Economy

US: Weekly jobless claims edge slightly higher. First-time claims for US unemployment benefits edged slightly higher in the week ended Dec 3. The report said initial jobless claims crept up to 230,000, an increase of 4,000 from the previous week's revised level of 226,000. Economists had expected jobless claims to inch up to 230,000 from the 225,000 originally reported for the previous week. The less volatile four-week moving average also ticked up to 230,000, an increase of 1,000 from the previous week's revised average of 229,000. Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also climbed by 62,000 to 1.67m in the week ended Nov 26. (RTT)

EU: Denmark industrial production drops 2.3%. Denmark's industrial production declined in Oct. Industrial production dropped a seasonally adjusted 2.3% MoM in Oct, after a 1.3% growth in Sept. The development must be seen in the light of the global uncertainty caused by Russia's invasion of Ukraine, as well as the rising commodity prices and supply difficulties, the agency said. Production of electrical equipment decreased by 15.2%. Production in the machinery industry declined 13.9% and those in the pharmaceutical industry fell 2.0%. Meanwhile, the electronics industry output grew the most by 8.7%. On a yearly basis, industrial production climbed an unadjusted 11.2% in Oct. (RTT)

EU: Germany fell short of gas savings target last week. German gas consumption rose last week, causing Europe's biggest economy to fall short of its gas savings target for the first time this winter. Gas consumption increased by 14% compared with the previous week. The savings target was thus clearly missed, referring to the country's 20% savings goal. Compared with the consumption of the last four years, the figure was 13% below average. (Reuters)

UK: Job placements fall further on candidate shortage, economic uncertainty. Labour shortage and economic uncertainty once again dragged permanent job placements in the UK, and rising inflation coupled with competition for workers continued to send the starting salaries higher, vindicating the tightness of the labour market. Permanent job placement decreased for a second month, albeit at a softer pace, while temp billings rose moderately. Demand for both permanent and temporary staff increased in Nov. However, in both cases, the increases were the slowest seen over the last 21 months. Pay pressures remained historically high due to the lack of workers and high inflation. Nonetheless, the rates of inflation for both starting salaries and temp wages eased again. (RTT)

UK: Sterling drops as falling UK house prices add to recession worries. Sterling fell on Dec 8 against the US dollar and euro as the Royal Institution of Chartered Surveyors saw in Nov the most widespread house price falls since early in the COVID-19 pandemic. The survey showed demand from buyers and sales activity slowed in the face of higher borrowing costs. Investors also pondered how interest-rate hike bets by the Bank of England will worsen the recession outlook in Britain. The BoE is expected to raise bank rate by 50bps to 3.5% next week despite the economy moving towards recession, as it battles inflation running at more than five times its target. The outlook for next year is just as gloomy, with the economy expected to shrink in the first 3 quarters of 2023. (Reuters)

China: COVID easing seen knocking growth early next year before recovery kicks in. China's shift from tough COVID policies, with its promise of driving an economic recovery next year, will instead likely depress growth over the next few months as infections surge, bringing a rebound only later in the year. There are already signs of revived demand for travel and other services, but China's fragile healthcare system and low vaccination rates have left it ill prepared for a big wave of infections, which could spark labour shortages and make wary consumers even more skittish. Compared with other developed countries, medical resources in China are somewhat insufficient. (Reuters)

Japan: GDP slips 0.8% on year in 3Q. Japan's GDP contracted 0.8% on year in the 3Q2022. That exceeded expectations for a decline of 1.1% following the 4.6% increase in the previous three months. On a seasonally adjusted quarterly basis, GDP fell 0.2% - again beating forecasts for a decline of 0.3% after climbing 1.1% in the three months prior. Capital expenditure was up 1.5% on quarter, in line with expectations and down from 2.4% in the second quarter. External demand was down 0.6% on quarter versus forecasts for a fall of 0.7% after adding 0.2% in Q2. Private consumption rose 0.1%, shy of forecasts for an increase of 0.3% after rising 1.2% in the previous quarter. (RTT)

South Korea: Current account surplus shrinks to USD0.88bn. South Korea posted a current account surplus of USD0.88bn in Oct - down from USD1.58bn in Sept. The goods account saw a USD1.48bn deficit, down from the USD6.1bn surplus one year earlier. The services account surplus decreased from USD0.64bn last year to USD0.05bn in Oct 2022, owing to a decrease in the transport account surplus. The primary income account surplus increased from USD1.25bn dollars the year previously to USD2.26bn dollars in Oct 2022, in line with an increase in the income on equity. The secondary income account recorded a USD0.05bn dollar surplus. (RTT)

Australia: Has AUD12.22bn trade surplus in Oct. Australia posted a merchandise trade surplus of AUD12.22bn in Oct. That exceeded expectations for a surplus of AUD12.1bn following the AUD12.44bn surplus in Sept. Exports were down 0.9% on month to AUD60.07bn after rising 7.0% in the previous month. Total goods credits were down 1.1% at AUD53.25bn, while total services credits rose 0.4% to AUD6.81bn. Imports fell 0.7% on month to AUD47.85bn after being roughly flat a month earlier. (RTT)

Indonesia: Consumer confidence remains strong in Nov. Indonesia's consumer confidence remained upbeat in Nov despite a slight fall since Oct, supported by the continued strength of households' expectations and current economic conditions. The consumer confidence index dropped to 119.1 in Nov from 120.3 in the previous month. However, a reading above 100 indicates optimism among households. The easing trend in Nov was mainly caused by the current income index, which fell to 116.4 from 118.7 due to a rise in fuel prices and a drop in job opportunities. (RTT)

Markets

Sime Darby (Neutral, TP: RM2.37): Sime Darby Motors to invest RM500m to set up showrooms for China's BYD in Malaysia. Sime Darby Motors, the automotive arm of conglomerate Sime Darby, has earmarked RM500m to build 40 showrooms for China's BYD in Malaysia by 2024 to showcase vehicles such as the all electric SUV model BYD Atto 3. The model will be available in two variants, with prices starting from RM149,800 for the standard range and RM167,800 for the extended range. The first showroom is slated to be opened by the middle of this month at TREC Kuala Lumpur. (The Edge)

Mitrajaya: Bags RM265.9m construction contract. Mitrajaya has clinched a construction contract worth RM265.9m from Retro Highland SB. Mitrajaya said the contract is for the construction and completion of two blocks of housing apartments and ancillaries in Bandar Tun Razak, Kuala Lumpur, under a joint-venture project between Retro and the Kuala Lumpur City Hall. The contract is for a duration of 40 months from Dec 15, 2022 — the date for site possession — and is expected to be completed by April 14, 2026, the construction company said. (Bernama)

Reneuco: To undertake housing project in Terengganu jointly with state government. Reneuco has inked a JV agreement with the Terengganu government for the development of a mixed housing project in Kuala Nerus. The project comprises of 636 units of Type A affordable housing, 360 units of Type B affordable housing and commercial housing. The gross value for the project is RM293.76 million and would be completed within 60 months. (The Edge)

LFE: To undertake private placement to fund construction firm buy . LFE Corp proposed a private placement to partially fund the acquisition of the remaining 49% stake in its 51%-owned construction firm Cosmo Property Management SB. The private placement entails the issuance of 240.4m new shares to raise RM20.8m based on an issue price of 8.64 sen apiece and it would use RM20.45m of the private placement’s proceeds for the partial settlement of the RM29.4m price of acquiring the Cosmo Property stake while another RM2.5m of the purchase consideration is to be funded via internally-generated funds, and a further RM6.5m via a separate issuance of 66.87m new shares at 9.72 sen apiece. (The Edge)

SCIB: Shareholders again reject payment of directors’ fees; Abdul Karim withdraws re-election bid . Sarawak Consolidated shareholders have refused to approve the payment of directors’ fees and benefits for the end-February to Dec 7 period of up to RM900,000 at the group’s 46th AGM. Also rejected was a resolution to seek approval for the payment of the same to the tune of RM1m for the period spanning Dec 8 till the next AGM. (The Edge)

Ranhill: Secures engineering design contract for solar powered offshore platform. Ranhill Utilities has secured a detailed design engineering (DDE) contract from Malaysia Marine and Heavy Engineering SB (MMHE) worth RM15m. Ranhill said Perunding Ranhill Worley SB PRW), a subsidiary of Ranhill Worley SB (which in turn is a subsidiary of Ranhill) had received a letter of award from MMHE. Ranhill said the Sarawak-based job will have an approximate duration of six months. (StarBiz)

Market Update

The FBM KLCI might open lower after US stocks rose on Thursday, but the move did little to recoup this week’s decline on worries about the effect of sustained high interest rates on the American economy. Wall Street’s benchmark S&P 500 gained 0.8% and the tech-heavy Nasdaq Composite rallied 1.1%. In Europe, the regional Stoxx 600 and London’s FTSE 100 both fell 0.2%. The S&P 500 had fallen for the previous five consecutive sessions as stronger-than-expected jobs and services sector data have chipped away at investors’ conviction about the direction of the Federal Reserve’s interest rate rises. Fed chair Jay Powell last week suggested that the Fed could slow its aggressive pace of interest rate increases in December, but also warned that the US central bank had a long way to go in its fight against inflation. The Fed is expected to raise interest rates by 0.5 percentage points in December, which would end a run of four 0.75 percentage point increases.

Back home, Bursa Malaysia ended in negative territory on Thursday on lack of fresh market-moving catalysts, in line with the downbeat performance in most regional peers. At the closing, the benchmark FBM KLCI stood at 1,465.93, down 0.95 of-a-point or 0.06%, from Wednesday's closing of 1,466.88. Mainland China stocks were also muted, with the CSI 300 index of Shanghai- and Shenzhen-listed shares flat. Investors were encouraged by a report of further easing of Hong Kong’s Covid curbs, which was confirmed when a health official told a briefing that isolation periods for victims and their close contacts would be shortened from seven days to five. Discussions on ending outdoor mask-wearing as a requirement were also reported, but the policy will officially remain in place. Meanwhile, the Hang Seng index gained 3.4%, after a fall of 3.2% in the previous session.

Source: PublicInvest Research - 9 Dec 2022