Economy

US: Labour market tightens as weekly jobless claims hit lowest level since 1969. The number of Americans filing new claims for jobless benefits dropped to a 52-1/2-year low last week, while unemployment rolls continued to shrink, pointing to rapidly diminishing labour market slack that will keep boosting wage inflation. The strength in the job market reported by the Labour Department may push the Fed to raise interest rates by half a percentage point at its next policy meeting in May. Fed Chair Jerome Powell said the US central bank must move "expeditiously" to raise rates and possibly "more aggressively" to keep high inflation from becoming entrenched. The Fed last week increased its policy interest rate by 25 basis points, the first hike in more than three years. (Reuters)

US: Business activity rises to eight-month high in March – survey. A measure of U.S. business activity increased to an eight month high in March, fuelled by strong demand for both goods and services, but Russia’s war against Ukraine hurt sentiment. S&P Global said its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, rose to a reading of 58.5 this month. That was the highest reading since July 2021 and followed 55.9 in Feb. (Reuters)

US: Current account deficit biggest on record in 2021. The US current account deficit narrowed in the fourth quarter, but the shortfall in 2021 was the largest on record amid a surge in imports as businesses rushed to replenish depleted inventories to meet strong demand. The Commerce Department said that the current account deficit, which measures the flow of goods, services and investments into and out of the country, shrank 0.9% to USD217.9bn last quarter. (Reuters)

US: Core capital goods orders fall in Feb. New orders for US made capital goods unexpectedly fell in Feb, while shipments slowed, but demand for goods remains strong, which should keep manufacturing expanding. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, slipped 0.3% last month, the Commerce Department said. These so-called core capital goods orders jumped 1.3% in Jan. Economists had forecast core capital goods orders rising 0.5%. (Reuters)

EU: Eurozone private sector growth slows on Russia-Ukraine War. Eurozone private sector growth eased in March as the economic impact of Russia's invasion of Ukraine offset a boost to demand from the further reopening of the economy from COVID-19 restrictions, flash survey results from S&P Global showed. The flash composite output index dropped to 54.5 in March from 55.5 in Feb. The score was forecast to fall deeply to 53.9. The survey data underscore how the Russia-Ukraine war is having an immediate and material impact on the eurozone economy. (RTT)

UK: Retail sales growth eases in March: CBI. The UK retail sales grew at a slower pace in March, according to the Distributive Trades Survey from the Confederation of British Industry. The retail sales balance fell to 9% in March from 14% in Feb. However, a net 39% expects sales to rise in the year to April. A net 23% said retail sales were seen as poor for the time of the year in March compared to +16% in Feb. The internet sales volumes in the year to March fell at the sharpest rate since Aug 2009. (RTT)

Japan: Manufacturing PMI Improves To 53.2 – Jibun. The manufacturing sector in Japan continued to expand in March, and at a faster pace, the latest survey from Jibun Bank showed with a manufacturing PMI score of 53.2. That's up from 52.7 in Feb and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Output returned to expansion territory in the latest survey period, albeit only marginally. That said, new order growth continued to slow. (RTT)

Philippine: Central bank maintains key rate. The Philippine central bank decided to maintain its key interest rate at a record low, as widely expected. The Monetary Board of the Bangko Sentral Ng Pilipinas left the key interest rate, which is the overnight reverse repurchase facility rate, steady at 2.00%. The interest rates on the overnight deposit and lending facilities were also kept at 1.5% and 2.5%, respectively. Citing higher global commodity prices, the bank had raised its inflation forecast for 2022 to 4.3% from 3.7%. Nevertheless, average inflation is projected to decline and settle within the target band at 3.6% in 2023. (RTT)

Markets

Cypark (Outperform, TP: RM1.49): Bags KL road upgrading contract worth RM74m. Cypark Resources has bagged a RM74.3m contract to undertake road upgrading and associated works along Jalan Dutamas 2. The project, awarded by TTDI KL Metropolis SB, is scheduled to be completed by Nov 22, 2023. The project is expected to contribute positively to the earnings and net assets of the group. (The Edge)

Comments: The contract is a welcome development, which will keep its construction segment busy. We remain excited over the Group's medium to long-term prospects underpinned by the additional capacity coming on-stream in its renewable energy and waste-to-energy segments nonetheless. Our Outperform call is affirmed with an unchanged RM1.49 target price.

TM (Outperform, TP: RM6.40): Secures green electricity tariff for three data centres. Telekom Malaysia has recently secured the Green Electricity Tariff (GET) for three data centres, allowing customers of its data centre services to accelerate their sustainability journey. The tariff, secured from Tenaga Nasional, is for its Klang Valley Core Data Centre (KVDC) in Cyberjaya, Iskandar Puteri Core Data Centre (IPDC) in Johor Baru, and KL City Data Centre (CTDC) in Brickfields. (Bernama)

PA Resources: Bags new RM550m contract to supply materials to First Solar. PA Resources has received a further one-year extension of its agreement to supply raw materials to the First Solar group for the production of photovoltaic modules. The extended contract is worth about RM550m, and will be effective until July 1, 2014. The First Solar group comprises Nasdaq-listed First Solar Inc and its manufacturing units First Solar Vietnam Mfg Co Ltd and First Solar Malaysia. (The Edge)

Bintai Kinden: Bags RM57.4m contracts from TNB. Bintai Kinden Corp's subsidiary Kejuruteraan Bintai Kindenko SB (KBK) has secured power substation and power transformer contracts from Tenaga Nasional with a combined value of RM57.4m. The group said the power substation contract entails the supply, erection, testing and commission of a 275kV switching station in Malaysia-China Kuantan Industrial Park in Gebeng, Pahang, for RM31.5m. (StarBiz)

Solarvest: Appointed EPCC solutions provider for Lotus's Malaysia project. Solarvest Holdings has been appointed by Nefin Group as the engineering procurement, construction, and commissioning (EPCC) solutions provider for a rooftop solar photovoltaic project for hypermarket chain Lotus's Malaysia. The contract involves 12 stores and one fresh distribution centre for Lotus's Malaysia with an estimated cumulative capacity of 7.98MWp. (StarBiz)

Datasonic: Obtains RM22.5m contract to supply security documents to NRD. Datasonic Group has received a RM22.5m contract to design, print, supply and deliver various security documents to the National Registration Department (NRD). The contract from the Home Ministry was awarded to the Group for a period of 36 months from May 1. The RM22.5m contract marks the second contract Datasonic has obtained in 2022, with the first being a RM50.12m contract. (The Edge)

Market Update

The FBM KLCI might open higher today after Wall Street stocks rose and government bonds remained under pressure on Thursday as US President Joe Biden met NATO and G7 leaders to discuss their collective response to Russia’s invasion of Ukraine. The parties forged an agreement to step up preparations for potential chemical and nuclear weapon threats, while investors were awaiting a response from EU leaders on possible blocks to Russian fossil fuel imports. Investors also remain focused on the path of monetary policy and persistent inflation, after retracing earlier losses stemming from the onset of Russia’s war with Ukraine. Wall Street’s S&P 500 share index closed 1.4% higher, as traders switched money out of a global bond market that is undergoing its deepest downturn since at least 1990 — knocked by concerns over global inflation and expectations of tighter monetary policy. The Nasdaq Composite added 1.9%. The broad based S&P has now climbed almost 7% above its closing level on February 23, the day before President Vladimir Putin launched Russia’s invasion of Ukraine. In Europe, the regional Stoxx 600 index lost 0.2% on Thursday and is 7% lower for the year, but the gauge has also retraced losses since the beginning of Moscow’s incursion.

Back home, Bursa Malaysia closed higher for a second consecutive day after a relatively quiet but choppy trading session amid a mixed regional market performance as investors remained cautious on the increasing market volatility. At 5pm, the benchmark FBM KLCI rose slightly by 1.09 points to 1,598.97 from 1,597.88 at Wednesday’s close. The barometer index opened 2.03 points easier at 1,595.85, and moved between 1,593.53 and 1,601.16 throughout the session. Major indices in Asia were mixed. China’s Shanghai Composite fell 0.6%, and Hong Kong’s Hang Seng declined 0.9%. Japan’s Nikkei 225 added almost 0.3%.

Source: PublicInvest Research - 25 Mar 2022