Economy

US: Trade deficit shrinks sharply as imports tumble. The US trade deficit contracted by the most in nearly 14 years in Nov as slowing domestic demand amid higher borrowing costs depressed imports. The trade deficit decreased 21.0% to USD61.5bn, the lowest level since Sept 2020. The percentage decline in the trade gap was the largest since Feb 2009. Imports tumbled 6.4% to USD313.4bn, with goods dropping 7.5% to USD254.9bn. Consumer goods imports were the lowest since Dec 2020. The Federal Reserve last year hiked its policy rate by 425 bps from near zero to a 4.25%-4.50% range, the highest since late 2007. Last month, it projected at least an additional 75 bps of increases in borrowing costs by the end of 2023. Exports fell 2.0% to USD251.9bn, with goods shipments dropping 3.0% to USD170.8bn. But exports of automotive vehicles, parts and engines were the highest since Aug 2019. (Reuters)

US: Weekly jobless claims at three-month low; layoffs drop in Dec. The number of Americans filing new claims for unemployment benefits dropped to a three-month low last week while layoffs fell 43% in Dec, pointing to tight labour market that could require the Federal Reserve to keep hiking interest rates. Initial claims for state unemployment benefits decreased 19,000 to a seasonally adjusted 204,000 for the week ended Dec 31, the lowest level since the end of Sept. Volatility around the year-end holidays has injected some noise into the claims data. Through the volatility, claims have remained at very low levels despite a raft of layoffs in the technology sector and interest-rate sensitive industries like housing and finance. (Reuters)

EU: Eurozone PPI at 11-month low on easing energy costs. Eurozone PPI eased for the third consecutive month in Nov, but remained high, as energy prices rose at a slower rate, offering some relief to the European Central Bank that is likely to continue raising interest rates in 1Q. Producer prices registered an annual increase of 27.1% after a revised 30.5% rise in Oct. That was slightly slower than economists' forecast of 27.5%. Consumer price data released this week from some main euro area countries revealed slowing inflationary pressures due to lower energy prices and in some cases, the support measures by governments to reduce the cost burden on households and businesses. (RTT)

China: Services activity logs fourth consecutive contraction. China's service sector shrank for the fourth consecutive month in Dec as the ongoing measures to contain the Covid-19 disrupted operations and hampered demand. At 48.0, the Caixin services PMI rose from a six-month low of 46.7 in Nov. The Covid-19 containment measures, including temporary business closures dampened production. Further, due to pandemic related restrictions, outstanding business increased for the fifth consecutive month as firms were unable to work through backlogs of work. Cost reduction policies together with voluntary leavers drove another fall in service sector employment. (RTT)

Japan: Monetary base sinks 6.1% on year in Dec. The monetary base in Japan was down 6.1% on year in Dec, coming in at JPY617.222trn. That follows the 6.4% decline in Nov and marks the fourth straight month of contraction. Banknotes in circulation were up 2.7% on year, while coins in circulation fell 4.2%. Current account balances dropped an annual 8.1%, including a 9.4% decline in reserve balances. The monetary base was down 6.5% on year in the fourth quarter of 2022, and it was up 1.5% for all of last year. (RTT)

Singapore: Retail sales growth slows further. Singapore's retail sales growth continued to ease in Nov, largely affected by a steep fall in demand for motor vehicles. Retail sales rose 6.2% YoY in Nov, after a 10.3% growth in Oct. Excluding motor vehicles, retail sales advanced 8.7% yearly in Nov, after a 14.2% gain in the preceding month. Sales of food and alcohol grew the most, by 57.6%, in Nov from a year ago, followed by a 34.1% surge in sales of apparel and footwear. (RTT)

Hong Kong: PMI improves to 49.6 in Dec. The private sector in Hong Kong continued to contract in Dec, albeit at a slower rate with a PMI score of 49.6. That's up from 48.7 in Nov, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction. Business activity in the Hong Kong SAR private sector improved in Dec, buoyed by the easing of COVID-19 restrictions which also enabled lead times to shorten. Although slight, the rise in activity marked the first expansion of private sector output since Aug. (RTT)

Markets

Computer Forms: To form electric vehicle JV with Thailand’s Energy Absolute . Computer Forms (M) plans to team up with Thailand-based Energy Absolute PCL by the first quarter of 2023 to jointly produce and distribute electric vehicles (EVs) as well as EV chargers in Malaysia. Computer Forms said it has entered into an agreement with Energy Absolute’s 99%-owned subsidiary EA Mobility Holding Co Ltd to set out further details pertaining to their joint-venture company. (The Edge)

MPay: Subsidiary receives conditional approval to operate as online money lender . Managepay Systems’ wholly-owned unit, ManagePay Resources SB (MRSB), has received conditional approval from the Ministry of Local Government Development (KPKT) to operate as an online money lender under the Moneylenders Act 1951 (Act 400). MPay said MRSB’s online money lending licence, dated Aug 30, 2022, was subjected to the conditions to be fulfilled within six months period from Jan 9, 2023 to July 8, 2023. (Bernama)

Revenue Group: Stock price plunges 28% amid boardroom changes and alleged illegal activities by suspended directors . Revenue Group said two of its ED, brothers Brian Ng Shih Chiow and Dino Ng Shih Fang, whose executive functions were suspended on Jan 4 had illegally seized documents belonging to the company. The e-payment solutions provider said its board of directors were made aware of the incident after their special meeting on the same day concerning the duo. Meanwhile, Revenue announced the appointment of Danny Leong Kah Chern as the its new CEO, as well as the redesignation of co-founding managing director and CEO Datuk Eddie Ng Chee Siong to managing director-cum-alternate chairman. (The Edge)

MR DIY: Buys 80 units foreign workers quarter for RM13.2m . MR D.I.Y. Group (M) is acquiring 80 units of foreign workers quarter under the centralised labour quarter (PAPA) for RM13.2m. The home improvement retailer said its wholly owned subsidiary, Mr D.I.Y. Management Two SB had entered into a sale and purchase agreement with Y5 Development SB and U & Location SB for the purchase of foreign workers' quarter in Balakong, Selangor. MR DIY said the purchase consideration for the 80 units of 600 square feet per unit was RM165,000 per unit. (StarBiz)

D’nonce: To buy land in Cheras for RM17.5m . D’nonce Technology is acquiring a piece of leasehold land in Cheras, Selangor, for RM17.5m. D’nonce had entered into a sale and purchase agreement with Paragon Car Carpets and Components SB for the acquisition. D’nonce said the proposed acquisition is to procure a proper industrial/ business lot for business expansion, with the expected increase in capacity to cater to the increasing revenue deriving from AVKL’s growing business operations. (StarBiz)

Scomi: To raise stake in JV firm as part of regularisation plan . Scomi Group has entered into a Heads of Agreement with its JV partner XAIR Generators SB towards acquiring a further 60% equity interest in the pair’s power generation solutions JV firm Hartamas Megah SB, to raise its stake in the company to 80%. Currently, XAIR holds an 80% stake in the JV, while SCSB holds 20%. (The Edge)

Market Update

The FBM KLCI might open lower as US stocks and Treasuries slipped on Thursday, while the dollar strengthened, after a stronger than expected jobs report underlined the labour market’s resilience in the face of the Federal Reserve’s aggressive campaign to tackle high inflation. Wall Street’s benchmark S&P 500 lost 1.2%, while the tech-heavy Nasdaq Composite fell 1.5%, erasing small gains registered in the previous session. The declines came after US private sector employment rose by 235,000 in December, ahead of estimates, according to payroll processor ADP. Across the Atlantic, the regional Stoxx Europe 600 fell 0.2%, eating into a roughly 3% gain this week. London’s FTSE 100 rose 0.6% while France’s Cac 40 and Germany’s Dax slipped 0.2% and 0.4%, respectively. 

Back home, Bursa Malaysia snapped two consecutive days of losses to end higher on Thursday with the key index rising by 0.77% on bargain-hunting activities. At the closing bell, the benchmark FBM KLCI jumped 11.38 points or 0.77% to 1,480.93 from Wednesday's closing of 1,469.55. The regional markets finished broadly with the Hang Seng jumped 1.25% while China's Shanghai Composite added 1.01% and Japan's Nikkei 225 tacked on 0.40%

Source: PublicInvest Research - 6 Jan 2023