Economy

US: Household wealth falls for third consecutive quarter . US household wealth fell by USD400bn in the 3QFY22 as a drop in US stock prices outpaced gains in real estate values. Household net worth declined to USD143.3trn at the end of Sept from USD143.7trn at the end of June, the Fed's quarterly snapshot of the national balance sheet showed. It was the third consecutive quarter household wealth has declined. During that period, an index that covers 95% of the market capitalization of US stocks lost almost USD2trn in value on worries about stubbornly high inflation and the Fed's outsized interest rate increases to try and bring it to heel. The US central bank raised interest rates to 3.00-3.25% from 1.50- 1.75% from June through Sept. (Reuters)

US: Producer prices increase, near-term inflation expectations ease. US producer prices rose slightly more than expected in Nov amid a jump in the costs of services, but the trend is moderating, with annual inflation at the factory gate posting its smallest increase in 1 to 1.5 years. Underlying producer prices are increasing at their slowest pace since April 2021 on a YoY basis. Consumers' one year inflation expectations fell to a 15-month low in Dec. The reports were published ahead of the Fed’s two-day policy meeting this week, at which the US central bank is expected to start dialing back the size of its interest rate increases. Consumer prices data this week will shed more light on the path of inflation. (Reuters)

US: Wholesale prices rose 0.3% in Nov, more than expected, despite hopes that inflation is cooling. Wholesale prices rose more than expected in Nov as food prices surged, dampening hopes that inflation could be headed lower. The PPI, a measure of what companies get for their products in the pipeline, increased 0.3% for the month and 7.4% from a year ago, which was the slowest 12-month pace since May 2021. Excluding food and energy, core PPI was up 0.4%, also against a 0.2% estimate. Core PPI was up 6.2% from a year ago, compared with 6.6% in Oct. Markets now will turn their attention to the more closely watched consumer price index, which is due out Tuesday morning. A day later, the Fed will conclude a two-day meeting with an announcement on where interest rates are heading. The hot inflation data keeps the Fed on track for another rate increase, likely a 0.5% hike that would push benchmark borrowing rates to a target range of 4.25%-4.5%. (CNBC)

EU: Portugal trade deficit widens in Oct. Portugal's foreign trade deficit widened in Oct, as imports grew faster than exports. The trade deficit rose to EUR2.83bn in Oct from EUR2.02bn in the corresponding month last year. In Oct, the shortfall was EUR2.74bn. Exports were 21.1% higher in Oct compared to last year, slower than the 25.0% gain in Sept. The annual growth in imports was 26.2% in Oct, after a 30.4% rise a month ago. The surge in imports was mainly due to more purchases of machinery and other capital goods, and industrial supplies. (RTT)

China: Logs mild inflation, factory gate prices ease steadily. China's CPI continued to ease in Nov and factory gate prices decreased again as strict zero-Covid strategy dragged on economic activity, depressing inflationary pressures while spiraling costs act as utmost policy constraint in major economies. CPI posted an annual increase of 1.6% in Nov, after Oct's 2.1% gain. This was in line with expectations. Nov inflation stands well below Beijing's official target of around 3% for the year. Within overall consumer prices, food price inflation eased sharply to 3.7%. At the same time, non-food prices posted a steady growth of 1.1%. Consumer prices slid 0.2% MoM as expected. (RTT)

Japan: Producer prices rise 9.3% YoY in Nov. Producer prices in Japan were up 9.3% YoY in Nov. That exceeded expectations for an increase of 8.9% and up from 9.1% in Oct. On a monthly basis, producer prices rose 0.6%, unchanged from the previous month and above forecasts for a gain of 0.5%. Export prices fell 0.1% MoM and added 1.1% YoY, while import prices dropped 2.5% MoM and jumped 8.6% YoY. (RTT)

Malaysia: Jobless rate steady at 3.6% . Malaysia's unemployment rate remained stable in Oct. The jobless rate remained unchanged at 3.6% in Oct. The number of unemployed persons decreased to 602,000 in Oct from 605,000 in the previous month. The number of unemployed persons decreased to the lowest since the Covid-19 pandemic. The number of employed rose 0.2% monthly to 16.08m in Oct from 16.05m in the previous month. The labor force participation rate remained unchanged at 69.7% in Oct. (RTT)

Markets

Datasonic: Inks deal with Republic of Guinea on digitisation, land management matters. Datasonic Group has entered into a Memorandum of Agreement with the West African nation of Guinea relating to the printing of secure documents, digitisation, and improvement of land management solutions and services. Under the deal, Datasonic will be the prime contractor while Guinea's Ministry of Urban Planning, Housing and Territorial Development (MUHAT) will be the project owner. The profit sharing rate will be in the proportion of 60% for MUHAT and 40% for the company. (The Edge)

Signature International: Acquires 19.9m shares or a 0.72% stake in Hextar Industries for RM11.51m. The company purchased the shares in six tranches between Nov 21 and Dec 7 at an average price of 57.8 sen apiece. The investment is for the company to pursue its investment goals having regard to the prevailing market conditions and part of the company’s short-term investment in quoted securities that are fundamentally sound and have the prospect of generating short-term returns. (The Edge)

CN Asia: Exits Zen Tech. CN Asia Corp is no longer a shareholder of Zen Tech International. This came after the group sold two million Zen Tech shares on Dec 7 and another 473,722 shares on Dec 8. The disposals of the two blocks of shares were made at the market price of 3.5 sen per share, adding that the proceeds from the disposal will be used for its working capital. (The Edge)

Muhibbah: Secures RM116m contract from Institute of Technology Petronas. Muhibbah Engineering (M) has been awarded a contract worth RM116.4m by Petroliam Nasional's (Petronas) subsidiary, Institute of Technology Petronas SB. The project, which is slated to start from Dec 15, is for the planned construction of student accommodation and a student centre at Universiti Teknologi Petronas in Bandar Seri Iskandar, Perak. (The Edge)

Petra Energy: Secures one-year extension to MCM contract from Petronas Carigali. Petra Energy Bhd has secured a one-year extension to the contract from Petronas Carigali Sdn Bhd for the provision of offshore maintenance, construction and modification (MCM) services. The contract value is based on work orders issued by Petronas Carigali throughout the duration of the extended contract from Sept 20, 2022 until Dec 31, 2023. (StarBiz)

Propel Global: Acquires 51% stake in Best Wide Engineering (BWE) for RM7.82m. Propel Global said BWE provides engineering and technical works for the oil and gas (O&G) industry through engineering, procurement, construction and commissioning (EPCC). The acquisition aligns with the company's strategy to grow the O&G business by expanding its offerings and enhancing its market presence as an O&G engineering services provider. (BTimes)

IPO: Kitacon inks underwriting deal with RHB IB for Main Market IPO. Kumpulan Kitacon has signed an underwriting agreement with RHB Investment Bank (RHB IB) to underwrite a total of 18.59m shares. The IPO entails a public issue of 76.09m new shares and an offer for sale of 62.5m existing shares. Kitacon is expected to list in Jan 2023. (The Edge)

Market Update

The FBM KLCI might open with a cautious note after US stocks notched their biggest weekly drop in more than a month as investors took a series of hotter than expected economic data as a sign that the central bank would keep interest rates higher for longer to curb persistent inflation. The benchmark S&P 500 fell 0.7% on Friday, following the release of stronger than expected producer inflation data. That took the index’s weekly drop to 3.4%, its biggest decline since late September. The Nasdaq Composite closed 0.7% lower on Friday, taking its weekly decline to 4%, the steepest slide since early November. Data released during the week showed resilience in the US economy despite the Federal Reserve’s efforts to slow it down by raising interest rates, and come ahead of crucial consumer inflation data on Tuesday and the central bank’s decision on monetary policy the following day. In Europe, the Stoxx 600 rose 0.8% and Germany’s Dax closed 0.7 % higher.

Back home, Bursa Malaysia ended the week higher in tandem with regional markets amid positive Wall Street performance overnight. At the closing bell, the benchmark FBM KLCI stood at 1,477.19, up 11.26 points or 0.77%, from Thursday's closing at 1,465.93. The regional stocks, meanwhile, also climbed as relaxations to China’s zero-Covid policy boosted investors’ hopes that the world’s second biggest economy would reopen early next year. The moves come as Beijing prioritises economic growth over suppressing the virus for the first time since the coronavirus pandemic began. Analysts, however, caution that infections are likely to surge as a result, delaying a swift reopening of the economy. Hong Kong’s Hang Seng index added 2.3% and has risen more than a fifth in the past month. Mainland China stocks also ticked higher, with the CSI 300 index of Shanghai- and Shenzhen-listed shares gaining 1%.

Source: PublicInvest Research - 12 Dec 2022