Economy

EU: Manufacturing sector continues to expand. The Euro area manufacturing sector expanded in Feb with growth in both output and new orders gaining further momentum following improvements in Jan. The manufacturing Purchasing Managers' Index fell to 58.2 in Feb from 58.7 in the previous month. The flash reading was 58.4. A score above 50.0 indicates expansion in the sector. New orders grew sharply and at the quickest pace in six months. Manufacturers raised their employment levels. (RTT)

EU: German inflation accelerates in Feb. Germany's consumer price inflation accelerated in Feb, after slowing in the previous month. The consumer price index rose 5.1% YoY following a 4.9% increase in Jan. In Dec, inflation was 5.3%. Food inflation climbed to 5.3% from 5.0% and energy price growth accelerated to 22.5% from 20.5%. Services costs rose 2.8% after a 2.9% increase in the previous month. Rents grew 1.5%, slightly faster than the 1.4% gain in Jan. The CPI rose 0.9% from Jan, when prices increased 0.4%. The harmonized index of consumer prices rose 5.5% annually in Feb after a 5.1% increase in the previous month. (RTT)

UK: Manufacturing growth accelerates in Feb. The UK manufacturing sector growth accelerated more-than-initially estimated in Feb. The Chartered Institute of Procurement & Supply manufacturing Purchasing Managers' Index rose to a three-month high of 58.0 in Feb from 57.3 in Jan. A reading above the neutral  50.0 indicates expansion in the sector. According to flash data, the score was unchanged at 57.3 in Feb. Faster growth of output, new orders and stocks of purchases all helped lift the PMI level in Feb, offsetting the impact of slower job creation and a lessening of supply chain disruptions. (RTT)

UK: Mortgage approvals at 6-month high. UK mortgage approvals increased to a six-month high in Jan, while consumer credit declined. Approvals for house purchases, an indicator of future borrowing, rose to 73,992 in Jan from 71,219 in Dec. This was the highest since last July, when it totaled 75,786 and was above the expected level of 72,000. Mortgage lending increased to GBP5.9bn in Jan from GBP4.0bn in Dec. This was above the pre pandemic average of GBP4.3bn in the twelve months up to Feb 2020, and the highest since Sept 2021. (RTT)

China: Growth in China's factory activity picks up slightly in Feb. China’s factory activity unexpectedly expanded in Feb, pointing to some resilience in the world’s second-largest economy even as downward pressure builds. The official manufacturing Purchasing Manager’s Index (PMI) registered 50.2 in Feb, remaining above the 50-point mark, which separates growth from contraction, and picking up slightly from 50.1 in Jan. (Reuters)

Japan: Manufacturing PMI slows in Feb. The manufacturing sector in Japan continued to expand in Feb, albeit at a slower pace with a manufacturing PMI score of 52.7. That's down from 55.4 in Jan, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. This indicated a thirteenth consecutive monthly improvement in the health of the sector, although the pace of expansion was the softest since last Sept. The weaker headline reading was partly due to a renewed reduction in output. (RTT)

South Korea: exports growth accelerates but recovery may slow on Ukraine crisis. South Korea’s trade sector swung back to a surplus in Feb from a record deficit a month earlier, powered by stronger-than-expected growth in exports, but the recovery faces some risks from Russia’s invasion of Ukraine. Exports in Feb expanded 20.6% from a year earlier to USD53.91bn, faster than the 15.2% gain in Jan. It also marked the 16th straight month of expansion. Continued rise in oil prices and high semiconductor prices boosted exports growth, adding to the solid exports volume. (Reuters)

Australia: 4Q current account surplus is AUD12.677bn. Australia had a seasonally adjusted current account surplus of AUD12.677bn in 4Q of 2021. That missed expectations for a surplus of AUD14.9bn following the downwardly revised AUD22.0bn surplus in the three months prior (originally AUD22.9bn). The balance on goods and services was a surplus of AUD11.197bn, a fall of AUD818m on the revised Sept quarter 2021 surplus of AUD12.015bn. (RTT)

Indonesia: Inflation eases in Feb. Indonesia's consumer price inflation eased in Feb. Consumer prices rose 2.06% YoY in Feb, after a 2.18% increase in Jan. Core inflation was 2.03% in Feb. On a monthly basis, consumer prices declined 0.02% in Feb, after a 0.56% increase in Jan. This was in line with economists' expectations. Prices for food, beverages and tobacco fell 0.84% yearly in Feb and prices for information, communication and financial services grew 0.04%. (RTT)

Markets

Sapura Energy (Neutral, TP: RM0.05): Gets another winding up petition. Sapura Energy has been served with another winding-up petition over unpaid money, this time by Icon Offshore. The High Court has fixed March 17 for case management, and May 24 for hearing of the petition. The petition was initiated after Sapura Offshore was unable to pay a sum of RM4.02m plus interest under a consent judgment entered into by the firm and Icon Offshore Group on Dec 13, 2021. (The Edge)

Yinson: Plans strategic review of FPSO business, public spinoff of segment possible. Yinson Holdings will be undertaking a strategic review of its floating production storage and offloading (FPSO) segment, and a public spinoff of the segment is possible. The strategic review is part of its medium to-long term plan to ensure the group is prepared and fit for future growth and that it will be exploring and assessing options available to the group for its FPSO segment. (The Edge)

Luster: To buy land in Ara Damansara for RM35m. Luster Industries has proposed to buy a 9,554 sqm freehold land in Ara Damansara from the Sime Darby group for RM35m. The acquisition would enable it to build its land bank in favourable areas, where the group can leverage on its extensive experience in building mixed-use developments. The property is located within the vicinity of other residential developments such as Puncak Seri Kelana Condominium, Puncak Nusa Kelana Condominium, Amaya Saujana and Nova Saujana. (The Edge)

Ireka: Joins PN17 list as Bursa rejects its bid for extension of relief period. Ireka Corp has joined 26 other affected listed issuers under Practice Note 17 (PN17) after Bursa Malaysia Securities rejected the company's application to extend the relief period, which ended on Feb 26. Ireka first triggered the criteria for PN17 after its auditors highlighted a material uncertainty relating to its ability to continue as a going concern regarding its audited financial statements for the FY20, and its shareholders’ equity had fallen to RM77.51m. (The Edge)

LYC Healthcare: To sell 25% stake in LYC SG to Kenanga Investors. LYC Healthcare has entered into a conditional sale and purchase agreement (SPA) with Kenanga Investors for the divestment of 6.53m ordinary shares in LYC Medicare (Singapore) Pte Ltd (LYC SG) for SGD12.9m (RM39.9m). The proposed divestment represents 25% of the shares. The proposed divestment to KIB establishes a new valuation for LYC SG at SGD51.67m (RM159.7m). (StarBiz)

Oil & Gas (Overweight): Petronas swings back to profitability in FY21 on surging oil prices. Petroliam Nasional has returned to the black in the FY21, inking a profit after tax PAT of RM48.6bn from the RM21m loss after tax recorded in FY20. Revenue in the same period increased 39% to RM248m from RM178.7m. The sustained performance was supported by surging commodity prices driven by the recovery in global energy demand as key economies reopened and travel restrictions eased amid higher Covid-19 vaccination rates around the world. (BTimes)

Market Update

The FBM KLCI might drop a few points today after US and European stocks fell, government bonds rallied and oil prices rose sharply on Tuesday as traders weighed the global economic implications of Russia’s invasion of Ukraine. Wall Street’s blue-chip S&P 500 index fell 1.6%, dragged lower by the worst day since June 2020 for financial stocks, with the S&P sub-index dropping 3.7%. The technology-heavy Nasdaq Composite ceded 1.6%, having closed 0.4% higher in the previous session. In Europe, the Stoxx 600 share index slipped 2.4%. The regional gauge is trading more than 9% lower for the year and has swung lower since last week, when western powers began launching their latest wave of sanctions against Russia. Meanwhile, government bond prices rose significantly both in the eurozone and the US. The move was bigger in Europe as traders sought shelter from economic risk and bet on the European Central Bank maintaining supportive monetary policies. The yield on Germany’s 10-year Bund, a benchmark for borrowing costs across the eurozone, dropped 0.21 percentage points to minus 0.08%, reflecting a significant rise in the price of the debt instrument.

Back home, Bursa Malaysia closed lower on Tuesday due to profit taking activities, mainly in banking, oil and gas and telecommunication counters despite the positive regional market performance. At closing bell, the benchmark FBM KLCI slipped 11.84 points to 1,596.44 from 1,608.28 at Monday’s close after opening 0.28 of-a-point better at 1,608.56. In regional equity markets, Japan’s Topix share index rose 0.5% and Hong Kong’s Hang Seng index added 0.2%.

Source: PublicInvest Research - 2 Mar 2022