Economy

US: New home sales drop further as mortgages rates rise, prices push higher. Sales of new US single-family homes unexpectedly fell in February amid rising mortgage rates and higher house prices, which are squeezing out some first-time buyers from the market. Despite the second straight monthly decline reported by the Commerce Department, sales remained above their pre pandemic level. Economists saw reduced affordability curbing activity in the near-term, but expected the new housing market to plod along this year given pent-up demand, a record low inventory of previously owned homes and strong wage gains. New home sales decreased 2% to a seasonally adjusted annual rate of 772,000 units last month. Jan’s sales pace was revised down to 788,000 units from the previously reported 801,000 units. Sales surged 59.3% in the Northeast and increased 6.3% in the Midwest. But they fell 1.7% in the densely populated South and tumbled 13.0% in the West. (Reuters)

US: March auto sales to tumble on rising inflation, Ukraine crisis - data. US auto retail sales could decline in March as rising inflation hinders spending by customers already limited by slim inventories due to pandemic-led supply shortages, and now the Ukraine crisis, consultants J.D. Power and LMC Automotive said. Supply bottlenecks were showing signs of easing in recent months, but that progress is likely to be stalled by Russia’s invasion of Ukraine as well as new lockdowns in China following a resurgence in COVID-19 infections. US retail sales of new vehicles could fall 27.8% to 1,044,500 units in March from a year earlier, according to a report released by the consultants. (Reuters)

EU: Dutch consumer confidence weakens further. The Netherlands' consumer confidence deteriorated in March to near a record low, and the war in Ukraine played a role for the deterioration for the first time, the Central Bureau of Statistics said. The consumer confidence index decreased to -39.0 in March from -30.0 in Feb. The score was below the 20-year average of -8 points. The reading has been falling since Oct. A lower reading than the latest score was only seen in Feb and March 2013, when it was -41, the agency said. Households' expectations regarding the economic outlook for the next 12 months deteriorated sharply. (RTT)

UK: Slashes growth forecast on high inflation. The UK government drastically lowered the economic growth forecast for  this year as higher inflation is expected to erode real incomes and consumption. The latest projections from the Office for Budget Responsibility were unveiled as Chancellor Rishi Sunak presented the Spring Statement in the parliament, announcing several tax cuts to support households and businesses. GDP is now forecast to grow 3.8% this year, which is much less than the 6.0% projected in Oct. Growth is expected to slow further to 1.8% next year, then rise to 2.1% in 2024. Driven by the surge in global oil and gas prices, mainly due to Russia's invasion of Ukraine, the OBR forecast CPI inflation to peak at close to 9% in the fourth quarter of this year, which was 4.3 percentage points higher and two quarters later than the peak in the Oct forecast. (RTT)

Japan: Leading index falls more than initially estimated. Japan's leading index fell more than initially estimated in Jan, final data from the Cabinet Office showed. The leading index, which measures the future economic activity, fell to 102.5 in Jan from 103.7 in Dec. In the initial estimate, the reading was unchanged at 103.7. The coincident index that measures the current economic situation, increased to 95.6 in Jan from 95.7 in the previous month. According to the initial estimate, the reading was 94.3. The lagging index fell to 94.3 in January from 94.9 in the previous month. The initial estimate was 93.1. (RTT)

Australia: Manufacturing PMI 57.3 in March - S&P Global. The manufacturing sector in Australia continued to expand in March, and at a faster pace, the latest survey from S&P Global showed with a manufacturing PMI score of 57.3. That's up from 57.0 in Feb and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Manufacturing production rose as new order growth accelerated in March. Firms reported that the lessening of COVID-19 disruptions led to an increase in demand. In turn, employment levels and purchasing activity continued to rise in March, contributing to higher stocks of purchase. (RTT)

South Korea: BOK chief reiterates need to further adjust rates as end of term nears. South Korea’s central bank chief reiterated the need to further raise the bank’s policy interest rate as the economy struggles to tame red-hot inflation and amid rising uncertainties caused by the Ukraine crisis. Governor Lee Ju-yeol said in a speech wrapping up his eight-year term at the Bank of Korea that as high inflation was expected to continue “for a considerable period” and there was a need to reduce financial imbalances, “it is necessary to continue reducing the degree of monetary policy easing”. Lee, who has presided over 76 rate decision meetings in total, ends his term on March 31 and will pass on his duties to Rhee Chang-yong, a veteran technocrat at the International Monetary Fund. (Reuters)

Taiwan: Industrial production growth improves in Feb. The manufacturing sector in Australia continued to expand in March, and at a faster pace, the latest survey from S&P Global showed with a manufacturing PMI score of 57.3. That's up from 57.0 in Feb and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Manufacturing production rose as new order growth accelerated in March. Firms reported that the lessening of COVID-19 disruptions led to an increase in demand. In turn, employment levels and purchasing activity continued to rise in March, contributing to higher stocks of purchase. The survey also showed that the services PMI climbed to 57.9 from 57.4 and the composite PMI improved to 57.1. (RTT)

Markets

TDM: Accepts RM115m offer for two-loss making Indonesia subsidiaries. TDM has accepted an offer by Ikhasas SB for the sale of PT Rafi Kamajaya Abadi (RKA) and PT Sawit Rezki Abadi (SRA) for RM115m, which will be conditional upon TDM meeting several agreed upon conditions. The group accepted the offer on March 21 for Ikhasas to acquire 93.75% and 95% equity interests in RKA and SRA respectively from TDM, as well as the remaining minority shares held by an individual named Andri in the 2 companies. (The Edge)

SMTrack: Purchases Bombardier Challenger aircraft for USD1.8m. SMTrack is purchasing a Bombardier Challenger 601- 3A aircraft as part of its move to venture into cargo carriage services. The company has entered into an aircraft purchase agreement with Fairway Logistic (M) SB for the purchase of the aircraft, together with all installed parts. It will fund the acquisition using proceeds from the issuance of redeemable convertible notes. (The Edge)

LYC Healthcare: Ventures into dental industry via acquisitions of three clinics in Klang Valley. LYC Healthcare has proposed to acquire three dental clinics in Klang Valley for a total of RM3.18m. Its wholly-owned subsidiary LYC Dental Group SB had entered into a conditional share purchase agreement to acquire 100% shareholding in KL Dental (Kiara) SB in Kiara 163 and SS15 Courtyard. LYC also entered into a conditional share purchase agreement to acquire 100% shareholding in KL Dental (Connaught) SB in Taman Connaught. (StarBiz)

Destini: Bags contract to provide tubular handling services off Terengganu coast. Destini said its wholly-owned subsidiary Destini Oil Services SB (DOS) has bagged a contract from EnQuest Petroleum Production Malaysia Ltd for the provision of tubular handling services off the coast of Terengganu. The contract is valid for three years from February, with an extension option of one year. It did not disclose the value of the contract. (The Edge)

Ni Hsin: Signs manufacturing deal for EV bike . Ni Hsin Group subsidiary Ni Hsin EV Tech SB has penned an original equipment manufacturing (OEM) agreement with Dongguan Tailing Motor Vehicle Co Ltd for the manufacture of the eBixon EV Bike. Under the terms of the agreement, Dongguan Tailing will manufacture the bikes and deliver them as semi-knocked down components that include spare parts and software while Ni Hsin EV Tech will assemble, test, run quality control and commission the electric two wheelers in Malaysia. "Our venture into the mobility business is in line with the group's commitment to seek opportunities under the ESG criteria of sustainability.(StarBiz)

IPO: Pawnshop operator Pappajack's IPO oversubscribed 22 times . Pappajack has garnered an overall oversubscription rate of 21.73 times for 33.4m public issue shares made available for application by the Malaysian public. A total of 7,125 applications for 759 million public issue shares with a value of RM227.75m were received from the Malaysian public. "For the Bumiputera portion, a total of 2,243 applications for 116,687,800 public issue shares were received, which represents an oversubscription rate of 5.99 times,” it told the stock exchange." (StarBiz)

Market Update

Overnight, US and European stocks reversed some of their recent gains on Wednesday as investors refocused on the effect of rising interest rates and oil prices rose in response to supply concerns and the threat of further sanctions on Russia. The benchmark S&P 500, which had climbed almost 6% over the previous five sessions, dropped 1.2%. The declines were broad-based, with energy and utilities the only subsectors in positive territory. The tech dominated Nasdaq Composite index slipped 1.3%, while Europe’s Stoxx 600 index gave up 1%. Stocks have rallied since the Federal Reserve announced its first rate rise in more than three years last week, despite the ongoing war in Ukraine and the fact the prospect of higher rates had spooked investors earlier in the year. On Monday, Jay Powell, Federal Reserve chair, said the central bank needed to move “expeditiously” towards tighter monetary policy after the annual pace of US inflation hit a 40-year high of 7.9% in February.

Back home, Bursa Malaysia closed 0.76% higher Wednesday, boosted by improved market sentiment across the region, as buying support emerged primarily in banking, gaming and glove stocks. At 5pm, the benchmark FBM KLCI was 12.07 points better at 1,597.88 from 1,585.81 at Tuesday’s close. The key index opened 2.97 points better at 1,588.78 to record its intraday low, and hit a high of 1,601.83 about half an hour before the trading session ended. In the region, Hong Kong’s Hang Seng index added 1.2% as investors took advantage of lower valuations. Chinese equities staged their worst weekly drop since 2008 earlier this month, before top economic official Liu He pledged state support for the economy and financial markets. The Hang Seng remains more than 5% lower for the year. Meanwhile, Japan’s Nikkei 225 jumped 3% and China’s Shanghai Composite advanced 0.3%.

Source: PublicInvest Research - 24 Mar 2022