Economy

US: Existing home sales accelerate; investors elbowing out first-time buyers. US home sales unexpectedly increased in Jan, but investors paying in cash are squeezing out first-time buyers from the housing market amid record low inventory and higher prices. The surge in sales of previously owned homes last month reflected buyers rushing into close contracts in anticipation of mortgage rates rising further. Existing home sales jumped 6.7% to a seasonally adjusted annual rate of 6.50m units last month. Sales rose in all four regions, with strong gains in the Midwest, the most affordable region. (Reuters)

US: Leading economic indicator unexpectedly falls in January. A gauge of future US economic activity fell in Jan for the first time in nearly a year amid a resurgence in COVID-19 cases, high inflation and supply chain disruptions, supporting expectations that growth would slow in the 1Q. The Conference Board said its Leading Economic Index dropped 0.3% last month, the first decline since Feb 2021, after increasing 0.7% in Dec. (Reuters)

EU: Consumer confidence erodes unexpectedly. Eurozone consumer confidence deteriorated further in Feb, defying expectations for a modest improvement, preliminary data from the European Commission showed. The flash consumer confidence index fell to -8.8 from -8.5 in Jan. Economists had expected a score of -8.0. The index fell for the fifth month in a row and the latest reading was the weakest since March 2021, when it was -10.9. The corresponding indicator for the EU dropped to -10.2 from -10.0 in the previous month. (RTT)

EU: Current account surplus falls in Dec. The euro area current account surplus declined in Dec, the European Central Bank said. The current account surplus decreased to EUR23bn from EUR24bn in the previous month. In Dec, surpluses were recorded for services, goods and primary income. The surplus on goods trade dropped to EUR11bn from EUR15bn. Likewise, the surplus on services fell to EUR18bn from EUR23bn.. (RTT)

EU: Construction output declines in Dec. Eurozone construction output declined for the second straight month in Dec, Eurostat reported. Construction output fell at a faster pace of 4.0% MoM in Dec, following a 0.2% drop in Nov. Building and civil engineering output decreased 4.5% and 1.9%, respectively. On a yearly basis, construction output fell 3.9%, reversing a 0.4% rise in Nov. Construction output in the EU27 declined 3.1% on month, and by 1.8% annually, data showed. The annual average production in construction for the year 2021, increased by 5.2% in the euro area and by 4.8% in the EU. (RTT)

EU: France jobless rate falls in 4Q. France unemployment declined in the 4Q as the economy continued to expand, data published by the statistical office Insee showed. The ILO jobless rate dropped to 7.4% in the 4Q from 8.0% in the 3Q. The rate was forecast to fall moderately to 7.8%. The rate had earlier dropped below 7.4% in the 2Q of 2020, during the onset of the pandemic. Excluding that instance, the latest unemployment rate was the lowest since 2008. The number of unemployed people decreased by 189,000 over the quarter and reached 2.2m. (RTT)

UK: Retail sales rebound in Jan. UK retail sales rebounded at a faster than expected pace in Jan as the disruption caused by the Omicron variant faded, the Office for National Statistics said. Retail sales volume grew 1.9% MoM, the fastest growth since April 2021 and also bigger than the expected rate of 1.0%. The monthly growth followed a revised 4% decline in Dec, when earlier Christmas trading than normal in Oct and Nov, and reduced retail footfall in Dec, linked to concerns around the Omicron variant of coronavirus, affected sales. (RTT)

China: NEV sales drop 18.6% in Jan after subsidy cut. Sales of new energy vehicles (NEVs) in China fell 18.6% MoM in Jan after the country cut subsidies for NEVs by 30%, industry data showed. Sales of NEVs, which include battery-powered electric vehicles, plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles, in January reached 431,000, representing an annual increase of 135.8%, according to data of the China Association of Automobile Manufacturers (CAAM). (RTT)

Japan: Annual inflation slows to 0.5% in Jan. Consumer prices in Japan were up 0.5% on year in Jan, the Ministry of Internal Affairs and Communications said. That was shy of expectations for an increase of 0.6% and down from 0.8% in Dec. On a monthly basis, consumer prices were up 0.1% - in line with expectations and unchanged from the previous month. (RTT)

Markets

Sapura Energy (Neutral, TP: RM0.05): Another of Sapura Energy's unit served with winding-up petition . In another blow to oil and gas service provider Sapura Energy Bhd, its wholly-owned subsidiary Sapura Fabrication SB (SFSB) has been served with a winding-up petition by Sun Hardware Enterprise SB after it failed to pay RM70,597.63 owed to Sun Hardware. "Pending the legal advice, there will be no immediate material financial and operational impact and no expected loss to the group arising from the petition," said Sapura Energy (The Edge)

Solution: Unit gets approval to locally formulate, fill and finish CanSino vaccine . Solution Group announced that its wholly-owned subsidiary Solution Biologics SB (SOLBIO) has received the Good Manufacturing Practises (GMP) approval from the National Pharmaceutical Regulatory Agency (NPRA) to commence local formulation, filling and finishing of CanSino's single-dose vaccine Convidecia in Malaysia. SOLBIO is the ASEAN manufacturing partner of CanSino Biologics Inc (CanSinoBIO). With this approval, Malaysia will become the regional filling and finishing centre for CanSino to supply the Convidecia finished product to the region, Solution said in a statement (The Edge)

Berjaya Food: Plans RM300m expansion . Inflation impacts restaurants in many ways, but it hits them the hardest when it comes to basic food items. Note that the government has intervened to place ceiling prices for some basic food items such as chicken. But for Berjaya Food (BFood), the current challenging environment is still an opportune time to expand its operations. “There are many more opportunities for expansion. For Starbucks, we plan on continuing our expansion into smaller towns, highways and neighbourhoods.” BFood CEO Datuk Sydney Quays tells StarBizWeek. (StarBiz)

Muar Ban Lee: Unit gets sued by firm linked to David Goh seeking return of monies. Muar Ban Lee Group Bhd's (MBL) wholly-owned subsidiary MBL Plantation SB (MBLPSB) is being sued by privately-held Doa Huat Holdings SB, which is seeking RM23.9m to be returned to the latter. In a bourse filing, the palm kernel expeller manufacturer said MBLPSB had on Feb 18 received a writ of summon and statement of claim filed by Doa Huat. (The Edge)

HeiTech Padu: Aborts plan to raise RM12.6m via private placement . HeiTech Padu has aborted its plan to raise RM12.6m via a placement of 10m new shares in the group to Regal Orion SB, which is involved in providing infrastructure of hosting and data processing services. It did not disclose the reason for its decision. HeiTech said after due and careful consideration, its board of directors has decided not to seek further extension of time from Bursa Securities for implementation of the proposed placement. (The Edge)

Asia Poly: Buys another 1.5% stake in Ta Win for RM7.5m . Asia Poly has acquired another 51.1m shares, or a 1.5% stake, in Ta Win Holdings between June 10, 2021 and Feb 16, 2022 for RM7.52m in the open market. This brings Asia Poly's total shareholding in the copper wire producer to 191m shares or a 5.59% stake. (The Edge)

Market Update

The FBM KLCI might open with a cautious note today after stocks on Wall Street slid on Friday, registering their second-consecutive weekly loss as tensions between Russia and Ukraine intensified at the end of a volatile five trading days. The S&P 500 fell 0.7% on Friday as traders removed some of their bets ahead of a long weekend, girded for news that could move markets. The decline took the losses for the index last week to 1.6%. The technology heavy Nasdaq Composite slipped 1.2% on Friday and finished the week down 1.8%. The Cboe’s Vix volatility index, which measures expected swings on the S&P 500 and is known as Wall Street’s “fear gauge”, briefly surged towards 30 — an indication of market stress. While it ended the day slightly lower at 27.79, it remained well above its long-term average. Financial markets have swung sharply over the past week as developments in Ukraine added to fears of potential sanctions against Russia, exacerbating market jitters about inflation and central banks raising interest rates. Europe’s regional Stoxx 600 share index fell 0.8%, Germany’s Xetra Dax dropped 1.5% and the UK’s FTSE 100 lost 0.3%.

Back home, Bursa Malaysia retreated from its gains to end the week marginally lower, due to profit-taking activities particularly in banking and oil and gas stocks, coupled with the weaker regional market performance. At the closing bell, the benchmark FBM KLCI eased 1.97 points to 1,603.05 from 1,605.02 at Thursday's close. Regionally, key markets trended broadly lower following negative cues overnight from Wall Street amid renewed geopolitical concerns over Ukraine and Russia. Hong Kong's Hang Seng Index lost 1.88% to 24,327.71 and Japan's Nikkei 225 eased 0.41% to 27,122.07.

Source: PublicInvest Research - 21 Feb 2022