Economy

Fed: Eurozone yields steady ahead of central banks. US Treasury yields were mixed ahead of an intense week for bond investors, with the release of fresh US inflation data and a policy decision by the Fed likely to set the tone for markets over the next few months. The Fed is largely expected to deliver a 50bps interest rate hike on Wed, slowing down from four consecutive 75bps increases as it tries to curb decades-high inflation without causing a recession. (Reuters)

US: Consumers see inflation easing considerably in the next year . Consumers grew more optimistic about inflation in Nov amid expectations that both food and energy price increases would be less severe in the coming year. Respondents see one-year inflation running at a 5.2% pace, down 0.7pp from the Oct reading. That’s the lowest level for that reading since Aug 2021 — the early days of the inflation surge that has gripped the economy and pushed the Fed into a series of aggressive interest rate hikes that is likely to continue this week. (CNBC)

US: New Zealand food prices rise 1.0% in Nov. Food prices in New Zealand were up a seasonally adjusted 1.0% MoM in Nov, after adding 0.8% in Oct. Individually, fruit and vegetable rose 0.9% MoM, while meat, poultry, and fish prices rose 1.2%, grocery food prices rose 0.8%, non-alcoholic beverage prices rose 0.8% and restaurant meals and ready-to-eat food prices rose 0.5%. On an annual basis, food prices jumped 10.7%, up from 10.1% in the previous month. (RTT)

UK: GDP growth masks recession ahead of BoE rate hike. The UK economy rebounded at a faster-than-expected pace in Oct with a strong contribution from the services activity, though the monthly figures mask the underlying recession. Later this week, the BoE is widely expected to shift the gear down on interest rate hikes. Markets have penciled in a 50bps rate hike for Thurs, after the bank delivered a 75 bps increase in Nov, which was the biggest in 33 years. Monthly real GDP expanded 0.5% in Oct, reversing a fall of 0.6% in Sept. GDP was forecast to gain 0.4% after the additional bank holiday for the State Funeral of HM Queen Elizabeth II depressed Sept GDP. (RTT)

UK: House prices log bigger than usual Dec drop. UK house prices declined more than they usually do during Dec as determined sellers reduced their prices in order to achieve a quicker sale as the economy slides into a recession. Average prices of property coming to the market declined 2.1% MoM, after a 1.1% fall in Nov. On a yearly basis, house price growth eased sharply to 5.6% in Dec from 7.2% a month ago. In the whole year of 2022, asking prices of sellers were 5.6% higher than a year ago, versus 6.3% in 2021. (RTT)

EU: German residential construction outlook bleak. Germany's residential construction sector outlook remained bleak amid rising cancellations and record low business expectations as high inflation, rising interest rates and less subsidies damp activity. Cancellations in the German residential property construction grew further in Nov, with the survey showing that the share of surveyed companies affected rose to 16.7% from 14.5% in the previous month. Meanwhile, pricing intentions eased only slightly with the relevant index dropping to 45.4 points, still very high, from 51.0 in the previous month. (RTT)

Markets

Maybank (Outperform, TP: RM9.70): Maybank Islamic aims to issue over 100,000 new eco-friendly credit cards in 2023. Maybank Islamic aims to issue over 100,000 new credit cards in 2023 that are eco-friendly and feature sustainable elements. In a statement on Dec 12, the bank said new credit cards will be available for its Amex, Mastercard and Visa Ikhwan lines and in a three-month campaign commencing from Dec 12 in conjunction with the unveiling of these new cards. (The Edge)

Maxis (Neutral, TP: RM4.00): Regional core network infrastructure improves connectivity in East Malaysia. Maxis has built a regional core network architecture in East Malaysia, namely in Kuching and Kota Kinabalu, to cater to all mobile user traffic and content reach with direct international content connectivity. The network provider said the network architecture would allow for a larger capacity of mobile user traffic in Sabah and Sarawak, providing improved user experience with higher speeds and lower latency, especially for video-related activities. (StarBiz)

Capital A (Neutral, TP: RM0.69): Launches new cross-border mobile gifting service for airasia Super App. Capital A has launched “airasia gifts”, the latest feature in its airasia Super App, in partnership with South Korea’s mobile platform company COOP Marketing Group. Users are now able to experience cross-border mobile gifting via airasia chat. The airasia Super App has set up the right infrastructure, such as airasia chat, which can facilitate mobile gifting easily, especially cross-border gifting. (The Edge)

Sunway: Sunway Healthcare invests RM400m to set up SMCP. Sunway Healthcare Group has invested about RM400m to set up the Sunway Medical Centre Penang (SMCP), its first hospital outside of the Klang Valley. The group plans to continue with phase two of SMCP’s development next year after getting the Ministry of Health’s approval. More hospitals will be set up, including the Damansara Selangor by the end of next year, another one in Ipoh, Perak in 2024, as well as in Kota Bahru, Kelantan and Iskandar, Johor, as well as a rehabilitation centre in Paya Terubong, Penang. (StarBiz)

UMW: Sold 39,034 vehicles in Nov as UMWT and Perodua hit record sales. The UMW group’s automotive sales surged to a new high in Nov 2022 as both UMW Toyota Motor (UMWT) and Perodua registered record sales. UMW delivered 39,034 units in Nov 2022, 11% higher than the 35,130 units registered in Oct 2022, as both companies continued to fulfil their encouraging outstanding bookings. It said year-to-date in Nov 2022, the UMW Group delivered a total of 341,390 units, 48% higher than the 230,355 units registered in the corresponding period of 2021. The Group expects sales to remain strong in Dec based on the encouraging bookings. (The Edge)

IPO: NationGate to raise RM165.5m under Malaysia's largest ACE Market listing. NationGate Holdings expects to raise RM165.5m from its listing exercise on the ACE Market of Bursa Malaysia. This would make it the largest listing on the ACE Market. With an issue price of 38 sen per share and an enlarged share capital totalling 2.1bn shares, the company is expected to have a market capitalisation of RM788.1m on its debut on Jan 12 next year. NationGate would add four surface mount technology assembly lines for its printed circuit board assembly services. As at Nov 14, the company has a monthly production capacity for SMT services of up to 1.26bn mounting points per month. (BTimes)

Market Update

The FBM KLCI might open higher after US stocks rose on Monday ahead of a potentially pivotal week for global financial markets, with central banks on both sides of the Atlantic expected to signal a big shift in their fight against inflation by slowing the pace of interest rate rises. After selling off last week, Wall Street’s benchmark S&P 500 closed 1.4% higher, while the tech-heavy Nasdaq Composite added 1.3%. The gains come ahead of crucial monetary policy meetings at the US Federal Reserve, the Bank of England and the European Central Bank, all of which are forecast to raise interest rates at a slower pace when they meet separately this week, despite stubbornly high rates of inflation. Across the Atlantic, Europe’s regional Stoxx 600 lost 0.6% and London’s FTSE 100 slipped 0.4%.

Back home, Bursa Malaysia ended marginally lower on Monday in tandem with the negative cues from the regional markets' performance amid heightened cautious sentiment. At the closing, the benchmark FBM KLCI fell 2.81 points to 1,474.38 from Friday's closing of 1,477.19. Most of the regional equities also kicked off the week lower, with Chinese technology and property stocks leading losses, having rallied at the end of last week. Hong Kong’s Hang Seng index fell 2.2% while China’s CSI 300 lost 1.1% and South Korea’s Kospi lost 0.7%. Japan’s Topix shed 0.2%.

Source: PublicInvest Research - 13 Dec 2022