Economy

Global: Inflation crisis poses greatest near-term global threat, Davos survey warns. The World Economic Forum’s annual Global Risks Report highlights the cost of living crisis as the biggest short term risk facing the world right now, with climate change as the biggest long-term threat. (CNBC)

US: Major central bankers dispute role in tackling climate change as they battle inflation. Divisions are forming among the world’s most influential central banks over their role in tackling climate change, as policymakers focus on reining in inflation. US Fed Chairman Jerome Powell told a conference hosted by Riksbank that the Fed would not become a climate policymaker or get involved in matters beyond its congressionally established mandate. (CNBC)

US: Investors brace for US debt-ceiling fight after House speaker saga. A tumultuous start for the new US Congress has some investors worried about what could be a prolonged battle over raising the US debt ceiling later this year. The US Treasury is expected to reach its mandated USD31.4trn borrowing limit in 2023, and Republicans see that as an opportunity to curb President Joe Biden’s spending on Democratic initiatives such as climate change and new social programs. While fights over raising the debt limit are nothing new in Washington, some investors worry the Republican party’s narrow majority in Congress could give the party’s hard liners the upper hand, making it much harder to reach a deal this time around. (RTT)

EU: Only softer core inflation can shift ECB on rates. Only a slowdown in core inflation can alter the ECB’s resolve to raise interest rates. While there’s hope that headline consumer-price gains have peaked, that’s not the case for underlying inflation. Officials must watch the latter very closely, as long as core inflation isn’t peaking, the change in headline inflation won’t make a change in our determination. (Bloomberg)

UK: Barratt warns of weak housing market on rising mortgage rates. Britain's largest housebuilder Barratt Developments Plc (BDEV.L) said it would build fewer homes in its current fiscal year than last as higher mortgage rates and inflation drive homebuyers away, sending its shares lower. The UK housing market has slowed in recent months, hit by a sharp rise in mortgage rates and reduced availability of loans, while expectations of further rate hikes this year and uncertainties about the extent of impact of raging inflation on households have added further pressure on the sector. (Reuters)

UK: Strikes roll on as 100,000 civil servants call walkout. Some 100,000 UK civil servants announced plans to strike next month after health care and rail unions signaled they’re far from resolving their disputes with employers and the government, piling further pressure on PM Rishi Sunak’s administration. Workers for 124 government departments and agencies will walk out on 1 Feb, impacting a range of public services including driving tests, passport applications and welfare payments. It will be the biggest civil service strike in years and signals a significant escalation of industrial action. (Bloomberg)

China: Beware of CNY pullback after strong start to 2023. The CNY saw a strong start to 2023, ranking it among the biggest emerging market winners versus the USD. The currency, however, risks a pullback after rising too much, too fast. Both seasonal flows and economic fundamentals point to depreciation pressure in the coming months, if not weeks. (Bloomberg)

China: Policy steps drag USD bond stress to least since 2021. Stress in China’s USD740bn offshore credit market has eased to the least in almost two years, following a rally in developers’ bonds as authorities intensify a campaign to alleviate an unprecedented property crisis. A Bloomberg index of Chinese junk dollar bonds, which are dominated by real estate firms, has surged nearly 60% from a record low in Nov to 77 cents on the dollar this week. It’s also at the highest in more than a year. That helped bring the market’s stress gauge in Dec to level 3, down from 4 in Nov and marking a level last seen for Bloomberg’s China credit tracker in May 2021, when compilation of the data began. (Bloomberg)

Markets

Sime Darby Plantation (Neutral, TP: RM4.60): Reiterates commitment to achieve net-zero emissions by 2050. Sime Darby Plantation reiterated its commitment to achieve net-zero emissions across its entire value chain by 2050. The net-zero strategy was developed in accordance with the latest guidance by the Science-Based Targets Initiative (SBTi). The group was looking at how it could expand its renewable business to capture methane. (The Edge)

Takaful Malaysia: Enters five-year bancatakaful arrangement with Affin Islamic. Under the arrangement, Affin Islamic shall distribute, market and promote credit-related, advisory and other family takaful products of Takaful Malaysia Keluarga and general takaful products of Takaful Malaysia Am. (The Edge)

Solarvest: Partners Huawei Malaysia, Sarawak govt talent development unit to provide training programme. Solarvest, Huawei Malaysia and Centre for Technology Excellence Sarawak have inked MOU to launch Green Energy Lab in Kuching, Sarawak. The facility will provide a green energy-related learning programme involving solar, green mobility, battery storage systems, as well as green hydrogen. (The Edge)

CAB Cakaran: In JV with Salim Group to re-enter Indonesian market. CAB Cakaran Corporation, intends to re-enter the Indonesian market through a JV with Salim Group by investing between USD50m and USD80m over the next 5 years. Due to the COVID-19 pandemic, the company ceased activities in Indonesia and both parties are currently resuming negotiations to continue the cooperation. (StarBiz)

Favelle Favco: Secures orders worth RM45.5m. Favelle Favco has secured 3 contracts worth RM45.5m to supply offshore and tower cranes. The first two contracts are from Malaysia Marine and Heavy Engineering SB and Ocean Might SB for the supply of offshore cranes. The third contract is from Daewoo Shipbuilding & Marine Engineering Co., Ltd for the supply of tower crane. (StarBiz)

Minetech Resources: Secures RM36.71mil EPCC contract for Besut mini-hydropower plant. Minetech Resources has secured a RM36.71m contract from Tesdec Hyropower SB for the EPCC of a 3MW mini-hydro power plant at Sungai Pelagat in Besut, Terengganu. The project, which is expected to commence in Jan 2023, followed by construction in 2025, is expected to be completed by May 2027. (StarBiz)

KKB Engineering: Secures contracts valued a combined RM351.7m. KKB has secured a contract from Sarawak Shell for the provision of EPC of standard wellhead platforms for the MLNG FaS Gas Field Development. The Group also received a purchase order from Seri Ghanimi Contractor SB for the supply of mild steel concrete lined pipes bringing the total contract sum for the awards to RM351.7m. (StarBiz)

Pesona Metro: Bags RM349m condo project. Pesona Metro Holdings has secured a RM349m construction award from Bon Estates Group, for a condominium project in Batu, Kuala Lumpur. The project will take place over a duration of 36 months commencing Feb 8, 2023. (StarBiz)

Market Update

The FBM KLCI might open higher today as US stocks rose as investors prepared for inflation data that analysts expect to show a slowdown in domestic price growth, which could buoy the hopes of traders despite hawkish messaging from the Federal Reserve. On Wall Street, the blue-chip S&P 500 closed 1.3% higher on Wednesday, while the tech-heavy Nasdaq Composite added 1.8%. It marked the first time in about three weeks the S&P 500 had notched back-to-back daily gains, while the Nasdaq Composite scored its first four-day winning streak in four months. The gains come ahead of US inflation data due to be released on Thursday morning. Analysts expect the headline consumer price index will moderate to 6.5% in December, down from 7.1% in November. Across the Atlantic, Britain’s FTSE 100 moved within striking distance of an all-time high amid growing investor optimism that inflation had peaked boosted US and European stocks. The UK’s benchmark stock index rose 0.4%, leaving it within about 2% of the historic peak it reached in May 2018. The gains in the London market echoed other regional bourses, with the regional Stoxx Europe 600 adding 0.4% and Germany’s Dax rallying 1.2%.

Back home, Bursa Malaysia ended higher on Wednesday, lifted by buying interest in most heavyweights, led by energy and technology stocks, amid improving market sentiment across the region. At the closing bell, the benchmark FBM KLCI put on 2.74 points or 0.18% to 1,487.87 from Tuesday's closing of 1,485.13. In the region, Hong Kong’s Hang Seng index rose 0.5%, taking its gains since the start of November to 45%. China’s CSI 300 index of Shanghai and Shenzhen-listed stocks fell 0.2%.

Source: PublicInvest Research - 12 Jan 2023