Economy

Global: Central banks aren’t declaring victory over inflation yet. Central banks aren’t giving up their inflation fight yet with the peak in interest rates still to come in most economies, but pauses will come at some point in 2023 and perhaps even pivots. After spending 2022 hiking borrowing costs by the most in four decades to restrain the surging price pressures they helped fan and then failed to forecast, Fed’s Chair Jerome Powell and ECB President Christine Lagarde are among the international policymakers set to tighten further in the early months of this year. Of the 21 other jurisdictions, 10 of them are expected to increase rates, nine are projected to cut and two are seen on hold. Decisions may become harder as rates move further into restrictive territory and risk constricting demand so much that economies topple into recessions. That’s the worry of bond traders who are increasingly skeptical of the ability of central banks to keep hiking and then hold tight. (Bloomberg)

US: Daly sees Fed raising rates above 5%, but how far is unclear. Two Fed officials said that the central bank will likely need to raise interest rates above 5% before pausing and holding for some time. He said the Fed was committed to tackling high inflation and this warrants raising interest rates into a 5% to 5.25% range to squeeze excess demand out of the economy. San Francisco Fed President Mary Daly expects the central bank to raise interest rates to somewhere above 5%, though the ultimate level is unclear and will depend on incoming data on inflation. (Bloomberg)

US: Consumer borrowing tops forecast on higher credit-card balances. US consumer borrowing climbed in Nov by more than forecast as credit-card balances increased by the most in three months. Total credit rose USD28bn from the prior month. The median forecast in a Bloomberg survey of economists called for a USD25bn advance. The figures aren’t adjusted for inflation. Revolving credit outstanding, which includes credit cards, rose USD16.5bn. Non-revolving credit, such as loans for school tuition and vehicle purchases, increased USD11.5bn, the smallest advance since the start of last year. (Bloomberg)

EU: Unemployment rate steady at record low 6.5%. Euro area jobless rate remained unchanged at a record low in Nov despite the economy moving closer to a recession. The jobless rate came in at 6.5%, as expected, unchanged from Oct. This was notably down from 7.1% in the same period last year. The number of unemployed totalled 10.84m in Nov, was down 2,000 from the prior month. Compared to the previous year, unemployment decreased by 846,000. Meanwhile, the unemployment rate among young people aged below 25 rose slightly to 15.1% from 15.0% in Oct. The overall unemployment rate in the EU27 also held steady in November, at 6.0%. (RTT)

EU: France trade gap widens amid rising imports. France's trade deficit widened in Nov as exports declined amid rising imports. Another official data revealed an increase in the current account gap in Nov driven by a decline in services surplus and an increase in trade deficit. The trade deficit climbed to EUR13.77bn in Nov from EUR11.59bn in Oct. In Nov 2021, the deficit totaled EUR10.20bn. Exports decreased 1.4% from the previous month, while imports grew 2.3% in Nov. On a yearly basis, exports logged a double-digit growth of 19.3%. At the same time, imports registered a much faster increase of 27%. The current account deficit increased to EUR6.8bn in Nov from EUR3.4bn in Oct. (RTT)

EU: German self-employed less pessimistic about outlook. The business climate for self-employed individuals in Germany showed a considerable recovery at the end of the year as they were less pessimistic about the economic outlook. The business confidence index for the self-employed rose sharply to -11.4 in Dec from -21.6 in Nov. The strong recovery in Dec is due to significantly less pessimistic expectations among self-employed people. (RTT)

Australia: Building approvals slump 9.0% in Nov. The total number of building permits issued in Australia in Nov was down a seasonally adjusted 9.0% MoM in Nov, coming in at 13,898. That missed expectations for a decline of 4.0% following the 6.0% contraction in Oct. On a yearly basis, permits tumbled 15.1% after sinking 6.4% in the previous month. Permits for private sector houses fell 2.5% on month and 13.4% on year to 9,142, while permits for private sector dwellings excluding houses tumbled 22.7% on month and 21.0% on year to 4,423. (RTT)

Markets

Petronas Chemicals: Divest 25% stake in Petronas Chemicals Fertiliser Sabah to state unit. The divestment is part of the group's strategic efforts to position itself as a preferred partner in shaping and implementing efforts by PetChem to sustain and grow the petrochemicals business in Sabah. The completion of the divestment is expected to be in 2023, subject to conditions precedent in the agreement being met. (The Edge)

MGRC: Partners SIRIM to explore commercialisation of R&D projects in medical, biotech fields. Under the strategic cooperation, both parties will evaluate the potential commercial value of a range of genomics-driven biotechnology R&D projects. These include developing biofuels and biopharmaceuticals, companion diagnostic tests for cancer treatment, and bioactive cosmeceuticals. (The Edge)

AWC: Enters MOU with Indonesian investment firm for green energy opportunities in Malaysia. The Indonesian company, PT Bintang Timur Investama, is engaged in consulting, financing and investments in that country with an issued and paid-up share capital of USD5m (RM21.88m). AWC said the MOU was valid for 12 months, and that it was among the MOUs witnessed by Prime Minister Datuk Seri Anwar Ibrahim in Indonesia on Jan 8. (The Edge)

Citaglobal: Inks deal with Indonesian state-owned firm for battery energy projects. The MOU with Indonesia Battery Corporation (IBC) shall remain in effect over the next one year. IBC was established by four Indonesian state-owned enterprises, with the vision of maximising Indonesian natural resources through the development of battery electric vehicles and the battery industry ecosystem in Indonesia. (The Edge)

EP Manufacturing: Bags major deal to supply 23,000 e-Bikes to Indonesian, Vietnamese markets. EP Manufacturing (EPMB) has won its first major deal to supply electric bikes for the Indonesian and Vietnamese markets, to be delivered from the first quarter of 2023. EPMB signed a master agreement with Averte Global Pte Ltd and Blueshark Group Ltd, in which Averte and Blueshark have jointly agreed to be the joint venture partners and purchasers. The purchase deal will be effective for five years and may be extended with mutual understanding. (BTimes)

GDB Holdings: Lifts suspension on 8 Conlay project. This was following the receipt of partial payment towards outstanding sums owed by project owner Damai City SB (Damai City). The company will proceed to remobilise and recommence for the full scope of works for the 8 Conlay project in early April 2023, subject to Damai City fulfilling the agreed terms and scheduled full settlement of outstanding sums. (BTimes)

IPO: Radium receives SC's green light for main market IPO. Radium has focused on enabling home ownership within Kuala Lumpur, especially in the affordable homes category. Since 2013, Radium has completed high-rise residential projects worth RM1.49bn in GDV within Kuala Lumpur. Continuing its growth trajectory, the company is currently developing projects with a cumulative GDV of RM1.45bn. (BTimes)

Market Update

The FBM KLCI might open flat today as US stocks erased earlier gains after two Federal Reserve members said they expected the policy rate to surpass 5% in 2023, curbing investors’ hopes for less restrictive monetary policy. Wall Street’s blue-chip S&P 500, which had been up as much as 1.4% earlier on Monday, closed 0.1% lower on Monday, with pharmaceutical stocks featuring among the decliners. The tech-heavy Nasdaq Composite, at one point up almost 2.3%, finished 0.6% higher, with Tesla and chipmakers Nvidia and Advanced Micro Devices rising more than 5%. Both indices pared gains in afternoon trading following comments from the presidents of the US central bank’s San Francisco and Atlanta branches that the fed funds rate would need to surpass 5% in order slow down inflation. Europe’s regional Stoxx 600 climbed 0.9%, adding to last week’s 4.2% gain, with technology and energy stocks among the top performers. London’s FTSE 100 rose 0.3%. Germany’s Dax gained 1.3% after production in the country’s manufacturing, energy and construction sectors increased 0.2 per cent between October and November, boosting hopes of a milder-than-feared economic downturn across the single currency area. Back home, Bursa Malaysia ended at an intraday high of 1,493.42 as the reopening of China's border has bolstered the outlook for global economy, with sustained buying interest seen in selected heavyweight counters led by transportation and logistics stocks. At the closing bell, the benchmark FBM KLCI jumped 12.87 points or 0.87% from Friday's close of 1,480.55. In the region, Hong Kong’s Hang Seng index gained 1.9% and China’s CSI 300 index of stocks listed in Shanghai and Shenzhen rose 0.8%.

Source: PublicInvest Research - 10 Jan 2023