Economy

US: Economy has not reached Fed's full employment goal -SF Fed report. The US economy is not at full employment, and likely will not get there until 2024, according to a research note of the San Francisco Federal Reserve Bank published. The 4% US unemployment rate, record job openings, worker shortages and rising wages suggest a very tight job market, which Fed policymakers say is one reason they feel it is time to start raising interest rates next month. (Reuters)

EU: Eurozone bond yields rise on ECB policy tightening fears. Eurozone yields rose with Italian bond prices underperforming their peers after the ECB last week opened the door to speculation about a monetary tightening in March. Italian yields skyrocketed in morning trade as a faster-than-expected monetary tightening would hurt more bonds of the most indebted countries. But they slowly gave up some gains in the afternoon as an early selloff calmed down. ECB chief Christine Lagarde, addressing the European Parliament, calmed some rate hike jitters by saying there were no signs that measurable monetary policy tightening would be required. (Reuters)

EU: Eurozone Sentix investor confidence improves in Feb. Eurozone investor confidence improved more-than-expected in Feb, survey results from the behavioural research firm Sentix showed. The investor sentiment index rose to 16.6 in Feb from 14.9 in the previous month. The expected reading was 15.2. Both current assessment and expectations strengthened from Jan. The current situation index came in at 19.3, up from 16.3 in the prior month. (RTT)

EU: German industrial output falls in Dec. German industrial production dipped in Dec as supply chain bottlenecks and a drop in construction hampered Europe’s largest economy at the end of last year. The Federal Statistics Office said the country’s industrial output fell by 0.3% on the month after an upwardly revised increase of 0.3% in Nov. A Reuters poll had pointed to a rise of 0.4% in Dec. Production in 2021 was 3.0% higher than in 2020 and 5.5% lower than in the pre-crisis year 2019, the office said. The German economy expanded by 2.8% last year, compared with 7% in neighbouring France, exposing Germany’s vulnerability to the supply chain bottlenecks holding back the manufacturing sector that forms its export-oriented backbone. (Reuters)

UK: House price inflation unchanged at 9.7% - Halifax. UK house prices annual rate of increase remained steady at the start of the year, while the monthly gain was the weakest in seven months, survey data from the Lloyds Bank subsidiary Halifax showed. The house price index rose 9.7% YoY, same as in Dec. Compared to the previous month, house prices rose 0.3%, which was the slowest increase since June last year, when prices decreased. In Dec, house prices climbed 1.1%. The average house price hit a new record high of GBP 276,759 in Jan versus GBP 275,996 in Dec. (RTT)

China: Jan services activity expands at slowest rate in five months - Caixin PMI. Activity in China's services sector in Jan expanded at the slowest pace in five months, as a surge in local COVID-19 cases and containment measures hit new business and consumer sentiment while employment fell, a private survey showed. The Caixin/Markit services PMI dropped to 51.4 in Jan - the lowest since Aug - from 53.1 in Dec. The 50-point mark separates growth from contraction on a monthly basis. The soft reading is likely to reinforce market expectations that policymakers need to roll out more support measures to stabilise the faltering economy. China's central bank has already started cutting interest rates and pumping more cash into the financial system to bring borrowing costs down, and further easing steps are expected in coming weeks. (Reuters)

Japan: Leading index at 5-month high. Japan's leading index rose to a five-month high in Dec, while the coincident index weakened, preliminary data from the Cabinet Office showed. The leading index, which measures the future economic activity, rose to 104.3 in Dec from 103.9 in the previous month. This was the highest reading since July. Meanwhile, the coincident index that measures the current economic situation, dropped to 92.6 from 92.8 in Nov. At the lagging index, the lagging index rose to 94.2 from 93.4 a month ago. (RTT)

Indonesia: GDP speeds up on easing COVID-19 curbs, brisk exports. Indonesia's economic growth accelerated in the final quarter of last year as consumption perked up following the easing of anti-virus mobility restrictions and as stronger commodity prices pushed exports to record highs. Southeast Asia's largest economy grew 5.02% on a yearly basis in the Oct-Dec quarter, compared with 3.51% growth in the previous quarter, data from Statistics Indonesia showed. That was roughly in line with the government's prediction and a touch faster than the 4.90% expected in a Reuters poll. For the whole of 2021, gross domestic product expanded 3.69%, compared with a 2.07% contraction the year before, as the economy recovered from the impact of the COVID-19 pandemic. (Reuters)

Markets

OpenSys: Clinches additional order from BSN to supply cash recycling machines. OpenSys (M) has received an additional order worth RM10.8m to supply cash recycling machines (CRMs) to Bank Simpanan Nasional (BSN) branches. CRMs are dual-function machines that replace standalone cash deposit and dispensing machines in banks and financial institutions. (The Edge)

Hong Seng: In talks with Japan’s Mitsui to form strategic partnership for nitrile butadiene latex business. Hong Seng Consolidated has accepted the letter of intent (LoI) from Japanese global trading and investment firm Mitsui & Co to form a strategic partnership for Hong Seng’s nitrile butadiene latex (NBL) business at Kedah Rubber City and integrated logistics services business at Penang. Mitsui intends to provide a one stop supply chain management for feedstock and raw materials of the NBL plant. (The Edge)

MR DIY: Partners with seven financial service providers to offer cashback to customers. MR DIY Group (M) is partnering with three banks and four e-wallet providers to offer its "Mega Cashback” programme and discounts across its stores. The three banks and four e-wallet platforms are HSBC, Public Bank, MAE by Maybank, as well as Touch ‘n Go eWallet, ShopeePay, GrabPay, and Boost. (StarBiz)

Scomi Group: Partners Odesi, LPHS to promote solar energy at strata properties. Scomi Group has partnered with Odesi Ecob and Lembaga Perumahan dan Hartanah Selangor (LPHS) to promote the usage of solar renewable energy in the relevant strata properties. Scomi Group has today signed a memorandum of understanding (MoU) to launch a Green Building and Life Fund Programme. (BTimes)

Serba Dinamik: Bursa orders Serba Dinamik to reveal E&Y's findings update by 9 Feb. Serba Dinamik Holdings has been ordered to make a public announcement within two market days in respect of the factual findings update as of 30 September 2021 by E&Y Consulting. The latter has been appointed to conduct a special independent review on the listed oil and gas services company. (BTimes)

LPI Capital: 4Q net profit down 23% to RM73m, declares 45sen dividend. LPI Capital’s net profit in 4QFY21 dropped by 23.27% to RM73.07m from RM95.23m in the same period the prior year amid lower underwriting profit caused by higher net claims incurred in the quarter. Consequently, earnings per share fell to 18.34sen from 23.9sen. The quarterly revenue, however, inched slightly higher by 1.58% to RM429.04m from RM422.38m, driven by growth in gross earned premium from its general insurance segment. (The Edge)

Censof: Posts 31% net profit jump in 3Q. Censof Holdings’s net profit jumped 31% to RM2.62m in the 3QFY22, from RM2m posted a year ago. Revenue, however, fell 10% to RM21.34m against RM23.73m a year prior. The lower revenue was due to the higher project deliverables by FMS-G (Financial Management Solution – Government) segment in the previous year and lower sales demands of ABSS products in the current quarter, especially in the Singapore region. (StarBiz)

Market Update

The FBM KLCI might open lower today as US and European stock markets skidded lower late on Monday after a choppy day of trading, as investors weighed countervailing forces of resurgent economies and central banks’ next steps to fight inflation. The S&P 500 ended the day down 0.4%, while the tech-heavy Nasdaq Composite fell 0.6%. Both indices lurched lower in the final hour of trading after swinging repeatedly between gains and losses earlier in the day. The two gauges made gains last week but remain significantly lower for the year, with investors adjusting expectations for the Federal Reserve’s impending end of its pandemic-era monetary support. Across the Atlantic, the shift in expectations on Monday hit bonds of southern European countries that are seen as particularly vulnerable to rising rates, namely Italy, Spain and Greece, though the selling pressure eased later in the day after Lagarde addressed the European Parliament. Italian and Spanish stocks also suffered, with their benchmark indices dropping 1% and 0.4% respectively, in contrast to a 0.7% increase in the continent-wide Stoxx 600.

Back home, Bursa Malaysia ended higher on Monday with the key index advancing 0.52% on strong buying interest, mainly lifted by selected heavyweights in glove and banking counters. At 5pm, the benchmark FBM KLCI improved by 7.89 points to 1,530.65 from 1,522.76 last Friday. In the region, the Hang Seng gained 0.03%, while Japan's Nikkei 225 was off 0.70%. Shares in China were unchanged with the Shanghai Composite at 3,429.58.

Source: PublicInvest Research - 8 Feb 2022