0.4% increase originally reported for the previous month. Disposable personal income, or personal income less personal current taxes, also edged up by 0.2% in Dec after rising by 0.4% in Nov. When adjusted for inflation, however, disposable personal income actually dipped by 0.2% for the third straight month. (RTT)

US: Labor costs increase solidly in the 4Q. US labor costs increased strongly in the 4Q, pointing to a rapidly tightening jobs market and supporting the Federal Reserve's shift towards raising interest rates. The Employment Cost Index, the broadest measure of labor costs, rose 1.0% last quarter after increasing 1.3% in the July-Sept period. Labor costs surged 4.0% on a YoY basis, the largest rise since 2001, after increasing 3.7% in 3Q. The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack and a predictor of core inflation as it adjusts for composition and job quality changes. Economists polled by Reuters had forecast the ECI advancing 1.2% in 4Q. (Reuters)

EU: Money supply growth slows; credit to private sector improves. Eurozone money supply grew at a slower pace in Dec and the annual growth in credit to private sector improved. The M3 monetary aggregates logged a slower annual growth of 6.9% in Dec after Nov's revised 7.4% increase. However, this was slightly faster than the economists' forecast of 6.8%. In three months to Dec, M3 growth averaged 7.3%. The narrow measure, M1, comprising currency in circulation and overnight deposits, grew 9.8% but weaker than the 10% rise in the previous month. (RTT)

EU: Economic confidence at 9-month low. Eurozone economic confidence weakened to a nine-month low in Jan largely driven by the weakness in services and construction. The economic confidence index fell unexpectedly to 112.7 in Jan from 113.8 in Dec. The score was forecast to rise to 114.5. At 13.9, the industrial confidence index reached a seven-month low, and was down from 14.6 in Dec and the expected score of 15.0. Similarly, the services sentiment index fell to a nine-month low of 9.1 from 10.9 a month ago. The expected level was 10.3. The consumer confidence index dropped marginally to -8.5, in line with flash estimate, from -8.4 in the previous month. The construction sentiment index came in at 8.1, down from 10.1 a month ago. Meanwhile, confidence rebounded in retail trade in Jan. (RTT)

EU: Italy consumer confidence weakens in Jan. Italy's consumer confidence deteriorated more than expected in Jan. The consumer confidence index fell to 114.2 in Jan from 117.7 in Dec. Economists had expected a score of 116.5. The manufacturing confidence index decreased to 113.9 in Jan from 115.0 in the previous month. Economists had forecast a score of 115.3. The economic sentiment index declined to 129.7 in Jan from 139.6 in the prior month. (RTT)

EU: Spain GDP growth exceeds expectations in 4Q. Spain's economy grew more than expected in the 4Q despite the weakness in household spending. GDP grew 2% sequentially in the 4Q, faster than the economists' forecast of 1.4%. However, this was slower than the 2.6% growth posted in 3Q. On a yearly basis, economic growth accelerated to 5.2% from 3.4% in 3Q. The rate also exceeded the expected 4.5%. In the full year of 2021, GDP was 7.2% higher than in 2020. On the expenditure-side, household spending slid 1.2% and government spending decreased 0.4% on quarter. Meanwhile, gross fixed capital formation surged 8.5% in 4Q. Exports and imports were up 6.5% and 3.5%, respectively. (RTT)

China: Jan service sector activity growth slows. Activity in China's services sector grew at a slower pace in Jan, as China battles a resurgence of COVID-19 outbreaks that are hitting consumer confidence. The official non-manufacturing Purchasing Managers' Index (PMI) was at 51.1 in Jan versus Dec's 52.7. The 50-point mark separates growth from contraction on a monthly basis. While the world's second-largest economy broadly rebounded last year from 2020's pandemic-induced slump, the services sector has lagged the recovery as China's tough zero COVID approach weighs on consumer spending. China's official composite PMI, which includes both manufacturing and services activity, stood at 50.1, compared with 52.2 in Dec. (Reuters)

South Korea: Industrial output spikes 4.3% on month in Dec. Industrial production in South Korea advanced a seasonally adjusted 4.3% on month in Dec. That beat forecasts for an increase of 1.0% following the upwardly revised 5.3% gain in Nov (originally 5.1%). On a yearly basis, industrial production jumped 6.2% - again surpassing expectations for a 2.0% gain following the upwardly revised 6.3% spike (originally 5.9%). For the 4Q 2021, industrial production was up 1.0% on quarter and 5.5% on year. For all of 2021, industrial production was up 6.9%. The Index of all industry production in Dec increased by 1.8% on month and 6.5% on year. The Manufacturing Production Index increased by 4.8% on month and 6.8% on year. The Manufacturing Shipment Index gained 4.8% on month and 3.2% on year. The Manufacturing Inventory Index rose 2.2% on month and 11.2% on year. (RTT)

Markets

UEM Sunrise (Neutral, TP: RM0.55): Breaches RM1.2bn sales target in 2021, eyes RM1.5bn in 2022. UEM Sunrise ended 2021 strong by exceeding its RM1.2bn sales target, selling 1,595 units and hitting RM1.46bn in sales. For this year, UEM Sunrise targeted higher sales target of RM1.5bn with plans to launch projects worth RM3.3bn in GDV, totalling 3,526 units. (BTimes)

Affin Bank: Sell Affin Hwang AM stakes to CVC for RM1.54bn. Affin Bank is selling all its 63% stake in Affin Hwang Asset Management (Affin Hwang AM) to global private equity fund CVC Capital Partners (CVC). It had inked a conditional share purchase agreement with Starlight Asset SB, an investment holding company incorporated by funds managed by CVC. It was disposing a total of 68.35% stake for RM1.54bn. (BTimes)

Inta Bina: Bags RM160.62m construction job contract from Sunway Artessa. Inta Bina Group has bagged a RM160.62m construction contract for the proposed development of Sunway Artessa condominium in Wangsa Maju. It has accepted the letter of award from Sunway Artessa SB for the project's main building works. The 33-month contract involves the construction of a 47- storey apartment (468 units). (The Edge)

KPower: Bags RM105m solar power plant contract. KPower has secured from Fabulous Sunview SB a RM104.97m solar power plant contract under which KPower will, among others, procure and maintain equipment for the proposed 50MWac photovoltaic entity, which will produce electricity from sunlight in Malaysia. Fabulous Sunview and KPower shall enter into a sub contract agreement not later than March 31, 2022. (The Edge)

Seni Jaya: Acquires three out-of-home advertising companies to expand asset footprint. Seni Jaya Corp is buying a 55% stake in each of the three advertising companies Andaman Media SB, Saakti Billboards SB and Tanjong Jernih SB for a total cash consideration of RM8.5m. The exercise will be funded through a combination of internally generated funds as well as proceeds raised from its private placement exercise. (The Edge)

SMTrack: Refutes accusations on current RFID projects, vows to take legal action. SMTrack has refuted accusations on its involvement in the current radio-frequency identification (RFID) projects and will take actions to protect its integrity and affect investors' confidence.. (BTimes)

Top Builders: Now under PN17. Top Builders Capital has been classified as a Practice Note 17 (PN17) company after Bursa Malaysia Securities rejected the company's application for a six month extension of the relief period. The company said it on Dec 28, 2021 submitted an application for the extension from Dec 29, 2021 to June 28, 2022, which Bursa Securities rejected. (The Edge)

IPO: Siab to raise nearly RM37m from IPO. Siab Holdings is raising RM36.72m from the issuance of 122.41m new shares at 30 sen under its initial public offering. The 122.41m shares are equivalent to 25% of its enlarged share capital. (BTimes)

Market Update

The FBM KLCI might trend higher today after Wall Street stocks rallied sharply at the end of a wild week across global markets on Friday, as investors weighed the prospect of rapid interest rate rises by the US Federal Reserve and an upbeat earnings report from Apple. The benchmark US S&P 500 index rose 2.4% as a late-day advance gathered momentum, reversing a drop of as much as 0.8% earlier in the day. The rise was enough to put the index in the green for the week, ending a three-week run of losses. The Nasdaq Composite index advanced 3%, enough to eke out a marginal gain for the week. Both indices have swung violently in recent trading sessions, with intraday moves pushing gauges of volatility to their highest levels since October 2020 this week. The gains on Friday followed a strong quarterly update from Apple, the world’s largest company by market capitalisation, as its shares rose 7%. The iPhone maker also revealed a lighter hit than analysts had forecast from coronavirus-related semiconductor supply chain glitches. European markets fell broadly on Friday, with the regional Stoxx 600 index down 1%.

Back home, Bursa Malaysia ended the week broadly higher due to bargain-hunting activities in the lower liners and technology stocks. At the closing bell, the benchmark FBM KLCI advanced 0.27% or 4.03 points to 1,520.02 from 1,515.99 at Thursday's close. The key index, which opened 2.26 points higher at 1,518.25, moved between 1,517.96 and 1,522.95 during the trading session. In the region, Hong Kong’s Hang Seng index fell 1.1% while Tokyo’s exporter-heavy Nikkei 225 added 2.1%.

Source: PublicInvest Research - 31 Jan 2022