Economy

US: Powell is ready to back half-point hike in May if it’s necessary. Fed Chair Jerome Powell said the central bank is prepared to raise interest rates by a half percentage-point at its next meeting if needed, deploying a more aggressive tone toward curbing inflation than he used just a few days earlier. Policy makers raised the benchmark lending rate by a quarter points at their meeting last week - ending two years of near-zero borrowing costs - and signalled six more hikes of that magnitude this year, based on  the median projection. Powell indicated that half-point hikes may be on the table when policy makers next gather May 3-4 and at subsequent sessions. (Bloomberg)

US: Goldman Sachs sees five rate hikes in 2023. Goldman Sachs expects the Fed to raise interest rates five times in 2023, and forecasts that the US central bank is keen to raise its funds rate above the current neutral estimate. The Fed hiked rates for the first time since 2018 last week and laid out an aggressive plan to push borrowing costs to restrictive levels next year, in a pivot from battling COVID-19 to countering the economic risks from excessive inflation and the war in Ukraine. (Reuters)

EU: Germany producer price inflation accelerates. Germany's producer prices continued to accelerate on energy prices in Feb, data published by Destatis showed. Producer price inflation accelerated further to 25.9% in Feb from 25.0% in Jan. Nonetheless, this was slightly slower than the expected growth of 26.2%. On a monthly basis, producer prices gained 1.4%, slower than the 2.2% increase in the previous month and also the economists' forecast of 1.7%. (RTT)

UK: Asking prices for UK houses see biggest March rise since 2004 - Rightmove. Asking prices for British houses have recorded their sharpest monthly jump for the time of year since March 2004, despite a growing squeeze on households’ disposable income from higher energy bills and rising interest rates. Property website Rightmove - which says it covers 95% of homes put up for sale in the United Kingdom - reported that the number of prospective buyers was twice the number of homes for sale, also a record for the time of year. (Reuters)

China: Leaves interest rates unchanged. China left its benchmark lending rates unchanged, as widely expected. The one year loan prime rate was retained at 3.70% and the five-year LPR, the benchmark for mortgage rates, was maintained at 4.60%. In Jan, the one-year loan prime rate was reduced by 5 basis points, which was the second consecutive reduction and the five-year LPR was lowered for the first time since April 2020. The loan prime rate is fixed monthly based on the submission of 18 banks, though Beijing has influence over the rate-setting. (RTT)

Hong Kong: Inflation increases in Feb, Hong Kong's consumer price inflation rose in Feb, after easing in the previous month, data released by the Census and Statistics Department showed. Consumer prices increased 1.6% YoY in Feb, following a 1.2% growth in Jan. Netting out the effects of all government's one-off relief measures, the underlying inflation also rose to 1.6% in Feb from 1.2% in the previous month. Core inflation rose mainly due to the increases in the prices of fresh vegetables, supply of which from the mainland was temporarily affected by the epidemic-induced transport disruptions in the month. (RTT)

Taiwan: Feb export orders surge, but war clouds outlook. Taiwan’s export orders grew much faster than expected in Feb to a record high for the month bolstered by sustained technology demand, but the government warned of uncertainty due to the war in Ukraine and its impact on global trade. Taiwan’s export orders, a bellwether of global technology demand, leapt 21.1% from a year earlier to USD51.56bn last month, data from the Ministry of Economic Affairs showed. It marked the 24th straight month of expansion, with the pace outperforming the median forecast of 12.75% growth in a Reuters poll. (Reuters)

Markets

Press Metal: Plans placement to raise up to RM1bn for working capital, capex. Press Metal Aluminium Holdings plans to raise up to RM1bn, through the placement of up to 163.4m new shares or 2% of its issued shares to third party investors, to be used as working capital, capital expenditure and to repay its borrowings. While the actual issue price for the placement shares will be determined and announced later, the placement for now assumes an issue price of RM6.12 per share for illustration purposes. (The Edge)

Jiankun: RM1.2bn GDV mixed development JV in Kampung Baru called off. Jiankun International said the joint venture agreement it inked with Menara Rezeki SB, related to the redevelopment of Flat PKNS Jalan Tun Razak in Kampung Baru, has been terminated. Jiankun said it received a notice of termination from Menara Rezeki on March 21, but did not elaborate on why the agreement was revoked. (The Edge)

Greenyield: Tham family plans to inject plantation assets into company for RM88m. The Tham family, founder and major shareholder of Greenyield, plans to inject their private plantation assets in Papua New Guinea into the Bursa Malaysia-listed agricultural and horticultural product and service provider for RM87.81m. Under a proposed plan, Greenyield will acquire a 65% stake in Greenyield Rubber Holdings (M) Ltd. (The Edge)

Gabungan AQRS: Bags RM32m sewer pipe relining works in Kuala Langat, Klang. Gabungan AQRS has secured a sub contract worth RM31.85m to carry out sewer pipe relining works under sub-package 2 for open excavation and pipe jacking works in Klang and Kuala Langat, Selangor. The project from Syarikat Muhibbah Perniagaan Dan Pembinaan SB was awarded to Gabungan AQRS' wholly-owned Gabungan Strategik SB on March 21, according Gabungan AQRS' bourse filing. The subcontract, which will commence on March 23, 2022, is expected to be completed by March 22, 2024. (The Edge)

Mestron: Biogas plant operation starts 2Q. Mestron Holdings has set plans to commence its newly-acquired biogas plant in the second quarter of this year and expects yearly revenue of around RM6m from this division. Group MD Por Teong Eng said the yearly revenue expectation is based on 36 cents per watt secured and stressed that this renewable energy division's earnings before EBITDA margins could reach 60 to 70% due to its strategic placement near a palm oil mill. (BTimes)

Berjaya Corp: Appoints Vivienne Cheng, Syed Ali as new joint CEOs. Berjaya Corp has appointed Vivienne Cheng Chi Fan and Syed Ali Shahul Hameed as its new joint group CEO effective from April 1, 2022. Syed Ali has also been appointed as an executive director of BCorp. Cheng joined the company in 1989 while Syed Ali joined in 1997. (BTimes)

Sumatec: To be delisted from Main Market of Bursa Malaysia. Sumatec Resources will be delisted from Bursa Malaysia’s Main Market on March 24. In August 2018, a winding up petition was filed by Sumatec’s bondholders, namely Kerisma, Capone and Prima Uno, who demanded the repayment of RM83.3m from three collateralised loans they had extended to the company. (The Edge)

Market Update

The FBM KLCI might open lower today as US stock and government bond prices swung on Monday after Federal Reserve chair Jay Powell stressed the need to move quickly to raise interest rates to combat high inflation. Government bond prices, which had already been declining earlier in the day, accelerated their losses after Powell appeared at a conference hosted by the National Association for Business Economics. The yield on the benchmark 10-year Treasury, which rises when prices fall, jumped 0.15 percentage points to 2.3%. The US government bond market is in the middle of its worst month since Donald Trump was elected president in 2016. Stocks also dropped in the immediate aftermath of Powell’s comments but recovered most of their losses later in the afternoon. The S&P 500 index dropped as much as 0.9% before closing down less than 0.1% for the day. The tech dominated Nasdaq Composite fell 0.4%. Powell repeatedly stressed on Monday that the central bank needed to move “expeditiously” toward a tighter monetary policy to restore price stability. He added that he was confident the Fed could bring down inflation — which hit a 40-year high of 7.9% in February — without causing a recession. His comments came after US stocks posted their best week since 2020, despite the Fed starting its long awaited cycle of rate rises. Europe’s Stoxx 600 index also erased all the losses it had incurred since Russia’s invasion of Ukraine began. The Stoxx 600 closed flat on Monday. The UK’s FTSE 100 gained 0.5%, but indices in France, Germany and Spain slipped back. Last week’s gains had been helped by optimism about peace talks between Russia and Ukraine. On Monday the Kremlin played down progress in talks, saying there had been “no more substantial movement” as fierce fighting engulfed the port city of Mariupol.

Back home, Bursa Malaysia's benchmark index ended lower on Monday despite the positive tone of the broader market as investors are cautious due to continuing geopolitical tensions in Europe and volatilities in regional equities. At 5pm, the benchmark FBM KLCI was 4.1 points weaker at 1,587.16 from 1,591.26 at last Friday’s close. After opening 3.19 points easier at 1.588.07, the market bellwether moved between 1,579.31 and 1,589.49 throughout the trading session. Major indices in Asia closed with mixed performance. South Korea’s Kospi fell 0.8% and Hong Kong’s Hang Seng declined 0.9%. China’s Shanghai Composite edged up 0.1%. Markets in Japan were closed for a holiday.

Source: PublicInvest Research - 22 Mar 2022