Economy

US: Robust imports boost US trade deficit to record high in 2021. The US trade deficit surged to a record high in 2021 as imports increased sharply amid the restocking of shelves by businesses to meet robust domestic demand. The sharp widening in the trade gap reported by the Commerce Department mostly reflected a shift in spending toward goods from services during the COVID-19 pandemic. (Reuters)

US: Consumer debt totals USD15.6trn in 2021, a record breaking increase. Consumers ended 2021 with record levels of debt, leading into a year in which interest rates are expected to rise substantially. Total US consumer debt at the end of the year came to USD15.6trn, a year-over-year jump of USD333bn during the fourth quarter and just over USD1trn for the full year, according to data released from the Federal Reserve’s New York district. (CNBC)

EU: France trade deficit widens in Dec. France's trade deficit widened notably at the end of 2021 driven by the increase in imports, data from the customs office showed. The trade shortfall increased to EUR11.3bn from EUR9.76bn in Nov. In the same period last year, the deficit was EUR4.15bn. Exports dropped 0.4% from Nov, while imports increased 2.5%, data showed. (RTT)

UK: Retail Sales Increase Strongly In Jan - BRC. UK retail sales grew at a stronger pace in Jan due to the easing of lockdown restrictions, data from the British Retail Consortium and KPMG showed. Like-for-like sales grew 8.1% in Jan from the previous year. At the same time, overall sales increased 11.9% on a yearly basis in Jan. (RTT)

Japan: Jan service sector sentiment worsens – govt. Japan's service sector sentiment index fell in Jan for the first time in five months, a Cabinet Office survey showed on Tuesday, taking a hit from curbs to stem a record rise in coronavirus infections. The survey of workers such as taxi drivers, hotel workers and restaurant staff, called "economy watchers" for their proximity to consumer and retail trends, showed their confidence about current economic conditions dropped 19.6 points to a five-month low of 37.9 in Jan. (Reuters)

Australia: Businesses suffer Omicron blues in Jan – survey. A measure of Australian business conditions took a turn for the worse in Jan as a surge in coronavirus cases hit consumer spending, though firms were optimistic the hit would be short-lived. Survey from National Australia Bank (NAB) showed its index of business conditions dropped 5 points to +3 in Jan, as sales halved to +7 and profitability slid 8 points to +2. (Reuters)

Philippines: Production index growth slows in Dec. The Philippines production index grew at a softer pace in Dec, data from the Philippine Statistics Authority showed. The production index value increased 18.6% yearly in Dec, after a 27.2% growth in Nov. Manufacture of wood, bamboo, cane rattan articles and related products gained 93.6% yearly in Dec. Manufacture of coke and refined petroleum products increased 75.1%. (RTT)

Markets

Rhone Ma: Proposes private placement to fund milk processing plant project. Rhone Ma Holdings plans to undertake a private placement of 10% of its issued shares to raise between RM13.45m and RM18.84m to fund the setting up of a milk processing plant and for working capital purposes. Rhone Ma hopes to use RM7.5m of the proceeds to build the plant with a capacity of 14.4m litres per year in Kapar, Selangor by 3Q of 2025. (The Edge)

YTL Power: To gain RM2.2bn gain on disposal of 33.5% stake in ElectraNet. YTL Power International has divested its 33.5% stake in ElectraNet Pty Ltd in Australia to Australian Utilities Pty Ltd as trustee of Australian Utilities Trust for AUD1.026bn (approximately RM3.075bn). YTL Power will realise a gain on disposal of approximately RM2.215bn upon completion of the transaction. (StarBiz)

Yinson: Says final acceptance of RM22bn Petrobras contracts to take place in 4Q24. Yinson Holdings said that the final acceptance of the group's estimated USD5.2bn (about RM21.7bn) floating production storage and offloading (FPSO) contracts with Brazil national oil company Petrobras is expected to take place in the 4Q24 and that the FPSO, which will be based offshore Brazil, is expected to commence operations upon achieving final acceptance. (The Edge)

Supermax: Expands scope of remediation payment to workers. Supermax Corp has expanded its remediation plan to include former direct hire and contract workers who left the company before 1 Oct 2019. The group has recently rolled out a new and comprehensive policy to strengthen its human resources management and migrant worker policies and practices. (The Edge)

BAT Malaysia: 4Q profit eases to RM72.3m, revenue rises 30.5%. British American Tobacco (Malaysia)'s (BAT Malaysia) net profit eased 1.7% YoY to RM71.45m for the 4Q ended 31 December 2021, from RM72.72m previously. This was attributed to a slight decrease in sales of the group's value-for-money brands - Rothmans and KYO. (BTimes)

F&N: Posts 32% lower net profit in 1Q. Fraser and Nerve Holdings's (F&N) net profit dropped 32.1% YoY to RM92.95m for the 1Q ended 31 December 2021, from RM136.81m previously. (BTimes)

Airline (Neutral): NRC proposes reopening nation's borders on March 1. The National Recovery Council (NRC) has proposed for the full reopening of the country's borders as early as March 1, without the need for mandatory quarantine. (BTimes)

Comments: The reopening of our international borders (proposed by NRC and to be discussed and approved by the cabinet or the Special Committee to Address Covid-19 chaired by the Prime Minister) would be a welcome boost to the Airline sector. The proposal is in line with UK and Australia, which are reopening theirs borders to vaccinated travellers from 11 Feb and 21 Feb respectively. We maintain our Neutral call on the sector with AAX our preferred pick given its hybrid cargo passenger business model.

Market Update

The FBM KLCI might nudge higher at opening today after major US stock indices rose Tuesday as investors snapped up shares of companies across industries. The gains were broad-based, with eight of the S&P 500’s 11 sectors rising. The S&P 500 advanced 37.67 points, or 0.8%, to 4521.54. The Dow Jones Industrial Average added 371.65 points, or 1.1%, to 35462.78. The tech heavy Nasdaq Composite climbed 178.79 points, or 1.3%, to 14194.45. The S&P 500 is still down 5.1% in 2022 after selling off in January. Earnings reports drove some of Tuesday’s moves in individual stocks. Pfizer shares fell $1.51, or 2.8%, to $51.70 after the vaccine maker reported revenue that missed analysts’ forecasts. Harley-Davidson shares rose $5.61, or 16%, to $41.73 after the motorcycle maker swung to a fourth-quarter profit. In Europe, the pan-continental Stoxx Europe 600 edged up less than 0.1%.

Back home, Bursa Malaysia ended marginally lower on lack of buying interest, with healthcare heavyweights weighing on the index amid volatile trading. Hartalega Holdings Bhd led the decliners after it slid 26 sen to RM5.57, while Top Glove Corp Bhd was six sen lower at RM2.29. At 5pm, the benchmark FBM KLCI eased 0.56 of-a-point to 1,530.09 from 1,530.65 at Monday's close. Regional stock markets were mixed. Japan’s Nikkei 225 added 0.1%, while in Hong Kong, the Hang Seng Index fell 1%. In mainland China, the Shanghai Composite Index added 0.7%.

Source: PublicInvest Research - 9 Feb 2022