Economy

US: Retail sales drop most in 11 months, missing estimates. US retail sales fell in Nov by the most in nearly a year, reflecting softness in a range of categories that suggest some easing in Americans’ demand for merchandise. The value of overall retail purchases dropped 0.6% last month after rising 1.3% in Oct. Excluding gasoline and autos, retail sales were down 0.2%. The figures aren’t adjusted for inflation. 9 of 13 retail categories fell last month, including electronics, furniture and building materials stores. Vehicle sales also declined, due in part to a drop in the prices of used cars and trucks. (The Edge)

US: Business inventories rise 0.3% in Oct, slightly less than expected. With increases in manufacturing and wholesale inventories partly offset by a dip in retail inventories, US business inventories rose by slightly less than expected in the month of Oct. Business inventories rose by 0.3% in Oct after inching up by a revised 0.2% in Sept. Economists had expected business inventories to climb by 0.4%, matching the increase originally reported for the previous month. (RTT)

EU: ECB hikes rates, sees significant increases ahead as it announces plan to shrink balance sheet. The ECB opted for a smaller rate hike at its meeting, taking its key rate from 1.5% to 2%, but said it would need to raise rates significantly further to tame inflation. It also said that from the beginning of March 2023 it would begin to reduce its balance sheet by EUR15bn (USD15.9bn) per month on average until the end of the 2QFY23. It said it would announce more details about the reduction of its asset purchase program (APP) holdings in Feb, and that it would regularly reassess the pace of decline to ensure it was consistent with its monetary policy strategy. (CNBC)

EU: France inflation steady at record high 6.2%. France's consumer price inflation held steady at its record high in Nov as initially estimated. Consumer price inflation came in at 6.2% in Nov, the same as in Oct, which was the strongest inflation since 1985. That was in line with flash data published on Nov 30. The Bank of France expects inflation to come in at 5.8% on average this year and in a range between 4.2% and 6.9% in 2023. (RTT)

UK: BoE hikes key rate by 50 bps. The BoE lifted its benchmark rate for the ninth consecutive meeting on Thursday but moderated the pace of tightening from the previous session's 75 bps hike amid rising concerns that the UK economy is in recession. The rate setting committee of the BoE raised the bank rate by 50 bps to 3.50%, the highest since Oct 2008. Six members of the MPC assessed that a 0.5pp increase in bank rate was warranted at the meeting. A majority observed that a 0.5pp increase at this meeting would help to bring inflation back to the 2% target sustainably in the medium term, and to reduce the risks of a more extended and costly tightening later. (RTT)

Japan: Tertiary activity rebounds with 0.2% growth. Japan's tertiary activity rebounded in Oct, largely driven by real estate and living, and amusement-related services. The seasonally adjusted tertiary activity index rose 0.2% MoM in Oct, reversing a 0.2% fall in Sept. Among the individual components, the indexes for living and amusement-related services, real estate, information and communications, finance and insurance, business-related services, and goods rental and leasing increased in Oct. (Reuters)

Markets

UEM Sunrise (Neutral, TP: RM0.33): Injects Johor land into JV with CapitaLand to expand Nusajaya Tech Park. UEM Sunrise is injecting freehold plots measuring a total of 94.9ha in Johor into its joint venture with CapitaLand Development of Singapore — Nusajaya Tech Park SB (NTPSB) — for the expansion of new industrial phases in the Nusajaya Tech Park. UEM Sunrise has inked two sale and purchase agreements with NTPSB for the sale of the plots for RM289.2m.. (The Edge)

Inta Bina: Gets RM93.73m construction contract from Sime Darby Property. Inta Bina Group has secured a RM93.73m contract for superstructure works from Sime Darby Property (KL East) SB in Selangor. The contract is for the construction of a 34- storey serviced apartment, comprising 234 units. The construction period is 28 months and the date of commencement as per the letter of the award shall be on Jan 16, 2023. (The Edge)

Insas: Conditional approval for proposed RTO of SYF to list M&A Securities. The Securities Commission Malaysia (SC) has granted a conditional approval to Insas’s proposal to list its stockbroking arm M & A Securities SB via a reverse takeover of furniture maker SYF Resources. SYF Resources is required to revise some of its proposals based on the terms by the regulator. (The Edge)

Comintel Corp: Wins building works contract worth RM170.7m. Comintel Corporation has accepted a letter of award from Butirjaya Maxim Development SB, worth RM170.7m, on Dec 15. The contract involves the main building works of a proposed affordable housing in Kampung Kasipillay, Kuala Lumpur. The contract commences on Dec 15 and ends 28.5 months from the commencement date, which is around the second quarter of 2025. (The Edge)

Ni Hsin: In strategic tie-up with SIRIM to set up lithium-ion battery recycling plant. Ni Hsin Group has signed a strategic collaboration with SIRIM to set up a lithium-ion battery recycling plant in Malaysia. The collaboration was inked by its wholly-owned subsidiary Ni Hsin EV Tech SB (NH EV Tech) on Dec 15. Pursuant to the strategic collaboration, NH EV Tech and SIRIM will commence discussions and negotiations on the structures and terms of the proposal. (The Edge)

IHI Corp: Partners Gentari Hydrogen to explore green ammonia production, sales in Malaysia. IHI Corp has partnered with Gentari Hydrogen SB, a subsidiary of Petroliam Nasional, to explore green ammonia production and sales in Malaysia. The company has entered into a MoU with Gentari Hydrogen to evaluate the feasibility of leveraging the abundant solar resources of Malaysia to produce and sell green ammonia derived from renewables. Under the MoU, both parties will consider a business model for ammonia production in Johor, Malaysia. (BTimes)

Reach Energy: Shareholders approve RM206.51m debt settlement. Reach Energy has obtained shareholders approval for the settlement of debt amounting to RM206.51m. In a statement, the company said the debt settlement entailed the offset of RM206.51m debt or 76% from a total of RM279.36m owing to Super Racer Ltd (SRL) via the issuance of 1.03bn settlement shares to SRL at an issue price of RM0.20 per share. Upon completion, SRL will hold 1.03bn Reach Energy's shares, representing approximately 48.5% of the enlarged issued share capital of the company. (BTimes)

Market Update

The FBM KLCI might open lower as global stocks tumbled after a broad group of central banks raised interest rates and warned of further increases to come in the fight to tame inflation. The benchmark S&P 500 index fell 2.5% on Thursday, its biggest daily loss since early November, following hawkish warnings on interest rates from central banks in the US, UK, Europe and Switzerland over the past day. The tech-heavy Nasdaq Composite dropped 3.2%, also its biggest loss since November. In Europe, the broad Stoxx 600 fell 2.8%, its biggest loss since May. The FTSE 100 fell 0.9% as the BoE raised its rate to 3.5% while warning that further rate rises were likely.

Back home, Bursa Malaysia ended in the negative territory in tandem with heavy selling across the region as investors tread cautiously amid a hawkish tone on the global interest rate hike. At the closing bell, the benchmark FBM KLCI declined by 1.08% or 16.04 points to 1,467.13 from Wednesday's closing of 1,483.17. The regional markets followed US equities lower, with Hong Kong’s Hang Seng index down 1.6%, while Japan’s Topix lost 0.2% and China’s CSI 300 traded flat.

Source: PublicInvest Research - 16 Dec 2022