Economy

Global: World economy faces supply hit as China battles Covid-19 again . The global economy — already struggling with war in Ukraine and the stagflation risks it’s fanning — is bracing for greater disruption as China scrambles to contain its worst outbreak of Covid-19 since the pandemic began. If China fails to contain Omicron’s spread, further movement restrictions would derail the economy’s promising start to the year, weakening a key pillar of global growth. (Bloomberg)

US: Producer prices climb 0.8% in Feb, slightly less than expected . A report released by the Labor Department showed producer prices in the US increased by slightly less than expected in the month of Feb. The Labor Department said its producer price index for final demand climbed by 0.8% in Feb after surging by an upwardly revised 1.2% in Jan. Economists had expected producer prices to advance by 0.9% compared to the 1.0% jump originally reported for the previous month. Compared to the same month a year ago, producer prices were up by a record 10.0% in Feb, unchanged from a revised 10.0% spike in Jan. (RTT)

EU: Eurozone industrial output remains flat in Jan . Eurozone industrial production remained unchanged in Jan, data from Eurostat showed. Industrial output remained flat MoM in Jan, following Dec's 1.3% increase. Economists had forecast a monthly growth of 0.1%. The growth in non-durable consumer goods production was offset by the declines in capital goods, durable consumer goods, energy and intermediate goods output. Production of capital goods was down 2.4% and durable consumer goods output fell 0.5%. Intermediate goods and energy output decreased 0.3% each. Meanwhile, non-durable consumer goods output grew 3.1%. On a yearly basis, industrial production fell 1.3%, in contrast to the 2.0% rise in Dec. Economists had forecast output to fall 0.5%. (RTT)

EU: German ZEW economic sentiment falls at record pace in Mar . German economic confidence fell more sharply than ever before in Mar as the war in Ukraine and the sanctions against Russia dampens economic outlook, survey results from the ZEW - Leibniz Centre for European Economic Research showed. The ZEW Indicator of Economic Sentiment declined 93.6 points to a current value of minus 39.3 points in March. This was the biggest drop in expectations since the survey began in December 1991. The reading was also well below the economists' forecast of plus 10.0. (RTT)

UK: Unemployment drops below pre-Covid-19 level for first time . UK unemployment dropped below its pre-pandemic level for the first time as companies generated more jobs and granted higher wages than expected. The jobless rate fell to 3.9% in the three months through Jan, the lowest since the start of 2020, the Office for National Statistics (ONS) said. Employers added 275,000 jobs in Feb, more than double the number predicted by economists. The figures also showed the redundancy rate fell to a record low and job vacancies reached a new high, adding to evidence of a strong recovery from Covid-19 in the weeks before the war in Ukraine. That is feeding inflation and leading investors to expect the BoE to raise interest rates again this week. (Bloomberg)

China: Retail sales, industrial production rise . China's retail sales and industrial production grew more than expected in Jan to Feb period, official data revealed. According to the National Bureau of Statistics, retail sales advanced 6.7% on a yearly basis, bigger than the economists' forecast of 3.0%. Nonetheless, the pace of growth slowed from 12.5% expansion seen in Dec. Industrial output logged an annual growth of 7.5%, which was also better than the 3.9% rise expected by economists. Fixed asset investment advanced 12.2% from the last year versus the expected growth of 5.0%. "All three activity data releases were better than expectations, but the highlight for us was the strength of retail sales," Iris Pang, an ING economist, said. This is even more notable during a period of strict people flow control during the Chinese New Year holidays. (RTT)

Singapore: Home sales plunge to lowest since May 2020 on curbs . Singapore home sales slumped to the lowest in 21 months as the residential market slowed on cooling measures and higher property taxes. Purchases of new private apartments fell to 527 units in Feb, Urban Redevelopment Authority figures showed on March 15. That’s 22.5% lower than the 680 units sold in the previous month and the lowest since May 2020, when 487 apartments were sold.. (Bloomberg)

Markets

Advancecon: Wins RM42.5m contract from Sime Darby Property. Advancecon Holdings' wholly-owned Advancecon Infra SB has clinched a RM42.5m contract from Sime Darby Property (Bukit Raja) SB – its sixth for the Bandar Bukit Raja 2 development in Klang, Selangor. Advancecon will undertake construction and completion of earthworks and other related works for sections R6, R8, R9 and C5 of Phase 2 in the development. The contract will span for 29 months, from the site possession on March 28. (BTimes)

HLT Global sues WRP Asia and four others over RM16.43m owed for services provided. HLT Global’s wholly-owned subsidiary HL Advance Technologies (M) SB (HLA) is suing WRP Asia Pacific SB, WRP Specialty Products SB (the first and second defendants) and three other defendants over RM16.43m owed for equipment, goods and services provided by HLA. (The Edge)

JAKS achieves financial close for LSS4 project. JAKS Resources said its wholly-owned subsidiary JAKS Nibong Tebal SB has achieved financial close for its Large Scale Solar 4 (LSS4) project in Seberang Perai, Pulau Pinang. It said AmBank Islamic and United Overseas Bank (Malaysia) have granted financing for the project. (The Edge)

Ranhill secures RM61m Kelantan pipe replacement project. Ranhill Water Services SB (RWS), an indirect wholly-owned subsidiary of Ranhill Utilities, has accepted a letter of acceptance from Pengurusan Aset Air Bhd (PAAB) for a RM61.49m pipe replacement project. Ranhill said the works package is for the replacement of old pipes and related works in Kota Bharu Timur, Machang, Tanah Merah and Kuala Krai in Kelantan. The works are to be undertaken immediately with the date of possession being March 29, 2022 and to be completed by March 28, 2024. (The Edge)

Advancecon secures RM42.54m construction project in Klang. Advancecon Holdings has bagged a construction project worth RM42.54m in Klang. The group, via its wholly-owned unit Advancecon Infra SB (AISB), has accepted the Letter of Acceptance from Sime Darby Property (Bukit Raja) SB for the appointment of AISB as the contractor for the proposed construction and completion of earthworks and other related works for the development of Phase 2 (R6, R8, R9, and C5) at Bandar Bukit Raja 2, Kapar district. (The Edge)

Xin Hwa to set up RM100m e-fulfilment centre in Shah Alam. Xin Hwa Holdings (Xin Hwa) has invested approximately RM100m to establish an e-fulfilment centre in Shah Alam. The e fulfilment centre is a purpose-built building, specially designed to facilitate e-commerce logistics and to support the booming e commerce market, which entails high volume and smaller-sized packages in general. (The Edge)

Samaiden bags RM56.6m EPCC contract for LSSPV in Perak. Samaiden Group has bagged a RM56.64m engineering, procurement, construction and commissioning (EPCC) contract in relation to the development of a 15MWac large scale solar photovoltaic (LSSPV) power plant in Kamunting, Perak. (The Edge)

Market Update

The FBM KLCI might open with a positive note today after Wall Street’s benchmark S&P 500 ended up the day 2.1% higher, with every market sector rising except energy. The technology-heavy Nasdaq Composite, which is down 17% year-to-date, added 2.9%. Meanwhile, Europe’s regional Stoxx 600 index ended the day down 0.3%. Germany’s Dax lost 0.1%and France’s Cac 40 index dropped 0.2%. In London, the FTSE 100 closed 0.2% lower. In government debt markets, the yield on the 10-year US Treasury note rose 0.01 percentage points to 2.14%, hovering around its highest level since 2019, which it hit earlier in the day. The yield on Germany’s 10-year Bund, which serves as a barometer for eurozone borrowing costs, fell 0.04 percentage points to 0.33%. Falling oil prices drove US stocks higher on Tuesday even as traders prepared for the Federal Reserve to raise interest rates on Wednesday. Economists widely expect the central bank to deliver a quarter-point increase — the first rate rise since 2018 — as the war in Ukraine threatens to exacerbate inflation that is already running at its highest annual rate in 40 years. A report from the Bureau of Labor Statistics on Tuesday showed a 10% annual rise in US producer prices in February, setting the stage for the Fed to lift rates.

Back home, Bursa Malaysia closed lower on lack of buying interest while investors continue to take profit on oil and gas, plantation and technology stocks. At 5pm, the benchmark FBM KLCI was 0.64% or 10.03 points weaker at 1,557.41 from 1,567.44 at Monday’s close. After opening 2.54 points lower at 1,564.9, the benchmark index fluctuated between 1,554.17 and 1,566.74 throughout the trading session. Benchmark oil prices on Tuesday fell below USD100 a barrel for the first time since March 1 on expectations that lockdowns could slow petroleum demand in China, the world’s largest importer of crude. Brent crude, the international oil marker, settled at USD99.91, its lowest close since February 25, down 6.5% on the day. West Texas Intermediate, the US crude contract, declined 6.4% to settle at USD96.44, its lowest closing price since February 28. Oil prices were at their highest levels since 2008 earlier this month, as Russia’s isolation from the international community over its invasion of Ukraine began to limit its exports of crude. That pressure on the oil market has eased slightly in recent days as Covid-19 infections in China have risen to the highest levels since the virus first emerged more than two years ago, prompting lockdowns in some the country’s main manufacturing hubs. Hong Kong’s benchmark Hang Seng index dropped 5.7%, while the Hang Seng China Enterprises index of large and liquid Chinese stocks shed 6.6%. In China, the CSI 300 index of Shanghai and Shenzhen-listed stocks fell 4.6%. Japan’s Nikkei 225 eked out a 0.2% gain.

Source: PublicInvest Research - 16 Mar 2022