US: Consumer price inflation eased more than expected in Nov. US CPI eased more than expected in Nov to its lowest level in almost a year, bolstering the Fed’s plans to slow the pace of interest rate rises this week. The rate of increase in the CPI fell to 7.1% last month, lower than the 7.3% forecast by economists and down from 7.7% in Oct. It is the lowest level since Dec 2021. Overall CPI rose 0.1% from the previous month, less than the 0.4% increase in Oct. (Financial Times)
US: Existing-home sales to slide to 11-year low in 2023. Sales of previously owned US homes will fall for a second year in 2023 to their lowest annual total since 2012 when the housing market was still in a slow recovery from the sub-prime mortgage crisis, but sales prices should hold up. Existing-home sales, which have fallen each month since Jan as mortgage rates surged on the back of the Fed’s aggressive campaign to hike interest rates to control inflation, are projected to slide by another 6.8% to 4.78m in 2023. Sales through Oct of this year are just shy of 4.4m, and estimates the 2022 total will reach 5.13m units when Nov and Dec data are reported, down by more than 16% from 2021’s 6.12m. That year was the highest sales total since 2006, just ahead of the financial crisis. (Reuters)
EU: Euro zone bond yields drop as US inflation cools. Euro zone government bond yields slid after data showed US inflation slowed more than expected in Nov, raising hopes that the Fed may soon pause its aggressive interest rate hikes. Germany's 10-year government bond yield was last down 6 bps at 1.87%, well below the 11-year high of 2.53% hit in Oct. It stood about 2 bps lower before the US data was released, having touched its highest level in two weeks earlier in the session. The German 2-year yield was 9 bps lower at 2.103%. Yields move inversely to prices. (Yahoo Finance)
UK: Unemployment rate rises, wage growth strengthens. The UK jobless rate edged up again in the three months ended Oct as firms held back recruitment amid recession fears but wage growth remained strong, fueling pressure on the BoE to hike interest rates further in a bid to rein in inflation. The ILO jobless rate climbed to 3.7% in the three months to Oct. This was in line with expectations and up from 3.6% in the quarter to Sept. The employment rate increased 0.2pp on the quarter to 75.6%. The economic inactivity rate decreased 0.2pp to 21.5% in the Aug to Oct period as more people above 50 years returned to work. (RTT)
UK: Household finances to come under pressure in 2023. The BoE has cautioned about the rising pressure on British household finances due to the increased cost of living and rising mortgage payments. Pressure on UK household finances will increase over next year. Around 4m mortgage borrowers will be exposed to rate rises over the next year, the FPC observed. Falling real incomes, increases in mortgage costs and higher unemployment will add notable pressure on household finances. (RTT)
UK: BoE to slow rate hikes ahead of 'prolonged' recession. The BoE is likely to shift the gear down on interest rate hikes this week as the economy enters a 'prolonged' recession and inflation is seen slowing towards the 2% target in two years' time. Markets have penciled in a 50 bps rate hike, after the central bank delivered a 75 bps increase in Nov, which was the biggest in 33 years. The MPC is set to conclude the rate-setting meeting on 15 Dec. The nine member committee is likely to decide on the rate hike again in a split vote. (RTT)
Philippines: Trade deficit narrows on strong export growth. The Philippine trade deficit narrows in Oct from the last year, as exports rose at the fastest pace in over a year, while the pace of growth in imports slowed. The trade deficit declined to USD3.31bn in Oct from USD3.82bn in the same month last year. In Sept, the deficit was USD4.84bn. Exports logged a double-digit growth of 20.0% yearly in Oct, following a 7.1% rise in Sept. This was the fastest growth seen since May last year. Imports increased 7.5% annually in Oct, after a 14.4% growth in the previous month. Import growth eased to the lowest since Jan last year. (RTT)
Hong Kong: Industrial output contracts in Q3. Hong Kong's industrial production contracted in the 3Q, primarily caused by a slump in textile and apparel output. The index of industrial production for manufacturing industries as a whole declined 0.6% yearly in the 3Q, in contrast to a 2.7% gain in the 2Q. On a quarterly basis, industrial production fell a seasonally adjusted 2.6% in the 3Q. Textiles and wearing apparel production logged a fall of 4.6%, and that of food, beverages and tobacco slid 1.0%. Data also showed that production for sewerage, waste management and remediation activities declined 3.0% annually in the 3Q, after rising 0.6% in the previous three-month period. (RTT)
Hartalega (Neutral, TP: RM1.87): Buys land for RM54.32m to facilitate expansion plan. Glove maker Hartalega Holdings is buying land for RM54.32m for its expansion plan. The purchase price of RM54.32m for the land translates into RM20.78 per sq ft. The acquisition will be funded by internally generated funds or existing credit facilities of the group. The acquisition of the said land marks Hartalega's preparation for latest phase of growth, the exercise is estimated to be completed by July 12, 2023. (The Edge)
Apex Equity (Neutral, TP: RM1.03): ACE Group sells down stake after SC's legal action. ACE Credit (M) SB, a part of the ACE Group, has disposed of the bulk of its stake in Apex Equity Holdings, days after the Securities Commission Malaysia (SC) went to court to block ACE from taking control of Apex Equity. Apex Equity notified Bursa Malaysia on Dec 13 that ACE has ceased to be a substantial shareholder in the stockbroking group after disposing of 27.04m Apex Equity shares, representing a 13.34% stake, in the open market on Dec 9. ACE was previously the second largest shareholder in Apex Equity with a 14.98% stake, and following the sale it is left with with a 1.64% stake or 3.32m shares in the group. (The Edge)
Advancecon: Secures RM87m subcontract job from KEB. Advancecon Holdings has secured subcontract works worth RM86.7m from KEB Builders SB. The company accepted a letter from KEB for its appointment as the subcontractor for the "Preliminaries, Site Clearance and Earthworks, Geotechnical Works, Erosion Sediment and Control Plan" job. The overall subcontract period is 30 months, starting from Dec 13, 2022. The group intends to fund the subcontract via internally generated funds and/or external borrowings. (The Edge)
Pharmaniaga: To co-develop children's vaccine with annual market value of RM200m. Pharmaniaga’s unit signed a research collaboration agreement (RCA) with a Thailand-based company to develop a six-in-one combination vaccine for children’s healthcare with an annual market value of RM200m in Malaysia. Pharmaniaga’s wholly owned subsidiary Pharmaniaga LifeScience SB (PLS) will be working with BioNet-Asia Co Ltd to develop the hexavalent vaccine, the pharmaceutical company said in a filing with Bursa Malaysia on Dec 13. The initiative is in line with Pharmaniaga’s plan of establishing the world’s first halal vaccine plant. (The Edge)
APM Automotive: EPF ceases to be substantial shareholder. PM Automotive Holdings said the Employees Provident Fund (EPF) has ceased to be a substantial shareholder of the company. The pension fund’s stake in APM dropped below 5% after it sold 279,500 APM shares on Dec 8. The EPF emerged as a substantial shareholder in APM on Oct 5, 2016 with a 5.385% stake or 10.53m shares after acquiring one million shares in the automotive parts manufacturer. (The Edge)
IPO: Wellspire Holdings inks underwriting agreement with TA Securities for ACE market IPO. Wellspire Holdings (WHB) has inked an underwriting agreement with TA Securities Holdings for its upcoming initial public offering (IPO) on the ACE Market of Bursa Malaysia. WHB is a distributor of consumer-packaged foods in Thailand, focusing on snack foods. TA Securities will underwrite a total of 124.6bn WHB shares. The IPO entails a public issue of 124.6bn new shares and an offer for sale of 124.6bn existing ordinary shares. (BTimes)
The FBM KLCI might open higher today after global stocks rose on Tuesday after US consumer price figures showed inflation pressure in the world’s biggest economy continued to ease in November, bolstering the Federal Reserve’s arguments for a smaller interest rate rise when it meets this week. Annual consumer price growth in the US slowed to 7.1% in November, down from 7.7% in October and the smallest 12-month increase since December 2021. Month on-month inflation ticked up 0.1%, less than the 0.3% increase forecast by economists. The benchmark S&P 500 closed 0.7% higher and the tech-heavy Nasdaq Composite gained 1.1%. Both indices jumped more than 2% when Wall Street opened an hour after the inflation figures were released. Europe’s Stoxx 600 added 1.3% and London’s FTSE 100 rose 0.8%. The latest figures suggest that the Fed is all but certain to raise interest rates by 0.5 percentage points on Wednesday, ending a run of four consecutive 0.75 percentage point moves.
Back home, Bursa Malaysia ended in negative territory due to persistent selling in selected heavyweights led by plantation and telecommunication stocks, despite the upbeat mode on regional markets. At the closing bell, the benchmark FBM KLCI fell 4.26 points to 1,470.12 from Monday's closing of 1,474.38. In the region, Hong Kong’s Hang Seng index rose 0.7%, while Japan’s Topix added 0.4%. China’s CSI 300 fell 0.2%.
Source: PublicInvest Research - 14 Dec 2022
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Created by PublicInvest | Mar 21, 2024