Economy

US: Shipping slowdown exposes vulnerability of US economic growth . Real economic activity in the US is slowing sharply. This is showing up in lower demand for new trucks and autos, and a tailing off in freight volumes, leaving transport stocks facing more downside. Heavy truck sales in the US are very good leading indicator of economic activity, with 65% of the dollar value of North American freight moved by trucks. But new truck sales have been falling sharply and are now down 23% on an annual basis. (Bloomberg)

US: Consumer sentiment unexpectedly shows significant rebound in April . Preliminary data released by the University of Michigan unexpectedly showed a substantial improvement in US consumer sentiment in the month of April. The report showed the consumer sentiment index spiked to 65.7 in April from 59.4 in March. The sharp increase surprised economists, who had expected the index to edge down to 59.0. (RTT)

US: Business inventories beat expectations in Feb. US business inventories increased more than expected in Feb amid a moderation in sales, data showed. Business inventories rose 1.5% after climbing 1.3% in Jan, the Commerce Department said. Inventories are a key component of GDP. Economists polled by Reuters had forecast inventories rising 1.3%. Inventories jumped 12.4% on a YoY basis in Feb. Retail inventories increased 1.2% in Feb, instead of 1.1% as estimated in an advance report published last month. (Reuters)

EU: ECB's Lagarde keeps options live amid high uncertainty, runaway inflation . ECB President Christine Lagarde confirmed that asset purchases would end in the third quarter, but avoided saying exactly when the bank would raise interest rates, as the economic outlook remains clouded with high uncertainty stemming from the war in Ukraine and runaway inflation. (RTT)

Singapore: Central bank tightens monetary policy . Singapore's central bank tightened its monetary policy for the third straight time, as global inflationary pressures and tight labor market continued to exert upward pressure on inflation. The Monetary Authority of Singapore, decided to re-centre the mid-point of the exchange rate policy band at the prevailing level of the S$NEER. The MAS will also increase slightly the rate of appreciation of the policy band to exert a continuing dampening effect on inflation. There was no change to the width of the policy band or the level at which it was centred. " (RTT)

Australia: Jobless rate steady at 4.0%. Australia's unemployment rate remained unchanged in March, the Australian Bureau of Statistics said. The jobless rate was a seasonally adjusted 4.0% in March, same as seen in February. Economists had forecast a rate of 3.9%. The number of unemployed persons declined by 12,100 to 551,300 in March. The youth unemployment rate decreased to 8.3% in March. The number of jobs increased by 17,900 in March, while economists had forecast a growth of 40,000. (RTT)

South Korea: Bank of Korea unexpectedly hikes key rate . South Korea's central bank unexpectedly lifted its key interest rate, as inflation is expected to remain high for some time. The Monetary Policy Board of the Bank of Korea decided to hike the Base Rate by 25 bps to 1.50% from 1.25%. (RTT)

Markets

Telekom Malaysia (TM) (Outperform, TP: RM6.40): has executed a service agreement with Digital Nasional Bhd (DNB) for the leasing of fibre over 10 years at RM2bn. (Bursa)

Comments: This was announced earlier on 16 December 2021. Under the agreement, DNB would leverage on TM’s extensive fibre and network infrastructure for 5G rollout. It is effective from 28 August 2021 and remains valid until the expiry in 10 years. Generally, we do not expect this to make any material contribution to the Group’s bottomline given that TM is a national telco services provider while DNB’s 5G deployment is based on a cost recovery model. No change to our forecasts.

Hibiscus Petroleum (Outperform, TP: RM1.31): Clarifies SPAC listing in Singapore. Hibiscus Petroleum says no board approvals have been sought to make any submission to any stock exchange for the listing of a special purpose acquisition company (SPAC). Subsequent to reviewing the published Bloomberg article, Hibiscus clarified that no advisors or investment banks had been mandated or appointed by the company to make any submission for a SPAC listing. (BTimes)

IHH Healthcare (Outperform, TP: RM7.50): Co-leads Series A investment with Singapore medtech firm. IHH Healthcare has tied up with Singapore-based medtech developer Us2.ai to transform cardiovascular care as a co-lead investor in its recently completed Series A funding. (SunBiz)

HB Global: Aborts plan to raise RM23m via private placement. HB Global Ltd has decided to defer a plan to raise RM23.1m in a private placement of 154m new shares or 20% of its existing issued shares after having considered the current market sentiment. (The Edge)

Serba Dinamik: Bursa Malaysia files contempt proceedings against Serba Dinamik for failing to reveal FFU. Bursa Malaysia Securities filed contempt proceedings against Serba Dinamik Holdings and its directors in relation to the failure to reveal the fact-finding update (FFU) of its special independent review (SIR) done by Ernst & Young Consulting SB (EY Consulting). (The Edge)

Brahim: Makes last ditch appeal to Bursa to put off delisting action. Practice Note 17 (PN17) in-flight caterer Brahim's Holdings has submitted an appeal to Bursa Securities against the commencement of delisting procedures on the securities of the company. (The Edge)

MBSB Bank: Inaugural RM300m sukuk secures final order book of nearly RM3bn. MBSB Bank has successfully priced its inaugural RM300m sukuk offering under its dedicated RM5bn sustainability sukuk Wakalah programme. The offering received overwhelming demand with a final order book received amounting to RM2.9bn, giving the transaction a strong bid to cover ratio of 10 times. (BTimes)

Sealink: Auditor raises uncertainty over group's going concern. Sealink International said its independent auditor has raised an uncertainty relating to the offshore marine support vessel operator's going concern in view of the current economic conditions and Covid-19. (The Edge)

Market Update

The FBM KLCI might open lower today as Wall Street’s benchmark S&P 500 stock index fell 1.2% overnight, after adding 1.1% in the previous session. The tech-heavy Nasdaq Composite lost 2.1%. Unexpectedly weak core inflation figures earlier this week had led investors to temper their expectations about how aggressively the Federal Reserve would raise interest rates, prompting a rally in bond prices. However, in an interview on Thursday John Williams, president of the New York branch of the Federal Reserve, stressed the need to move interest rates “back to more neutral levels”. The regional Stoxx Europe 600 index rose 0.7%, with Germany’s Dax up 0.6% and France’s Cac up 0.7%. The FTSE 100 in London added 0.5%.

Back home, Bursa Malaysia finished lower on Thursday on last-minute selling in heavyweights. The benchmark FBM KLCI moved in positive territory earlier but profit taking in index-linked counters emerged in the last 10 minutes of trading, pushing the key index to settle at its intraday low. At 5pm, the FBM KLCI fell 1.48 points to end at 1,595.7 compared with Wednesday’s close of 1,597.18.

In the region, Hong Kong’s Hang Seng index added 0.7% and China’s CSI 300 was up 1.3%. Japan’s Topix rose 1% and South Korea’s Kospi traded flat.

Source: PublicInvest Research - 15 Apr 2022