Economy

US: Jobless claims rise slightly but remain near historic lows . Applications for US unemployment benefits rose last week, but remained near historic lows, underscoring the enduring resilience of the labour market despite the Federal Reserve’s aggressive efforts to cool demand. Initial unemployment claims increased by 9,000 to 225,000 in the week ended Dec 24, Labor Department data showed. That was in line with the median forecast in a Bloomberg survey of economists. Continuing claims, or the number of people who have already filed an initial application and are now claiming unemployment benefits, rose to 1.7m in the week ended Dec 17, the most since early Feb. The sustained upward trend suggests it’s been more difficult for out-of-work individuals to find new jobs. The data can be particularly difficult to seasonally adjust around major holidays. The four-week moving average in initial claims, which smooths out some of that week-to-week volatility, was little changed at 221,000. (Bloomberg)

UK: Consumers vow to cut eating out and non-essential shopping . British consumers plan to cut back on restaurant meals and non-essential shopping next year after a surge in the cost of living ate into disposable income. The consulting firm KPMG said almost two-thirds of the 3,000 people it surveyed felt the need to reduce spending and save more because inflation hit the highest in four decades. It found people paying more for basics like food, mortgages and energy bills. Eating out, take-aways, and clothing were the things people said they’d cut first, pointing to weaker demand for retailers and hospitality firms in 2023. A third of people said they would buy fewer items and opt for more own-brand goods. “Consumers are increasingly changing how they shop to save money — including switching to cheaper retailers, buying more value or promotional produce, and swapping eating out for meals in,” said Linda Ellett, UK head of consumer markets, retail and leisure at KPMG. (Bloomberg)

India: 2Q current account deficit widens to USD36.4bn. India’s current-account deficit widened to a record high in the July-Sept quarter on a yawning trade imbalance and portfolio outflows. The shortfall in the broadest measure of trade in goods and services was USD36.4bn, or 4.4% of GDP, the Reserve Bank of India said in a statement. That compares with a median estimate for a gap of USD36.1bn in a Bloomberg survey and a reading of USD18.2bn in the previous quarter. India’s external finances remained under pressure as global monetary tightening and a weak currency dented demand. Elevated commodity prices and export slowdown inflated the nation’s trade gap. Merchandise trade deficit rising to USD83.5bn, from USD63bn in the previous quarter. (Bloomberg)

Hong Kong: Exports drop most in almost seven decades on global slump. Hong Kong’s exports plummeted in November by the most in nearly seven decades as a slump in China’s economy and global demand worsened, making the road to recovery even tougher for the financial hub. Overseas shipments plunged 24.1% last month from a year earlier, the Census and Statistics Department said. That was the worst decline since 1954, and far more severe than the median estimate of a 16.2% decline in a Bloomberg survey of economists. Exports fell 10.4% in Oct. Imports declined 20.3% in Nov from a year earlier — the biggest drop since 2009 and worse than economists’ projection of a 13.8% decline. The trade deficit was HKD27.1bn (USD3.5bn). A government spokesman attributed the falls to a “deteriorating external environment and disruptions to cross-boundary land transportation”, according to a statement accompanying the release. (Bloomberg)

Singapore: Producer price inflation slows to 7.7%. Singapore's producer price inflation eased for the fifth straight month in Nov, primarily due to a slowdown in the price growth of the non-oil index, data from the Department of Statistics showed. The manufacturing producer price index climbed 7.7% YoY in Nov, slower than the 11.6% surge in the prior month. The oil index grew 21.6% annually in Nov, and the non-oil index registered an increase of 5.4% versus 9.9% growth in Oct. Domestic supply prices were 6.1% higher in Nov from a year ago, after an 8.5% gain in Oct. On a monthly basis, producer prices dropped 2.3% in Nov, reversing a 0.3% rise in the previous month. (RTT)

South Korea: Industrial production climbs 0.4% in Nov . Industrial output in South Korea rose a seasonally adjusted 0.4% on month in Nov, Statistics Korea said. That beat forecasts for a decline of 0.8% following the 3.5% contraction in Oct. On a yearly basis, industrial output sank 3.7% - also topping expectations for a drop of 4.0% following the downwardly revised 1.2% contraction in the previous month (originally -1.1%). The index of all industry production was up 0.1% on month and 0.6% on year in Nov. The Manufacturing Production Index added 0.5% on month but fell 3.8% on year. The Manufacturing Shipment Index lost 2.4% on month and 4.2% on year. The Manufacturing Inventory Index increased by 1.4% on month and 6.1% on year. (RTT)

South Korea: Retail sales sink 1.8% in Nov . The value of retail sales in South Korea was down a seasonally adjusted 1.8% on month in Nov, Statistics Korea said. That missed expectations for a decline of 1.0% following the 0.2% contraction in Oct. On a yearly basis, retail sales were down 2.2% - again missing forecasts for a decline of 1.5% following the 0.7% drop in the previous month. (RTT)

Markets

TM (Outperform, TP: RM6.63): Exit from KL Tower concession is to focus on strengthening core business. Telekom Malaysia (TM) has clarified that the telecommunications giant's decision to exit the Kuala Lumpur Tower (KL Tower) concession was part of a business transformation programme to focus its efforts and resources on strengthening its core business of telecommunications and technology. It was reported on Dec 27 that the Ministry of Communications and Digital was examining the acquisition of the ownership of the management of KL Tower from TM through its wholly owned subsidiary Menara Kuala Lumpur SB (MKLSB) by Hydroshoppe SB. (The Edge)

TNB (Outperform, TP: RM12.42): Chairman resigns. Tenaga Nasional (TNB) has announced the resignation of its chairman, Datuk Seri Hasan Arifin, with effect from 1 Jan 2023. TNB said Hasan, 69, shall also relinquish his chairmanships and directorships in the respective subsidiaries within TNB’s group of companies. (StarBiz)

TAFI Industries: Wins RM205m job to build 941 Soho units in Subang Jaya. TAFI Industries' unit has secured a RM205m contract to build 941 units of Small Office Home Office (Soho) and related facilities in Subang Jaya, Selangor for the project's main contractor, Metbuild SB. Additionally, the group's wholly owned subsidiary TA Furniture & Projects SB has been appointed as the project management consultant by the project's developer, Pinnacle Homes SJ CBD SB. (The Edge)

Pharmaniaga: Concession with MOH extended by six months. Pharmaniaga’s unit has been granted a six-month extension till end June 2023 of the concession agreement for the provision of medicines and medical supplies to Ministry of Health facilities, pending the finalisation of a new concession agreement. (The Edge)

Boustead Holdings: Declares first interim dividend in four years. Boustead Holdings has announced an interim dividend of 1.5 sen for its FY2022, its first in four years. The dividend will be paid on 27 March 2023 with a Feb 27 ex-date and a Feb 28 entitlement date. (The Edge)

Haily: Secures third contract from Mah Sing valued at RM52.3m. Haily Group has secured a RM52.3m contract from Mah Sing Group's subsidiary Meridin East SB to build 283 two-storey terrace houses. Meridin East is Mah Sing’s largest integrated township in the Eastern Gateway of Iskandar Malaysia. (StarBiz)

Ranhill: Frontrunner for Sabah power project. Ranhill Utilities is a frontrunner to bid for a new 100MW gas fired power plant in Kimanis, Sabah as the state seeks to assume more control of its energy infrastructure. Ranhill’s leading role as an independent power producer (IPP) in the power deficient state puts the group in a favourable position to lead the planned project development. (StarBiz)

IPO: ACE Market-bound TT Vision IPO to raise RM32.3m. TT Vision Holdings has set a price of 34 sen per share for its IPO exercise that will raise RM32.3m, including an offer for sale by existing shareholders for RM3.6m. Slated to list on the ACE Market of Bursa Malaysia on Jan 18. (The Edge)

Market Update

The FBM KLCI end the year with a positive note after US stocks rose on Thursday as investors sought to snap up bargains in tech stocks, looking past a surge in Covid-19 cases in China following the country’s relaxation of its pandemic policies. Wall Street has faltered this week as the rapid spread of the coronavirus in China has increased risks to the global economy. There has been no fundamental change to that outlook, and Thursday’s move is unlikely to mark a shift in the market’s overall direction. The benchmark S&P 500 rose 1.7% and Nasdaq Composite 2.6% as investors bought tech stocks such as Tesla, Netflix and Apple. Trading volumes were thinner on Thursday with many investors on holiday, meaning that relatively small trades can skew or exaggerate trends. The gains in the US bolstered benchmarks in Europe, which were affected by the thin trading volumes of the holiday period. The Stoxx 600 finished 0.6% higher. The commodities-heavy FTSE 100 recovered morning losses to close up 0.2%.

Back home, Bursa Malaysia ended in an upbeat mode on Thursday on window dressing in banking, utilities, and plantation counters. At the closing bell, the benchmark FBM KLCI jumped 11.52 points to end at an intraday high of 1,491.63 from Wednesday's closing of 1,480.11. Elsewhere, Hong Kong’s Hang Seng index closed down 0.8%, while China’s blue-chip CSI 300 index fell 0.4% as major cities across the country were faced with rising Covid cases. Thursday’s declines came after China’s National Health Commission said it would drop quarantine requirements for inbound passengers from January 8, even as the country endures its worst Covid outbreak. The announcement was the latest easing of the government’s punishing zero-Covid policies, which have hit economic growth.

Source: PublicInvest Research - 30 Dec 2022