Economy

Global: World Bank warns global economy could tip into recession in 2023. The World Bank slashed its 2023 growth forecasts to levels teetering on the brink of recession for many countries as the impact of central bank rate hikes intensifies, Russia's war in Ukraine continues, and the world's major economic engines sputter. The development lender said it expected global GDP growth of 1.7% in 2023, the slowest pace outside the 2009 and 2020 recessions since 1993. (Reuters)

US: Powell says Fed might have to make unpopular decisions to stabilize prices. Fed Chairman Jerome Powell emphasized the need for the central bank to be free of political influence while it tackles persistently high inflation. Powell noted that stabilizing prices requires making tough decisions that can be unpopular politically. Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits over time. But restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy. (CNBC)

EU: Norway CPI falls to 5.9%; PPI rise at slower rate. Norway's CPI eased more than expected in Dec and PPI increased at a softer rate. CPI slowed to 5.9% in Dec from 6.5% in Nov. Economists had forecast inflation to moderate to 6.1%. Prices for food and non alcoholic beverages logged a double-digit growth of 11.5% annually in Dec. Prices for furnishings, household equipment, and routine maintenance grew 9.5%, and those of transport increased by 7.8%. Prices for recreation and culture climbed 7.1% in Dec. Prices for alcoholic beverages and tobacco, and communication advanced by 5.3% and 5.2%, respectively. (RTT)

UK: Job placements fall further on bleak outlook, labor shortages. Permanent placements in the UK decreased further at the end of the year 2022, as hiring activity was dampened by the rising economic uncertainty, low candidate numbers along with the squeeze on clients budgets. Permanent job placements decreased for the third month in a row. Growing economic uncertainty and pressures on budgets weighed on permanent staff appointments. At the same time, billing for temporary staff rose marginally. The overall rate of vacancy growth softened for the ninth straight month and was the slowest since the current sequence of increase began in Feb 2021. (RTT)

China: Bank lending unexpectedly rises in Dec. China's bank lending unexpectedly increased in Dec. Banks extended CNY1.4trn in new loans in Dec compared to CNY1.21trn in the previous month. Lending was forecast to fall to CNY1.1trn. Total social financing, a broad measure of credit and liquidity in the economy, totalled CNY1.31trn, which was higher than the expected level of CNY1.6trn. (RTT)

Japan: Tokyo inflation hits 4% first time in 4 decades. Inflation in Japan's capital Tokyo hit 4% for the first time in four decades at the end of 2022, lifting speculation over a shift in the BoJ's massive monetary easing stance. An unexpected fall in overall household spending in Nov shown was driven by rising consumer prices. The CPI excluding fresh food rose 4.0% in Dec, faster than the 3.6% increase in Nov. The core inflation rate exceeded 3.8% economists had forecast. (RTT)

Philippines: Exports rise 13.2%, trade deficit narrows. The Philippine trade deficit narrows in Nov from the last year, as exports increased and imports declined. The trade deficit declined to USD3.68bn in Nov from USD4.71bn in the same month last year. In Oct, the deficit was USD3.31bn. Exports rose 13.2% yearly in Nov, after a 20.3% growth in Oct. Imports dropped 1.9% annually in Nov, after a 7.7% growth in the previous month. Imports declined for the first time in twenty-two months. (RTT)

Markets

LBS Bina (Outperform, TP: RM0.67): To launch 12 new projects with RM2bn GDV in 2023. LBS Bina Group remains optimistic about hitting its property sales target of RM2bn this year amidst macroeconomic headwinds. Last year, the Group managed to surpass sales target of RM1.6bn by 25% to RM2bn. With unbilled sales totalling up to RM2.5bn as at Dec 31, 2022, LBS Bina plans to launch 12 new projects in 2023 across the Klang Valley, Johor, Pahang and Perak. This brings in total GDV of RM2.0bn or 4,021 cumulative units. (StarBiz)

BCorp: Acquisition target is MCIS Insurance. Berjaya Corp says it is in the midst of negotiations for the proposed acquisition of a controlling stake in MCIS Insurance (MCIS Life). The group was in talks with Sanlam Ltd to purchase 51% stake in MCIS Life since last year. Koperasi MCIS holds another 44.39% equity interest in MCIS Life, while the remaining shares are held by individuals. (The Edge)

Tex Cycle: To sell two factories for RM19m. Tex Cycle Technology (M) has proposed to dispose of two detached factories in Puchong for RM19m, noting that they have increased in value since their acquisition in 2004. The proposed disposal is expected to result in a gain on disposal of approximately RM13.7m. The group is selling the two-storey and one-and-half-storey factories, located on leasehold land in Taman Perindustrian Kinrara, to Sedaya Rasmi (M) SB. The total land area of the properties is 4088.63 sqm. (The Edge)

Haily: Wins RM38m contract to build shop offices in Johor Bahru. Haily Group has won a RM37.85m contract to build commercial properties for the Crest@Austin development in Johor Bahru. The construction specialist accepted the letter of award from RDC Arkitek SB. RDC Arkitek is appointed by Austin Senibong Development SB for the construction of 77 units of three-storey shop offices at Bandar Jaya Putra in Tebrau district. (The Edge)

Kelington: Bags RM170m construction job at chip manufacturing facility in Kuching. Kelington Group has secured a RM170m contract to undertake construction works at an integrated chip manufacturing facility at the Sama Jaya Free Industrial Zone in Kuching, Sarawak. The contract was awarded by a global supplier of micro-electronic semiconductor solutions. The construction work is expected to be completed by March 2024. (The Edge)

Nestcon: Unit wins RM200m job to build 47-storey mixed development. Nestcon secured a RM200m contract to build a 47- storey mixed commercial development at Jalan Liew Weng Chee. The 41-month contract was awarded by Armada Istimewa SB and is expected to be completed on or before June 16, 2026. (The Edge)

Bintai Kinden: Ventures into digital assets. Bintai Kinden Corporation is venturing into digital assets, as part of the company's treasury management. The move also considers longer-term needs in business expansion. As part of this initiative and to take into consideration the longer-term needs, BTSB has an account with a digital currency exchange licensed by the Securities Commission. (BTimes)

Market Update

The FBM KLCI might open higher today as US stocks rose on Tuesday even after Federal Reserve officials reiterated that interest rates would probably hover above 5% for much of 2023. Rising prices for healthcare and consumer cyclical stocks helped Wall Street’s blue-chip S&P 500 close 0.7% higher. The tech-heavy Nasdaq Composite gained 1% as investors shook off warnings on Monday from the Presidents of the US central bank’s San Francisco and Atlanta branches that high inflation meant interest rates had further to climb. Most Fed officials expect the fed funds rate to peak between 5% and 5.25% later this year, up from its current level at between 4.25% and 4.5%. Much of the debate among investors now revolves around whether the central bank will lift borrowing costs by 0.5 percentage points or 0.25 percentage points when it meets at the end of this month. Arguments for either move depend to a large extent on December’s consumer price index data, which will be published on Thursday. In Europe, Europe’s Stoxx 600 shed 0.6%, eating into strong gains since the beginning of January, while London’s FTSE 100 fell 0.4% and Germany’s Dax lost 0.1%.

Back home, Bursa Malaysia retreated from Monday’s gains to end lower ton Tuesday due to profit-taking amid the jittery performance of the regional markets, as investors were cautious ahead of the speech by US Federal Reserve chairman Jerome Powell, scheduled for Tuesday. At the closing, the benchmark FBM KLCI decreased 8.29 points or 0.55% to 1,485.13 from Monday's close of 1,493.42. In the region, Hong Kong’s Hang Seng index fell 0.3% and China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks added 0.1%.

Source: PublicInvest Research - 11 Jan 2023