Economy

US: Fed's Mester calls for frontloading rate hikes, sees rise to 2.5% in 2022. Cleveland Federal Reserve Bank President Loretta Mester on Tuesday said she would like to raise interest rates to about 2.5% by year end, with bigger rate hikes in the first half, and further tightening next year to bring down high inflation and keep it  from getting entrenched. “I find it appealing to front-load some of the needed increases earlier rather than later in the process because it puts policy in a better position to adjust if the economy evolves differently than expected,” Mester said in remarks prepared for delivery at John Carroll University. (Reuters)

US: Business borrowing for equipment falls 4% in February – ELFA. US companies borrowed 4% less in Feb to finance their investments in equipment compared to a year earlier, the Equipment Leasing and Finance Association (ELFA) said. The companies signed up for USD7.1bn in new loans, leases and lines of credit last month, compared with USD7.4bn a year earlier. Borrowings were down nearly 1% from Jan. (Reuters)

EU: Eurozone current account surplus remains unchanged. The eurozone current account surplus remained unchanged in Jan, the European Central Bank said. The current account surplus held steady at EUR 23bn in Jan. In the same period last year, the surplus was EUR38bn. The expected level was EUR24.3bn. The surpluses on services and goods trade and primary income were partly offset by a deficit in the secondary income. The trade in goods showed a surplus of EUR14bn. (RTT)

EU: Eurozone construction output rebounds in Jan. Eurozone construction output increased in Jan, led by building activity, after falling in the previous month, data from Eurostat showed. Construction output rose 3.9% MoM in Jan, after a 1.5% drop in Dec. In Nov, construction output edged up 0.1%. Building and civil engineering output increased 4.2% and 1.4%, respectively, after declines in Dec. On a yearly basis, construction output grew 4.1% in Jan, following a 0.2% rise in Dec. (RTT)

UK: Budget deficit falls in Feb. The UK budget deficit narrowed in Feb from the last year but the shortfall was the second-highest for the month of Feb since records began in 1993, the Office for National Statistics said. Public sector net borrowing excluding public sector banks was GBP13.1bn in February, which was GBP2.4bn less than in Feb. In the financial year-to-Feb, PSNB exclude banks totaled GBP138.4bn, the third-highest financial year to-Feb borrowing since monthly records began in 1993. (RTT)

UK: Manufacturers' price expectations at record high - CBI. UK manufacturers price expectations hit a survey record high and production increased at a brisk pace in three months to March, survey results from the Confederation of British Industry showed. A net balance of 80% of manufacturers expects to raise their prices over the coming three months, according to the latest Industrial Trends survey results. This was the highest score since 1975. (RTT)

UK: Borrowing remains below official estimate. The UK government borrowing remained below the official estimate in the financial year to Feb period, data from the Office for National Statistics showed. In the financial year-to-Feb, public sector net borrowing excluding banks totalled GBP138.4bn, the third-highest financial year-to-Feb borrowing since monthly records began in 1993. But this was GBP25.9bn less than the official Office for Budget Responsibility forecast. (RTT)

South Korea: Producer prices rise 8.4% on year in Feb. Producer prices in South Korea were up 8.4% on year in Feb, the Bank of Korea said- slowing from 8.9% in Jan. Individually, prices for agricultural, forestry and marine products fell 6.6% on year, while manufacturing products jumped 14.0%, utilities climbed 12.0% and services rose 2.5%. On a monthly basis, producer prices rose 0.4%, down from 1.1% in the previous month. (RTT)

Markets

Wah Seong (Outperform, TP: RM0.91): Sells remaining 30% stake in pipe manufacturing unit for RM31m. Wah Seong Corp is selling its remaining 30% stake in pipe manufacturing unit Spirolite (M) SB (SPRL) to Lesso Malaysia Holdings SB (LMHSB) for RM30.8m, cash, as part of its plan to divest non core businesses within the group to streamline its operations and resources. Tthe disposal was to collaborate with Lesso Malaysia, which it said was a market leader in the pipeline manufacturing business, with a wide international network. (The Edge)

Supermax Corp: Releases artist impression of USD350m glove factory in Texas . Supermax Corp says its US-based subsidiary Maxter Healthcare Inc has released the artist impression of its advanced manufacturing facility in Brazoria County in Texas, US. This will be Supermax's 18th manufacturing plant worldwide and its first in the US. The new 215-acre manufacturing facility will showcase cutting edge capabilities through expanded use of artificial intelligence and robotic engineering. The facility will be comprised of a total of 8 buildings. (BTimes)

Unisem: New plant in Gopeng to double existing production capacity. Unisem held a groundbreaking ceremony to commemorate the start of construction of its new semiconductor production facility on a piece of industrial land in Gopeng, Perak. Unisem said Phase 1 of the new Gopeng Plant with an aggregate built up area of about 57,000sq m with cleanroom facilities, is expected to be completed in April 2023 at an approximate cost of RM300m.Once completed, the Gopeng Plant will enable it to better serve the needs of customers with a broad portfolio of products and services. (The Edge)

Hong Seng: Unit participates in NADMA's foreign workers’ management programme. Hong Seng Consolidated has inked a collaboration and commitment agreement with the National Disaster Management Agency (NADMA) on foreign workers’ recruitment and quarantine management at a panel of selected hotels. The agreement was signed and would be executed by Hong Seng's 52%-owned subsidiary, eMedAsia SB, and NADMA while the panel of selected hotels was represented by Cahaya Pengurusan Cekap SB and Faz Group SB. (The Edge)

Kejuruteraan Asastera: Bags power purchase agreements worth RM46.8m in Thailand: Kejuruteraan Asastera (KAB) has secured five rooftop solar power generating system construction and power purchase agreements worth RM46.8m in Thailand. The agreement requires KAB to construct, install, operate, and maintain the grid-connected photovoltaic (GCPV) solar system for Siam Machinery and Equipment Co Ltd and four subsidiaries of Aapico Group of Companies. (StarBiz)

United Malacca: 3Q net profit nearly doubles to RM30.24m on higher CPO price. United Malacca’s net profit in 3QFY22 almost doubled to RM30.24m compared to RM13.73m in the same period last year, on the back of higher crude palm oil prices. EPS surged to 14.42 sen, from 6.54 sen previously. The group said its quarterly revenue rose 38.15% to RM147.79m from RM106.98m, underpinned by higher contribution from its Malaysia and Indonesia’s operation. (The Edge)

Market Update

The FBM KLCI might open higher today after Wall Street stocks rose on Tuesday and US government bond prices fell, as investors looked ahead to tighter monetary policy from the Federal Reserve. The S&P 500 index rose 1.1% as investors balanced remarks from Fed chair Jay Powell about the need for rapid interest rate rises with his reassurance that tightening would not spark a recession. The tech-heavy Nasdaq Composite added 2%. Meanwhile, the yield on the benchmark 10-year US Treasury note rose 0.09 percentage points to 2.38% — the highest level since May 2019 — as its price fell. Powell said on Monday that the Fed should move “expeditiously” towards tighter monetary policy. He also pushed back on concerns that this would cause a recession, citing episodes in 1965, 1984 and 1994 when the central bank slowed an overheated economy without prompting a sharp contraction. Europe’s regional Stoxx 600 share index, which remains about 6% lower for the year, ended the day 0.8% higher, with strong gains for financial stocks. Bundesbank President Joachim Nagel said on Monday that the European Central Bank should raise interest rates this year if the inflation outlook warranted it. Germany’s Xetra Dax closed up 1% and London’s FTSE 100 gained 0.5%.

Back home, Bursa Malaysia ended mixed on Tuesday with the barometer index easing 0.09% after going through a choppy trading day, with buying interests spotted mainly in plantation and oil and gas counters, while the broader market was slightly positive on mild buying support. At 5pm, the benchmark FBM KLCI was 1.35 points weaker at 1,585.81 from 1,587.16 at Monday’s close. Hong Kong’s Hang Seng index gained 3%. It began to rally last week when Chinese vice-premier Liu He made a rare intervention to pledge state support for the economy and capital markets. Elsewhere, Japan’s Nikkei 225 rose 1.5%. China’s Shanghai Composite advanced 0.2%.

Source: PublicInvest Research - 23 Mar 2022