Economy

US: Consumer confidence rebounds. US consumer confidence rose to an eight-month high in Dec as inflation retreated and the labour market remained strong, but fears of a recession persisted, resulting in fewer households planning to make big-ticket purchases over the next six months. Other data showed sales of previously owned homes falling for a 10th straight month in Nov, the longest such stretch since 1999. The economy is on recession watch as the Federal Reserve, which is in the midst of its fastest interest rate hiking cycle since the 1980s, wages war on inflation by trying to cool demand for everything from housing to labour. (Reuters)

US: Existing home sales fall for 10th straight month in Nov. US existing home sales slumped to a 2-1/2 year low in Nov as the housing market continued to be squeezed by higher mortgage rates. Existing home sales plunged 7.7% to a seasonally adjusted annual rate of 4.09m units last month, the lowest level since May 2020, the National Association of Realtors said. Outside the plunge during the first wave of the COVID-19 pandemic in the spring of 2020, this was the lowest level since Nov 2010. Sales have now declined for 10 straight months, the longest such stretch since 1999. They dropped in all four regions in Nov. (Reuters)

US: Current account deficit shrinks in third quarter. The US current account deficit narrowed sharply in the third quarter as exports jumped to a record high, data showed. The Commerce Department said that the current account deficit, which measures the flow of goods, services and investments into and out of the country, contracted 9.1% to USD217.1bn last quarter. That was the smallest gap since the second quarter of 2021. The current account gap represented 3.4% of GDP, down from 3.8% in the second quarter. That was the smallest share in two years. The deficit peaked at 6.3% of GDP in the fourth quarter of 2005. (Reuters)

US: New vehicle sales to fall in Dec as high prices deter buyers. US total new vehicle retail sales are expected to decline in Dec as high vehicle prices and rising borrowing costs pushed consumers to cut back spending, a report from industry consultants J.D. Power-LMC Automotive showed. The average monthly payment for a new vehicle loan in Dec was USD718, up USD47 from a year ago, per the report. Retail sales of new vehicles this month are expected to touch over 1.04m units, down 2.8% from last year. (Reuters)

EU: Euro zone yields edge down, hawkish central banks still in focus. Eurozone borrowing costs edged lower on Wed, with short dated yields hovering near their highest in more than a decade as investors stayed focused on rising bond supply and central banks’ commitment to fight inflation. The BOJ shocked markets with a surprise tweak to its bond yield control that allows long-term interest rates to rise more, but analysts expect further spillover effects to be limited. (Reuters)

EU: German consumer sentiment maintains upward trajectory. German consumer sentiment is set to extend its recovery heading into the new year as government relief measures meant to take the bite out of soaring energy prices seem to be having an effect, a GfK institute survey showed. The institute said its consumer sentiment index rose to -37.8 heading into Jan from a slightly revised reading of -40.1 in Dec, and above forecasts from analysts polled by Reuters of -38.0. However, despite the slight improvement, consumer confidence is still at a low point. Oct had marked the lowest reading in over a decade at -42.8. (Reuters)

UK: Retail sales pick up unexpectedly in Dec. British retailers reported an unexpected pick-up in demand in Dec, but expect consumer spending to slide again in 2023 as shoppers are pressured by the rising cost of living, a survey from the Confederation of British Industry showed. The CBI’s monthly distributive trades index rose to +11 in Dec from -19 in Nov, well above both the -21 forecast by retailers and the -23 median in a Reuters poll of economists. However, for Jan retailers see the sales balance falling back to -17. (Reuters)

Hong Kong: Records highest quarterly net outflows in a year. Hong Kong’s portfolio investment saw a net outflow of HKD239.17bn (USD30.7bn) during the July to Sept quarter, the highest in a year, as investors pulled money out from equities and investment funds amid lacklustre returns. The quarterly outflow rose 34.4% from the previous quarter when net outflows totalled HKD177.9bn. (Reuters)

South Korea: Nov producer inflation falls to 19-month low. South Korea’s producer inflation in Nov slowed for a fifth consecutive month to a 19-month low, data showed, pointing to weakening consumer price pressure ahead. The producer price index in Nov stood 6.3% higher than the same month a year before, according to the Bank of Korea data, after a revised 7.3% annual rise in Oct. It posted its slowest gain since April 2021 last month. Its annual growth kept slowing since touching a near 14-year high of 10.0% in June this year. On a monthly basis, the index fell 0.2% in Nov after a 0.5% gain in Oct. (Reuters)

Markets

Tenaga Nasional (Outperform, TP: RM12.42): Partners BELECTRIC for solar greenfield development in UK. Tenaga Nasional has partnered with BELECTRIC GmbH (BELECTRIC) to venture into solar greenfield development in the UK. TNB subsidiary Vantage RE Ltd (Vantage RE) has signed an EPC contract with BELECTRIC for the construction and commissioning of 102 MW of solar farms in the UK. The project also includes an option to develop 65MW co-located battery energy storage systems. (BTimes)

Reneuco-Citaglobal: Consortium wins bid to develop IPP project for ECRL. A 50:50 joint venture consortium between Reneuco (formerly known as KPower) and Citaglobal (formerly known as WZ Satu) has won a tender to develop an independent power producer (IPP) project for the ECRL network. The consortium, which accepted a letter of intent from Malaysia Rail Link SB (MRL), will undertake the planning, design, financing, development, construction, installation, completion, commissioning and operation of the project, said Reneuco in a statement. (The Edge)

BCorp: Ups REDTone stake to 47.76%. Berjaya Corp (BCorp) has raised its stake in REDTone Digital to 366.86m shares, or 47.76% of the company. In a bourse filing on Dec 21, the group said it had acquired another 24.6m shares or 3.18% in REDTone at about 45 sen per share, or RM11m, via direct business transactions from 30 Aug till 21 Dec. (The Edge)

Supercomnet: Proposes to transfer listing to Main Market. Supercomnet Bhd has proposed to transfer the listing and quotation of its entire issued share capital and outstanding warrants from the ACE Market to the Main Market of Bursa Malaysia Securities. In a filing with the exchange today, Supercomnet said it had also proposed to adopt a new company constitution to facilitate the implementation of the proposed transfer. The proposed transfer would enhance the confidence of its business partners, employees and shareholders through its profile as a company listed on the Main Market of Bursa Securities, it said. (StarBiz)

YSP Southeast Asia Holdings: Buys property in Bandar Baru Bangi for RM31m. Pharmaceutical and veterinary products manufacturer YSP Southeast Asia Holdings (YSPSAH) is buying a property in Bandar Baru Bangi, Selangor for RM31m. The property will be used for the group’s future expansion for the production of food and health supplements, it said in a Bursa Malaysia filing on Dec 21. Its unit YSP Industries (M) SB entered into an agreement with Onkyo Asia Electronics SB (OAE), a manufacturer of consumer electronic audio and video equipment products. (The Edge)

Sersol: Ventures into electric scooters business. Sersol is venturing into electric scooters business. Its wholly owned unit Sersol Energy SB inked a three-month MOU on Dec 20 with China based Chongqing Beidou Jiean Neo-Energy Technology Ltd (Beidou) to sell, distribute and produce electric scooters and related accessories, which include charging of the electric scooters. Sersol Energy entered into the agreement via its joint venture companies, namely Sersol Takuni (M) SB, Sersol Takuni (Thailand) Co Ltd and PT Sersol Takuni (collectively referred as ST). (The Edge)

Market Update

US markets bounced higher for a second day running following strong earnings reports from two industry bellwethers (Nike and Federal Express) that raised expectations of corporate earnings faring better than expected even amid a possible recession. The three major benchmarks of the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite jumped 1.6%, 1.5% and 1.6% higher respectively. Strong consumer confidence numbers for December also boosted sentiment. The mood was also lifted in Europe, with retail-based stocks taking the cue from its American counterparts to end the day higher. Germany’s DAX and UK’s FTSE 100 rose 1.5% and 1.7% as France’s CAC 40 gained 2.0%. Asian markets were mixed earlier in the day however, in reaction to the Bank of Japan’s surprise move to adjust its yield curve control tolerance. Benchmarks in Australia (+1.3%) and Hong Kong (+0.2%) rose as respective government officials head to China for various reasons. The Nikkei 225 fell 0.7% however, its second day of declines. The Shanghai Composite Index slipped 0.2%.

Source: PublicInvest Research - 22 Dec 2022