Economy

US: Fed raises interest rates half a point to highest level in 15 years. The Fed raised its benchmark interest rate to the highest level in 15 years, indicating the fight against inflation is not over despite some promising signs lately. Keeping with expectations, the rate-setting FOMC voted to boost the overnight borrowing rate half a pp, taking it to a targeted range between 4.25% and 4.5%. The increase broke a string of four straight three-quarter point hikes, the most aggressive policy moves since the early 1980s. (CNBC)

US: Import prices decrease for fifth straight month in Nov. Import prices in the US declined for the fifth consecutive month in Nov. Import prices slid by 0.6% in Nov after falling by a revised 0.4% in Oct. Import prices expected to decrease by 0.5% compared to the 0.2% dip originally reported for the previous month. The slightly bigger than expected drop in import prices partly reflected a continued slump in prices for fuel imports, which dove by 2.8% in Nov after tumbling by 2.7% in Oct. (Reuters)

EU: German economy to undergo shallow recession. Germany is set to experience a less severe recession next year as the economy would recover by the spring and rebound strongly with incomes rising faster than prices. GDP is forecast to grow 1.8% this year, revising up from its earlier projection of 1.6% from Sept. Although GDP will shrink in the winter 2H2022 and 1H2023, pushing the largest euro area economy into a recession, the region should recover at stronger rates in the 2H. (RTT)

EU: Swiss producer and import prices rise in Nov. Switzerland's producer and import prices increased in Nov. Producer and import prices rose 3.8% YoY in Nov. The PPI advanced 2.8% annually in Nov, and import prices grew 5.8%. Compared to previous month, producer and import prices declined 0.5% in Nov. Prices declined the most in pharmaceutical and chemical products, and petroleum and natural gas, while, petroleum products became more expensive, the agency said. (RTT)

UK: Inflation slows on lower transport cost. UK consumer price inflation slowed more-than-expected in Nov from a 41-year high in Oct as transport costs rose at a weaker pace, but elevated prices and higher interest rates continue to squeeze household finances. Consumer prices logged an annual increase of 10.7% in Nov. Inflation rate eased from 11.1% in Oct, which was the highest since 1981, and was also weaker than forecast of 10.9%. (RTT)

UK: House price growth rises in Oct. UK house price inflation accelerated in Oct due to the low base of comparison. House prices advanced 12.6% YoY in Oct, up from 9.9% in Sept. The annual increase was mainly due to the base effect as prices decreased by GBP 6,000 between Sept and Oct 2021, following changes to Stamp Duty Land Tax. The average UK house price hit a record GBP 296,000 in Oct. House prices gained by seasonally adjusted 0.7% MoM, following an increase of 0.5% in the previous month. (RTT)

South Korea: Export prices rise 8.6% on year in Nov. Export prices in South Korea were up 8.6% YoY in Nov, slowing from 13.5% in Oct. Import prices climbed an annual 14.2%, easing from 19.8% in the previous month. Export prices fell 5.2% MoM and import prices fell 5.3% MoM. Individually, exports of agriculture products fell 2.1% MoM and gained 8.1% YoY, while manufacturing products sank 5.2% MoM and advanced 8.6% YoY. (RTT)

Markets

TM (Outperform, TP: RM6.63): Consolidates business to strengthen fixed-mobile convergence. Telekom Malaysia (TM) on Dec 14 announced an internal reorganisation, which involves the transfer of its business in Malaysia to a single operating entity named TM Technology Services SB (TM Technology). (The Edge)

Comments: The reorganization will involve the transfer of unifi, TM One and TM Wholesale. Currently, only unifi mobile is parked under TM Technology, which was formerly known as Webe Digital. This is to enable the group to achieve operational efficiencies, streamline processes and simplify customer touchpoints to provide more seamless customer experience. By incorporating its diverse businesses, TM aims to reinforce its fixed-mobile convergence leadership. However, this proposed reorganization will not have any financial impact as it does not involve any issuance of new shares.

T7 Global: Partners with Siemens and bagged KLIA's baggage handling system. T7 Global together with Siemens Logistics, has been awarded a major contract to modernise the baggage handling system (BHS) at Terminal 1 KL International Airport in Sepang, Selangor. The order covers the systematic phase-out of the existing system as well as the design, installation and commissioning of a new BHS. The BHS would also feature the efficient VarioBelt belt conveyor. With VarioStore, Terminal 1 is getting a modern early bag store (EBS) that will give the airport a storage capacity of 2,500 spaces. (BTimes)

Nylex: Inks letter of intent with CRRC on construction of LRT project in JB. Nylex (Malaysia) has proposed to enter into discussions with China-based CRRC Changchun Railway Vehicles Co Ltd on the construction of a light rail transport (LRT) system in Johor Bahru. The project, which is to be an integrated property development using the “transit-oriented development”, is subject to an ongoing feasibility study being completed and the grant of the concession award by the Johor government. (The Edge)

K-One: Green light to sell acne patches. K-One Technology has secured approval from the Ministry of Health’s Medical Device Authority (MDA) to distribute and sell acne patches primarily used for quick healing and reducing redness or inflammation of acne. MDA has approved the distribution and sale of the patches for a five-year period from Dec 13, 2022 to Dec 12, 2027. The group will sell acne patches in Malaysia as an authorised representative of China-based acne patch manufacturer Wuhan Huawei Technology Co Ltd (WH Tech). (The Edge)

MGB: Collaborates with Invest Energy on clean energy solutions for Kerteh industrial park. MGB inked a framework agreement with Investment Energy for the potential collaboration, which includes the potential design, finance, operation, use, and/or maintenance of clean energy solutions by IESB in about 10 acres of land within KTIP that RCSB will provide. MGB is the developer and operator of KTIP. (The Edge)

Pestech: Signs MOU to undertake feasibility studies on solar based projects in Cambodia. Pestech International is collaborating with a Cambodian company to produce two feasibility studies pertaining to the construction or ownership of solar-based assets in Cambodia. Under the MOU, the two companies would cooperate to complete the feasibility studies, and formulate the licence and approval strategy, while embedding the requirements of clean energy-generation. (The Edge)

Market Update

The FBM KLCI might lose a few points at the opening after US stocks turned lower on Wednesday after the Federal Reserve raised interest rates by half a percentage point against a backdrop of cooling inflation. Wall Street’s benchmark S&P 500 closed 0.6% lower following an afternoon of choppy trading, while the technology-heavy Nasdaq Composite ended the day 0.8% lower. Both indices had been down more than 1% during Fed chair Jay Powell’s press conference. The moves followed gains in the previous session after US consumer price inflation eased more than expected in November to its lowest level in almost a year. The Fed’s unanimous decision on Wednesday took its so-called target range for interest rates to 4.25% to 4.5%. It also ended a string of larger 0.75 percentage point increases as the US central bank aggressively tightened monetary policy to curb inflation. Across the Atlantic, the regional Stoxx Europe 600 closed flat and London’s FTSE 100 slipped 0.1%, despite UK inflation slowing to 10.7% in November, down from 11.1% in October.

Back home, Bursa Malaysia rebounded from Tuesday's loss to end in positive territory as bargain-hunting emerged, in line with the regional markets’ uptrend performance. At the closing bell, the benchmark FBM KLCI rose 0.89% or 13.05 points to 1,483.17 from Tuesday's closing of 1,470.12. The regional markets finished mixed with the Nikkei 225 gained 0.72% while the Hang Seng was higher by 0.39%. The Shanghai Composite was flat.

Source: PublicInvest Research - 15 Dec 2022