Economy

US: Home sales tumble; higher prices, mortgage rates eroding affordability. US home sales fell by the most in a year in Feb as a perennial shortage of houses and double-digit price growth continued to squeeze first-time buyers out of the market. With mortgage rates rising above 4% for the first time in nearly three years, sales are likely to slow this year, though that would do little to curb house price inflation. Contracts to buy previously owned houses, a leading indicator of home sales, fell for three straight months through Jan. (Reuters)

US: Leading economic index rises slightly more than expected in Feb. the Conference Board released a report showing its US leading economic index rose by slightly more than expected in the month of Feb. The leading economic index increased by 0.3% in Feb after falling by a revised 0.5% in Jan. Economists had expected the leading economic index to edge up by 0.2% compared to the 0.3% drop originally reported for the previous month. The increase by the leading index reflected positive contributions. (RTT)

US: Fed's rate path balances inflation fight and pandemic unknowns, Barkin says. The rate increases projected by Federal Reserve officials represented a balancing act between the need to begin normalizing monetary policy in the face of high inflation, while guarding against a fast tightening of credit that could damage the economy, Richmond Fed President Thomas Barkin said. New projections showed Fed officials at the median envision raising that rate to 1.9% by the end of this year, still below the roughly 2.4% level that policymakers feel would have a neutral impact on economic decisions. (Reuters)

EU: Trade deficit narrows in Jan. The Eurozone trade deficit narrowed in Janon higher exports, data released by Eurostat showed. The trade deficit declined to EUR7.7bn from EUR9.7bn in Dec. The trade balance has been negative for the third straight month. The trade balance increased slightly in Jan compared to Dec when it had reached a level almost as low as in July 2008 when the lowest level since the start of the time series in 1999 had been recorded. MoM, exports grew by a seasonally adjusted 3.4% and imports advanced 2.3% in Jan. (RTT)

EU: Hourly labor cost growth slows in 4Q. Eurozone hourly labor costs increased at a slower pace in the fourth quarter, data from Eurostat showed. Hourly labor costs grew 1.9% on a yearly basis, slower than the 2.3% increase seen in the 3Q. The two main components of labor costs are wages and salaries and non-wage costs. Wages and salaries climbed 1.5% after a 2.2% rise. Meanwhile, the non-wage component rose at a faster rate of 3.4% following a 2.6% increase. The EU labor cost gained 2.3% annually versus third quarter's 2.8% increase. (RTT)

EU: Italy trade balance swings to deficit. Italy's trade balance swung to deficit in Jan, as imports rose faster than exports, data published by the statistical office Istat showed. The trade balance registered a deficit of EUR5.052bn in Jan versus a surplus of EUR1.584bn in the same month last year. Exports rose 22.6% annually in Jan and imports gained 44.5%. On a seasonally adjusted basis, exports rose 5.3% monthly in Jan (RTT)

Japan: BoJ keeps monetary policy unchanged. The Bank of Japan maintained its monetary policy stimulus, as widely expected. The policy board, governed by Haruhiko Kuroda to hold the interest rate at -0.1% on current accounts that financial institutions maintain at the central bank. The bank will continue to purchase a necessary amount of Japanese government bonds without setting an upper limit so that 10-year JGB yields will remain at around 0%. (RTT)

Japan: Tertiary activity drops in Jan. Japan's tertiary activity dropped for the first time in five months in Jan, data from the Ministry of Economy, Trade and Industry showed. The tertiary activity index declined 0.7% MoM in Jan, after a 0.1% increase in Dec. Among the individual components, the living and amusement related services, medical, health care and welfare, retail trade, and business-related services decreased in Jan. (RTT)

Markets

Berjaya Corp: Abdul Jalil to step down, new BCorp CEO identified . Berjaya Corp (BCorp) has identified a new CEO after it is learnt that Abdul Jalil Rasheed will be leaving the position roughly a year after he was appointed, according to a source. “It is understood that a replacement has been found and an announcement will be made soon,” the source said. This came after BCorp CEO Abdul Jalil Abdul Rasheed was reportedly stepping down from his role to pursue his personal interests. (StarBiz)

Public Bank: In financing tie-up with Carsome . Public Bank and Carsome have signed a MoU for a car financing collaboration. Under the MoU, the bank will provide stock financing and end-financing arrangements for the vehicles to its member car dealers and individual purchasers who have won the bids through Carsome online platform as well as to extend wholesome financial products and services to Carsome’s customers, Public Bank said in a statement. (Bernama)

Mobilia: To acquire land in Johor for RM9.25m to expand manufacturing facilities . Mobilia Holdings is planning to acquire land in Muar, Johor, for RM9.25m to increase its manufacturing facilities in the future as part of its business expansion, according to a filing on March 18. The 4.49-ha freehold development land is located within an industrial-use zone, about 700 metres away from Mobilia’s existing plant in Muar, Johor, according to the filing. (The Edge)

Cahya Mata: Widens reach via energy venture . Cahya Mata Sarawak (CMS) is upping its game via a diversification into the energy sector amid the current high oil prices. The conglomerate, which has a presence in cement, building materials and construction, among others, is acquiring the oilfield operations of Scomi Energy Services - a deal that will give it presence in 15 countries across Asia, Middle East, Europe and Africa when completed in the third quarter of 2022. Towards this end, CMS through two of its subsidiaries had entered into four conditional sale and purchase agreements with Scomi Energy to acquire Scomi Oilfield Ltd (SOL), together with various companies and assets within that group of companies. (StarBiz)

Hextar Industries: Buys remaining 16.67% stake in PK Fertilizers (Sarawak) for RM6.29m . Hextar Industries said that the company has acquired the remaining 16.67% stake in PK Fertilizers (Sarawak) SB (PKFS) for USD1.5m (RM6.29m). The agro-chemicals manufacturer said in a bourse filing that it has entered into a share purchase agreement with Golden Barley International Pte Ltd to purchase the stake, and the acquisition will be fully satisfied in cash. (The Edge)

IPO: Main-market bound Farm Fresh posts RM11.46m net profit in 3QFY22 . Farm Fresh's net profit for 3QFY22 fell 24.13% to RM11.46m from RM15.1m in 3QFY21 due to lower revenue, as well as higher animal feed and freight costs. The dairy product specialist reported revenue of RM116.67m, down 9.26% YoY from RM128.57m. It said the lower revenue was due to overall impact of the prolonged pandemic, which resulted in dampened economic activity, consumer confidence and levels of household income in Malaysia, as well as the ceasing of raw milk sales by the group’s Australia farm to third parties since end September 2021. (The Edge)

Market Update

The FBM KLCI might open higher today after European stocks have wiped out losses incurred since Russia invaded Ukraine last month, with large indices on both sides of the Atlantic registering their biggest weekly advances since November 2020. The regional Stoxx Europe 600 closed 0.9% higher on Friday, lifting its gain this week to 5.4%. The advance in recent days has helped erase losses tallied since the close of trading on February 23, the day before Russian president Vladimir Putin launched a full-scale incursion into Ukraine that had eclipsed 10%. In the US, the S&P 500 on Friday rose 51.45 points, or 1.2%, to 4463.12. The Dow Jones Industrial Average added 274.17 points, or 0.8%, to 34754.93. The Nasdaq Composite advanced 279.06 points, or 2%, to 13893.84. Investors showed increased enthusiasm for US stocks after two weeks of declines for the S&P 500 and five weeks of losses by the Dow Jones Industrial Average. They say the solid fundamentals of many US companies will allow them to deliver profits in the face of higher costs and growing geopolitical uncertainty. Many believe the strong US labour market will help consumers keep the economy growing. In economic news, US existing-home sales fell 7.2% in February, the National Association of Realtors said Friday, while February sales fell 2.4% from a year earlier. The average rate for a 30-year fixed mortgage recently topped 4% for the first time since 2019.

Back home, Bursa Malaysia ended the week on a flattish note following a roller coaster session due to foreign buying during the last minutes of trading. At 5pm, the benchmark FBM KLCI was 0.02% or 0.38-of-a-point higher at 1,591.26 from 1,590.88 at Thursday’s close. After opening 2.80 points better at 1.593.68, the market bellwether moved between 1,583.25 and 1,594.76 throughout the trading session. In the region, most major benchmarks rose. Chinese stocks were mixed, with the Shanghai Composite Index rising for the third consecutive trading session after adding 1.1% and extending the momentum catalyzed by policy makers in Beijing signaling support for capital markets earlier in the week. Hong Kong’s Hang Seng Index slid 0.4% on Friday but still closed more than 4% higher for the week.

Source: PublicInvest Research - 21 Mar 2022