Economy

US: Business equipment borrowings rise 9% in Nov. US companies borrowed 9% more to finance their equipment investments in Nov from a year earlier, industry body Equipment Leasing and Finance Association (ELFA) said. The companies signed up for USD8.6bn in new loans, leases and lines of credit last month, compared with USD7.9bn a year earlier, according to ELFA. Borrowings were up nearly 6% from Jan. “Rising interest rates seem to have little or no effect on origination volume in Nov,” ELFA CEO Ralph Petta said in a statement. “Labour markets are stable, inflation woes appear to be abating, consumers are spending, and businesses continue to expand and grow: a recipe for stable growth by providers of equipment financing. (Reuters)

US: Higher mortgage rates depress US single-family housing starts, building permits. US single-family homebuilding tumbled to a 2-1/2-year low in Nov and permits for future construction plunged as higher mortgage rates continued to depress housing market activity. The dour report from the Commerce Department followed on the heels of news that confidence among homebuilders plummeted for a record 12th month in Dec. It put residential investment on track to contract for the seventh consecutive quarter, which would be the longest such stretch since the collapse of the housing bubble triggered the Great Recession. (Reuters)

EU: Eurozone current account deficit lowest in eight months. The euro area current account deficit narrowed sharply to the lowest in eight months in Oct, underpinned by the improvement in foreign trade. The current account deficit totalled EUR0.4bn versus a EUR8.06bn shortfall in Sept, data published by the ECB. The current account balance has remained negative since March. The latest shortfall was the smallest in the current sequence of negative balance. Data showed that the deficit on goods trade declined notably to EUR3bn from EUR 11bn. At the same time, services trade showed a surplus of EUR13bn, more than doubled from EUR6bn in Sept. (RTT)

EU: German exporters cautiously optimistic. Confidence among German exporters improved slightly in Dec, as they expect better demand conditions for the automotive and electrical sector, survey results from the ifo Institute showed. The ifo Export Expectations index rose to a 6-month high of 1.6 points from 0.9 points in Nov. German manufacturers are cautiously optimistic as they head into the New Year. Despite a slight drop from the previous month, the automotive industry continues to expect considerable growth in the near future. (RTT)

China: Leaves 1-year lending rate unchanged at 3.65%. China retained its benchmark lending rate for the fourth straight month, providing no hope for the beleaguered housing market and the struggling economy. The People's Bank of China kept its one-year loan prime rate, or LPR, unchanged at 3.65%. Similarly, the five year LPR, the benchmark for mortgage rates, was retained at 4.30%. The bank had reduced the five-year LPR rate by 15 basis points each in May and Aug, and by 5 basis points in Jan. (RTT)

Japan: BOJ widens 10-year JGB yield target band. The BOJ expanded its 10-year Japanese government bond yield target band, surprising market participants, pushing the yen sharply higher, and led to a fall in government bonds. At the policy meeting of the BOJ, board members unanimously decided to maintain a negative interest rate of -0.1% on current accounts that financial institutions maintain at the central bank. The bank will also continue to purchase a necessary amount of JGBs without setting an upper limit so that 10-year JGB yields will remain at around 0%. (RTT)

Taiwan: Nov export orders plunge, China's COVID surge clouds outlook. Taiwan’s export orders contracted at the worst rate in more than a decade in Nov, hit by a plunge in China demand and generally weaker global consumer spending because of inflation and interest rate hikes. The island’s export orders last month, a bellwether for global technology demand, were 23.4% lower than a year earlier at USD50.1bn. That was higher than analysts’ expectations of an 11.2% decline. (Reuters)

Australia: RBA minutes say policymakers discussed pausing rate hikes. Policymakers of the RBA discussed pausing the interest rate hike at the last meeting of the year, citing the lagged effect of the previous adjustments. Nonetheless, further rate hikes are on cards based on incoming data. At the Dec meeting, policymakers observed that they should proceed cautiously given the uncertain environment. However, the status quo on interest rates might not be warranted as inflation is forecast to take several years to return to the target even with further increases in the cash rate, the minutes showed. (RTT)

Thailand: Nov car production rises but sales, exports drop. Car production in Thailand rose 15.0% in Nov from a year earlier to 190,155 units, helped by improvement in the supply of chips, an industry body said. Production rose 10.83% YoY in Oct, the Federation of Thai Industries (FTI) said. Car exports fell 10.98% in Nov from a year earlier, however, after a rise of 15.51% in the previous month, due to a lack of space for loading cars to be shipped out. Domestic car sales in Nov dropped 4.79% to 68,284 vehicles due to flooding in several parts of the country. (Reuters)

Markets

Opcom: Shareholders green-light Opcom's RM90m acquisition, diversification into telecom infra biz. Shareholders of Opcom Holdings have approved the proposed acquisition of the entire equity interest in T&J Engineering SB (TJE) for RM90m as well as its subsequent proposed diversification into the telecommunication network infrastructure solutions business. The purchase price will be satisfied by a combination of cash and new ordinary shares in the group. (The Edge)

PBA Holdings: Penang to maintain water intake fee at 3 sen per cubic metre. The Penang government has decided to maintain the water intake fee to be imposed for 2023 at 3 sen per cubic metre, based on the annual actual production volume for the year. The water intake fee is imposed by the government based on the power given to the state pursuant to Article 110 of the Federal Constitution. (The Edge)

JAKS: Seeks to raise up to RM74.4m from private placement for loan repayment, working capital. JAKS Resources has proposed to undertake a private placement of up to 292.2m new shares in the group, which represents 10% of its existing shares, at an issue price to be determined and announced later pending approvals. The group aims to raise up to RM74.4m based on an illustrated issue price of 25.4 sen per placement share. (The Edge)

TDM: Loses appeal in RM260m environmental loss lawsuit. TDM's 93.75%-owned unit has failed in its appeal against Indonesia's Ministry of Environment and Forestry in relation to a fire incident in 2019 at its land in West Kalimantan province. PT Rafi Kamajaya Abadi, in which TDM is in the midst of divesting its interest, has been ordered by the Pontianak High Court to pay a compensation of 188.98bn rupiah (RM53.5m) to the National Account of Indonesia for environmental loss. (The Edge)

GIIB Holdings: Three GIIB shareholders call for EGM to remove director. Three GIIB Holdings shareholders, who collectively own more than 10% of shares in the group, have requisitioned an EGM to be convened to remove Wong Weng Yew as director. The shareholders are Tai Boon Wee, Wong Ping Kiong and Teng Pik Sun. Tai has been the rubber compound provider's executive chairman and CEO since Feb 17 last year, while Ping Kiong was appointed as executive director in Aug this year. (The Edge)

Citaglobal: Major shareholders' stake little changed at 50.23% after close of MGO. Citaglobal major shareholders' stake in the group remains at 50.23% after the close of their mandatory general offer (MGO). Only 17,365 shares, or less than 0.01% of the group's total share base, were sold to the offerors, namely TIZA Global SB, Tan Sri Mohamad Norza Zakaria and persons acting in concert. This raised the offerors' collective shareholdings in the group to 943.32m shares from 943.31m. (The Edge)

Malaysia Airports Holdings: Records 5.2m domestic passenger movements in Nov, 60% of pre-pandemic volume. MAHB recorded 5.2m passenger movements for its 39 airports in the country in Nov, reaching 60% of what was posted for the same month in 2019, before the Covid-19 outbreak in 2020. This was more than double the 2.3m passenger movements recorded for the same month last year. Airports recorded 2.9m domestic passenger movements last month, despite Nov being a typically slower month. (The Edge)

Market Update

US markets snapped a 4-day losing streak ahead of key data due out later this week which will provide insights on the health of the economy. Sales data for existing homes and new homes are set to be released, in addition to November’s personal consumption expenditure report. Investors also brushed off a surprise move by the Bank of Japan (BoJ) to widen the cap on its 10-year bond yields. The Dow Jones Industrial Average and S&P 500 gained 0.3% and 0.1% respectively. The Nasdaq Composite inched 0.01% higher meanwhile. European markets were mostly lower however as investors assessed the interest outlook for 2023 while also contemplating on the BoJ’s recent move in modifying its yield curve control tolerance range. This comes against the backdrop of hawkish tones by various European central banks following various hikes last week. Germany’s DAX and France’s CAC 40 both slipped 0.4% though UK’s FTSE 100 inched 0.1% higher. Markets in Asia were also mostly lower with the Nikkei hardest hit by the BoJ’s move and consequential strengthening of the Yen. The benchmark slumped 2.5% on the day. The Shanghai Composite and Hang Seng indices fell 1.1% and 1.3% meanwhile.

Source: PublicInvest Research - 21 Dec 2022