Economy
- US: Fed's Mester sees rates rising more than most policy makers have forecast. Cleveland Fed President Loretta Mester said she believes the US central bank will have to raise interest rates higher than the level most policy makers cited in their Fed forecasts this week. Against the Fed’s projection that the current federal funds rate of between 4.25% and 4.5% will rise to 5.1% next year, Mester said, “I’m a little higher than the median.”, adding once the Fed finishes raising rates, it will need to hold them there for "quite a while in order to get inflation on a sustainable downward path." (Reuters)
- US: Fed could hold rates at peak into 2024, Daly signals. San Francisco Fed President Mary Daly said it's a "reasonable" to think that once the Fed policy rate gets to its peak, it will stay there for nearly a year, and added she's prepared to keep it there longer if needed. "Everybody has rates holding for '23," Daly said, referring to interest-rate projections from all 19 Fed policymakers published earlier this week, when they also signalled they will likely need to lift the policy rate to 5.1% in coming months. (Reuters)
- US: Business activity slumps in Dec, price pressures ease, S&P Global survey. US business activity contracted further in Dec as new orders slumped to the lowest level in just over 2-1/2 years, but softening demand helped to significantly cool inflation. S&P Global said its flash US Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 44.6 this month from a final reading of 46.4 in Nov. It was the sixth straight month that the index remained below the 50 mark, which indicates contraction in the private sector. (Reuters)
- EU: Eurozone bond yields jump a day after hawkish ECB. Eurozone borrowing costs rose as investors revised their forecasts for bond yields after the ECB pledged further monetary tightening to fight inflation. The ECB eased the pace of its interest rate hikes but stressed significant tightening remained ahead and laid out plans to drain cash from the financial system. Germany's 10-year government bond yield, the benchmark of the bloc, touched 2.208%, its highest in a month, and was last up 8 basis points at 2.17%. (Reuters)
- EU: Eurozone inflation moderates less than estimated. Eurozone inflation slowed for the first time since the middle of 2021 but the rate was slightly above the preliminary estimate in Nov. Inflation eased to 10.1% in Nov from 10.6% in Oct, final data from Eurostat revealed. However, inflation was slightly above the flash estimate of 10.0%. The annual rate slowed for the first time since June 2021. Core inflation that excludes energy, food, alcohol and tobacco, held steady at 5.0% in Nov, in line with the flash estimate published on Nov 30. (RTT)
- EU: Eurozone trade deficit narrows amid softer fall in exports. Euro area trade gap widened in Oct amid a faster fall in imports than exports, data from Eurostat showed. The seasonally adjusted trade deficit dropped to EUR28.3bn in Oct from EUR36.4bn in Sept. The trade balance also remained negative for the thirteenth successive month in Oct. Both exports and imports fell by 0.4% and 3.2%, respectively, in Oct from a month ago. On an unadjusted basis, the trade balance showed a deficit of EUR 26.5bn in Oct compared to a surplus of EUR0.6bn in the previous year. (RTT)
- UK: Retail sales unexpectedly fall amid cost of living crisis, weak confidence. UK retail sales declined unexpectedly in Nov as the rising cost of living and weak consumer sentiment dragged down consumer spending. Retail sales volume fell 0.4% from Oct, when turnover was up by revised 0.9%, data from the Office for National Statistics showed. Sales were expected to gain 0.3%. Sales excluding auto fuel decreased 0.3%, in contrast to the 0.7% rise in Oct and economists' forecast of +0.3%. (RTT)
- Hong Kong: Jobless rate falls in Nov. Hong Kong's unemployment rate declined in the three months ended Nov with unemployment falling across almost all the major economic sectors, official data showed. The unemployment rate dropped to 3.7% in the Sept to Nov period from 3.8% in the Aug to Oct period, the latest labour force statistics from the Census and Statistics Department revealed. The underemployment rate fell slightly to 1.6% in three months to Nov from 1.7% in the preceding period. (RTT)
- Singapore: Exports fall more than forecast on weaker demand. Singapore's non-oil exports declined for the second straight month in Nov, and at a faster-than-expected pace, amid falls in both shipments of electronic and non-electronic goods, data from Enterprise Singapore showed. Non-oil domestic exports decreased 14.6% YoY in Nov, which was worse than the 6.1% fall in Oct. Economists had expected a 7.4% drop. Electronic exports plunged 20.2%, while non-electronic NODX dropped 12.8%. (RTT)
Markets
- DRB-Hicom (Outperform, TP: RM1.95): Syed Mokhtar weighs options for DRB-Hicom. Tycoon Tan Sri Syed Mokhtar Albukhary is conducting a strategic review of conglomerate DRB-Hicom, according to people with knowledge of the matter. The businessman is in talks with potential advisers on options that could involve a buyout of the firm, said the people, who asked not to be identified as the process is private. Syed Mokhtar is also weighing a stake sale or other ways to further streamline DRB-Hicom’s businesses. (StarBiz)
- UEM Sunrise (Neutral, TP: RM0.33): Aborts plan to sell stake in South African firm. Property developer UEM Sunrise has aborted plans to dispose of its 80.4% stake in South Africa-based RocUnion Proprietary Ltd for 142.6m rand (RM38m). UEM Sunrise said both the group and the purchaser, Olive Investment Trust, have mutually agreed to discontinue with the proposed divestment since the settlement of the consideration was not concluded and settled within the prescribed time. (The Edge)
- SYF Resources: Gets conditional nod from SC for reverse takeover by M&A Securities. SYF Resources has received conditional approval from the SC for a reverse takeover by M&A Securities SB, the stockbroking arm of Insas. In a statement on 16 Dec, the furniture maker said the reverse takeover will be carried out in tandem with various proposals. (The Edge)
- Ni Hsin: Group’s unit collaborates with Sirim to setup lithiumion battery recycling plant. Ni Hsin EV Tech SB (NH EV Tech), a wholly-owned subsidiary of Ni Hsin Group, has signed a strategic collaboration agreement with Sirim to set up a lithium-ion battery recycling plant in Malaysia through a public-private partnership funding model. Both parties will also cooperate on providing an ecosystem for a circular economy model to mitigate the impact on the environment due to lithium-ion batteries being processed illegally in the country. (New Straits Times)
- Mega Sun City: Changes name to Rekatech Capital. Mega Sun City Holdings has changed its name to Rekatech Capital, according to Bursa Malaysia’s announcement (16 Dec). The company’s new stock short name will be quoted as “Rekatech” with effect from 21 Dec, replacing old stock short name “Megasun”, Bursa said. In an earlier Bursa filing, the company said it received the certificate on the change of name from the Companies Commission of Malaysia on Thursday. (New Straits Times)
- Artroniq: ICT outfit Artroniq adopts 30% dividend payout policy. Artroniq (formerly known as Plastrade Technology) has adopted a dividend policy that aims to distribute at least 30% of the company’s PAT, excluding unrealised income from adjustments due to accounting policy that are non-cash, as a dividend for 2023 to its shareholders. Any dividend will be paid only if approved by the company’s board of directors or shareholders, as the case may be, out of funds available for such distribution. (The Edge)
- F&N: Announces final single-tier final dividend of 33 sen. F&N has declared a final single-tier dividend of 33 sen per share for the financial year ended 30 Sept 2022. Its ex-date is 19 Jan 2023 followed by the entitlement date on 20 Jan 2023, and payable on 10 Feb 2023. This is the second dividend announced for its FY2022 after the first dividend of 27 sen per share announced on 27 April, totalling 60 sen in 2022. The group’s highest final dividend payment on record was 47 sen in FY2011. (The Edge)
MARKET UPDATE
The FBM KLCI might open lower today as US stocks fell for a second consecutive week after investors heard hawkish messages from central banks in the US and Europe that set expectations that interest rates would remain higher for longer. Wall Street’s S&P 500 fell 2.1% on the week, including a 1.1% drop in Friday’s session. The tech-heavy Nasdaq Composite closed 1% lower on Friday, taking its drop for the week to 2.7%. Friday’s session had the largest expiry of options in two years in an event known as triplewitching, which typically boosts trading volumes and volatility. Europe’s Stoxx 600 fell 1.2% and London’s FTSE 100 lost 1.3%. The moves come after a week in which the Federal Reserve, the Bank of England and the European Central Bank all slowed the pace of their interest rate rises while warning that further tightening of monetary policy would be required.
Back home, Bursa Malaysia ended the week in positive territory, after late buying of selected plantation heavyweights lifted the benchmark index by 0.78%, despite volatility in regional markets. At the closing bell, the FBM KLCI had risen by 11.41 points to 1,478.54, from Thursday's closing at 1,467.13. The regional stocks were mixed, with Hong Kong’s Hang Seng index up 0.4%, Japan’s Topix down 1.2% and South Korea’s Kospi flat. China’s CSI 300 was unchanged.
Source: PublicInvest Research - 19 Dec 2022