Economy

Global: World’s central banks told not to blink at war, hold course . Global central banks should focus on fighting inflation and leaving governments to respond with spending to cushion economies from the impact of the war in Ukraine, the Organization for Economic Cooperation and Development (OECD) said. The Paris-based group estimates that the conflict’s effects will take more than 1 percentage point off global growth this year and drive up inflation by a further 2.5 percentage points from already-high levels. It said the right mix of economic policies is for governments to extend support and central banks to stay focused on price risks. “Steps towards the normalization of monetary policy should continue in the advanced economies, albeit at a differentiated pace and with frequent reassessment as the conflict evolves,” the OECD said. (Bloomberg)

US: Economy flexes muscle with jobless benefit rolls at 52- year low; factories humming . The number of Americans filing new claims for unemployment benefits fell last week as demand for labour remained strong, positioning the economy for another month of solid job gains. Unemployment benefit rolls were the smallest in 52 years in early March, the Labor Department's weekly jobless claims report also showed. Signs of the economy's underlying strength against the backdrop of rising inflation and geopolitical tensions were also evident in other reports showing an acceleration in manufacturing production last month and a sharp rebound in homebuilding. Initial claims for state unemployment benefits decreased 15,000 to a seasonally adjusted 214,000 for the week ended March 12. Economists polled by Reuters had forecast 220,000 applications for the latest week. (Reuters)

US: Mortgage rates jump, topping 4% for first time since 2019. Mortgage rates in the US soared, surpassing 4% for the first time in almost three years. The average for a 30-year loan was 4.16%, up from 3.85% last week and the highest since April 2019, Freddie Mac said in a statement. Rates haven’t been above 4% since May of that same year. Borrowing costs tracked a surge in 10-year Treasury yields. While rates are expected to climb in the long-term, the next few weeks will be unpredictable as financial markets continue to churn. Meanwhile, inflation and escalating home prices continue to erode Americans’ buying power, putting the dream of homeownership increasingly out of reach for many. Many buyers jumped into the market earlier in the pandemic, and existing owners rushed to refinance, taking advantage of rates that were sliding. (Bloomberg)

US: Housing starts rebound to highest rate since June 2006 in Feb . After reporting a sharp pullback in new residential construction  in the US in the previous month, the Commerce Department released a report showing housing starts rebounded by much more than expected in the month of Feb. The report showed housing starts spiked by 6.8% to an annual rate of 1.769m in Feb after plunging by 5.5% to a revised rate of 1.657m in Jan. Economists had expected housing starts to jump by 3.2% to a rate of 1.690m from the 1.638m originally reported for the previous month. With the much bigger than expected increase, housing starts reached their highest annual rate since hitting 1.802m in June of 2006. (RTT)

EU: Eurozone inflation rises more than estimated in Feb. Eurozone inflation rose more than initially estimated in February, final data from Eurostat showed. Inflation advanced to a fresh record high 5.9% in February from 5.1% in January. The rate was revised up from 5.8%. Core inflation that excludes energy, food, alcohol and tobacco, increased to 2.7%, in line with estimate, from 2.3% in the previous month. On a monthly basis, the harmonized index of consumer prices moved up 0.9%, as estimated. Data showed that energy prices grew 32.0% annually and prices of food, alcohol and tobacco gained 4.2%. Non-energy industrial goods prices climbed 3.1% and services grew 2.5%. (RTT)

UK: Bank of England hikes rates again but shows unease over outlook . The BoE raised interest rates again in a bid to stop fast rising inflation becoming entrenched, but it softened its language on the need for more increases as households face a huge hit from soaring energy bills. Eight of the nine Monetary Policy Committee (MPC) members voted to raise Bank Rate to 0.75% from 0.5%, taking the benchmark for UK borrowing costs back to its pre pandemic level. (Reuters)

Hong Kong: Jobless rate rises in Feb . Hong Kong's unemployment rate increased to a five-month high during the Dec to Feb period after remaining unchanged in the previous period, the labor force statistics from the Census and Statistics Department showed. The unemployment rate rose a seasonally adjusted 4.5% in the three months to Feb from 3.9% during Nov-Jan period. The latest rate was the highest since the July-Sept period of last year, when it was at the same level. The underemployment rate increased to 2.3% from 1.8% in the preceding period. The number of unemployed persons increased by around 22,700 to 157,900 in Dec-Feb. (RTT)

Australia: Unemployment rate falls to 4.0% in Feb. The jobless rate in Australia came in at a seasonally adjusted 4.0% in Feb, the Australian Bureau of Statistics said. That was below expectations for 4.1% and down from 4.2% in Jan. The Australian economy added 77,400 jobs last month, blowing away forecasts for an increase of 37,000 jobs following the gain of 12,900 jobs in the previous month. (RTT)

Taiwan: Central bank unexpectedly raises key rate . Taiwan's central bank raised its key interest rate unexpectedly amid worries about inflation. At the quarterly meeting, policymakers of the central bank lifted its benchmark rate by 25 bps to 1.375% from 1.125%. The interest rate has been at a record low 1.125% since March 2020. The central bank said the global supply chain bottleneck will continue for some time, and the recent military conflict between Russia and Ukraine has caused the prices of crude oil, grains and base metals to rise. (RTT)

Markets

SKP Resources (Outperform, TP: RM2.41): Appoints TÜV Rheinland Malaysia to review labour practices and operations. Electronics manufacturing services (EMS) provider SKP Resources has appointed TÜV Rheinland Malaysia SB to conduct an independent third-party social compliance audit of its labour practices and operations. TÜV Rheinland Malaysia is a subsidiary of TÜV Rheinland Group (Cologne, Germany), and an independent auditor of social compliance, responsible business practices and economic sustainability. (The Edge)

Sapura Energy (Neutral, TP: RM0.05): Three more subsidiaries served with winding-up petitions. Sapura Energy said three more of its subsidiaries have been served with winding-up petitions on March 7 and 9, due to non-payment of outstanding sums. In a filing with the bourse, it said Sapura Fabrication SB (SFSB) was served with a winding-up petition taken out by Posh Subsea Pte Ltd, due to the former being unable to pay according to a payment plan for USD3.99m (RM16.76m) plus interest. (The Edge)

Cahya Mata Sarawak: Ventures into energy market via acquisition of Scomi Energy's oilfield assets. Diversified group Cahya Mata Sarawak (CMS) is venturing into the energy sector via the acquisition of Scomi Energy Services’s oilfield operations for RM21m. In a statement on March 17, CMS said it has, through two of its subsidiaries Cahya Mata Oiltools SB and Oiltools International SB, entered into four conditional sale and purchase agreements with Scomi Energy to acquire Scomi Oilfield Ltd together with various companies and assets within the Scomi Oilfield Group of Companies. (The Edge)

Vizione: And Chinese firm explore building materials trading, dealership opportunities. Construction and property development firm Vizione Holdings and China's Hubei Wuqiao Geotechnical Engineering Co Ltd (HWGE) plan to explore building materials trading and dealership opportunities in Malaysia. In a bourse filing on March 17, Vizione said it has entered into a memorandum of understanding (MoU) with HWGE to explore cooperation in the potential venture. (The Edge)

Paramount: Expands footprint in e-commerce with Commerce.Asia buy. Paramount Corp has invested RM10m in Commerce DotAsia Ventures SB (Commerce.Asia). Commerce.Asia is an all-in-one e-commerce ecosystem that provides one stop, end-to-end e-commerce solutions for brands, businesses, and small and medium enterprises (SMEs) in Southeast Asia. Paramount said the investment was made through its wholly-owned investment vehicle Magna Intelligent SB (Magna) and Magna's 30% owned associated company, Omegaxis SB, which owns Fundaztic. (Btimes)

SCIB: Appoints three independent directors, two linked to Bintai Kinden. Sarawak Consolidated Industries (SCIB) has appointed Shamsul Anuar Ahamad Ibrahim, Ku Chong Hong and Noor Azri Azerai as independent directors on its board, filings with Bursa Malaysia showed. (The Edge)

Market Update

The FBM KLCI might open higher today after US and European stocks rose on Thursday in choppy trading, following sharp rallies in the previous session, as traders weighed developments in Ukraine and central banks’ moves to tighten monetary policy. Wall Street’s broad-based S&P 500 share gauge had its best close in roughly a month, ending the day 1.2% higher, after gaining more than 2% on Wednesday. The technology-heavy Nasdaq Composite gained 1.3%, the highest close since early March. In Europe, the regional Stoxx 600 index closed 0.4% higher after rising 3.1% in the previous session. London’s FTSE 100 gained 1.3%. Those moves came after the Bank of England raised borrowing costs on Thursday. The BoE’s policy move followed an interest rate rise by the Federal Reserve a day earlier, the first increase since the US central bank slashed rates to zero at the start of the pandemic. The BoE’s monetary policy committee voted eight to one to raise interest rates by 0.25 percentage points to 0.75% and predicted that inflation was expected to hit 8% by the end of June.

Back home, the local equity market continued its upward trajectory with Bursa Malaysia closing 1.24% higher on Thursday (March 17) on buying support across the board except for plantation counters. At closing, the benchmark FBM KLCI was 19.56 points firmer at 1,590.88 from 1,571.32 at Wednesday’s close. The market bellwether opened 6.24 points higher at 1,577.56, and fluctuated between 1,577.56 and 1,592.9 throughout the trading session. In the regional equity markets, Chinese stocks rallied for a second day, after Beijing pledged to take measures to support the economy. Hong Kong’s Hang Seng index jumped 7%, while the CSI 300 index of Shanghai- and Shenzhen-listed stocks rose by almost 2%. China’s Financial Stability and Development Committee had promised “substantial measures” on Wednesday to shore up growth and flagged other supportive actions. Concerns over the country’s growth outlook had sparked double-digit falls earlier in the week. Key equity indices in Australia and South Korea finished up more than 1% in Thursday’s session, while Japan’s Nikkei 225 closed up 3.5%.

Source: PublicInvest Research - 18 Mar 2022