Economy

US: Near-term consumer inflation expectations lowest in nearly two years. US consumers are becoming more confident that price pressures will ease considerably over the next 12 months, with a survey showing their one-year inflation expectations falling in Jan to the lowest level since the spring of 2021. But the road to low inflation will be bumpy as other data showed import prices unexpectedly increasing in Dec after five straight monthly decreases, boosted by higher costs for natural gas and food. Overall inflation is retreating as the Fed's aggressive interest rate increases cool demand, and bottlenecks in the supply chain ease. Year-ahead inflation expectations dropped to a preliminary reading of 4.0% this month from 4.4% in Dec, the University of Michigan Surveys of Consumers showed. (Reuters)

US: Import prices unexpectedly rebound in Dec, export prices plunge. While the Labour Department released a report showing an unexpected increase in US import prices in the month of Dec, the report also showed a much steeper than expected nosedive in export prices. The Labour Department said import prices rose by 0.4% in Dec after falling by a revised 0.7% in Nov. The rebound surprised economists, who had expected import prices to decrease by 0.8% compared to the 0.6%t drop originally reported for the previous month. The unexpected import price growth, which marked the first increase since June 2022, reflected higher prices for both fuel and non-fuel imports. (RTT)

EU: Eurozone industrial resilience, narrower trade deficit signal shallow recession. A recovery in the euro area industrial production due to higher demand as supply constraints continued to ease along with a fall in commodity prices, and a narrowing in the trade deficit on the back of strong export growth add to signs that the single currency bloc is set for a shallow recession. Elsewhere in the region, Germany reported the GDP figures for 2022, which showed that growth slowed less than expected in the biggest economy in Eurozone. Eurozone industrial production recovered in Nov and the trade deficit narrowed to a 9-month low, as exports advanced amid a notable fall in imports, data from Eurostat revealed. (RTT)

EU: Eurozone trade deficit at 9-month low. The euro area trade deficit narrowed to a nine-month low in Nov as exports increased amid falling imports, data from Eurostat revealed. The trade deficit declined to a seasonally adjusted EUR15.2bn from EUR28.1bn in Oct. This was the lowest since Feb, when the deficit totalled EUR12.4bn. Exports increased 1.0% from Oct, while imports fell 3.8% in Nov. On an unadjusted basis, the trade in goods resulted in a deficit of EUR11.7bn, which was bigger than last year's shortfall of EUR3.9bn due to high energy bills. Compared to Nov 2022, exports logged a double-digit growth of 17.2%. At the same time, imports registered a much faster increase of 20.2%. (RTT)

EU: France inflation eases to 5.9% as estimated in Dec. France's consumer price inflation eased as initially estimated in Dec amid a slowdown in the price growth of energy, softening pressure on the ECB to tighten policy at an aggressive pace, the latest data from the statistical office INSEE showed. The consumer price index climbed 5.9% YoY in Dec, slower than the 6.2% rise in Nov. That was in line with flash data published on Jan 4. Energy prices surged 15.1% annually, which was slower than the 18.4% rise registered in Nov. Food price inflation held steady at 12.1%. (RTT)

EU: Italy industrial production falls unexpectedly on lower energy output. Italy's industrial production decreased for the third straight month in Nov, driven mostly by a steep decline in energy goods output and to a lesser extent by weakness in the consumer and intermediate goods divisions, the statistical office Istat said. Industrial production fell a seasonally adjusted 0.3% MoM in Nov, following a 1.1% rise in Oct. Meanwhile, economists had forecast a 0.3% gain. Production in the energy goods sector dropped the most, by 4.5%, since Oct. Production of consumer and intermediate products fell 0.4% and 0.3%, respectively. (RTT)

UK: Economy unexpectedly expands in Nov. The UK economy unexpectedly expanded in November as the FIFA World Cup boosted sales of food and beverages, data from the Office for National Statistics revealed. GDP grew 0.1% on a monthly basis in Nov, confounding expectations for a fall of 0.2%. Nonetheless, the pace of growth eased sharply from 0.5% in Oct. GDP is still 0.3% below its pre-coronavirus levels. Moreover, in the three months to Nov. GDP shrank 0.3% from the previous three months. On a yearly basis, the economy expanded only 0.2% in Nov after Oct's annual growth of 1.1%. (RTT)

China: Trade tumbles sharply in Dec, clouds 2023 growth outlook. China's exports shrank sharply in Dec as global demand cooled, highlighting risks to the country's economic recovery this year, but a more modest decline in imports reinforced views that domestic demand will slowly recover in coming months. While imports are expected to ride a wave of pent-up demand after China dropped its tough COVID-19 measures in Dec, its exports are seen weakening well into the new year as the global economy teeters on the brink of recession. Exports contracted 9.9% YoY in Dec, extending a 8.7% drop in Nov, though slightly beating expectations, customs data showed. The drop was the worst since Feb 2020. (Reuters)

China: Dec copper imports slide as demand cools, but up in 2022. China’s copper imports fell 12.7% in Dec from a year earlier, weighed down by weak demand as factory activity shrank at a sharper pace amid surging COVID-19 infections. Imports of unwrought copper and copper products totalled 514,049 tonnes in Dec, data from the General Administration of Customs showed. The purchases, which included anode, refined, alloy and semi-finished copper products, compared with imports of 589,165 tonnes in Dec 2021, a 14-month high. “Domestic copper consumption slowed down since mid- to late-Oct, resulting in lower demand for imports,” said a copper analyst at Shanghai Metals Market. (Reuters)

South Korea: Bank of Korea raises interest rates, hints they will now be steady. South Korea's central bank raised its policy interest rate by 25 basis points as expected, but bond yields plunged in response to comments suggesting its 1-1/2-year rate hike campaign had ended. The benchmark 10-year treasury bond yield dived as much as 14.3 basis points to 3.270%, its lowest since late August and far below the BOK's policy rate which was raised to 3.50%. The central bank said in a statement that economic growth this year would fall short of forecasts issued in Nov while inflation would slow in line with its expectation of two months ago. It abandoned a formerly regular reference to the need for more interest rate rises. (Reuters)

Markets

Revenue Group: Files police report, eyes special review after suspended co-founders . Revenue Group has filed police reports against two suspended executive directors — co-founders Brian Ng Shih Chiow and Dino Ng Shih Fang — over complaints, illegal forced entry and alleged theft. Meanwhile, the e-payment solutions provider is considering two independent professional firms to conduct a special review but did not elaborate on what it will entail (The Edge)

MCE Holdings: Gets contract to supply parts of Perodua's new model, expects RM60.7m revenue . MCE Holdings unit has secured a contract to supply various electronic and mechatronics parts of a new car model under Perusahaan Otomobil Kedua SB (Perodua), which is expected to generate total revenue of about RM60.7m. The supply of these parts is expected to commence in 3QFY2024, for a duration of six years and will involve an estimated investment cost of about RM5.5m. (The Edge)

Advancecon: Plans private placement to fund large-scale solar project . Advancecon Holdings has proposed to undertake a private placement of up to 20% of the company’s total share base to raise as much as RM21.9m to fund the development of a solar photovoltaic project under the Large Scale Solar 4 (LSS4) @ MEnTARI programme. (The Edge)

Eduspec: Plans rights issue with free warrants; 20-to-one share consolidation . Eduspec Holdings has proposed to undertake a rights issue with free warrants to raise as much as RM29.9m for the repayment of borrowings, as well as to fund its education programs and digital school solutions business. Prior to implementing the rights issue, Eduspec plans to undertake a share consolidation of every 20 Eduspec shares into one share on a date to be determined and announced later. (The Edge)

MGB: Explores construction project in Saudi Arabia. MGB Bhd is exploring a collaboration with Sany Alameriah For Construction Co Ltd for the installation of IBS precast concrete products in Saudi Arabia. The construction group said under the partnership, it would be appointed to install IBS precast concrete products in up to 10,000 units of properties under the Government Sakani Program in Saudi Arabia. The contract, with a value of about SAR2.5bil, would have a duration of five years. (StarBiz)

Aurelius: Plans 10% placement to raise RM75m, proposes to buy land for RM13.6m . Aurelius Technologies has on Jan 13 proposed a 10% shares placement to raise about RM75m. The proceeds from the corporate exercise will be mainly used to partly repay bank loans and to purchase additional surface mount technology (SMT) lines. The electronics manufacturing services (EMS) firm said in a bourse filing that the issue price per placement share has been assumed to be RM2.10, which represents a discount of approximately 1.7% to the five-day volume weighted average market price of the shares up to and including the latest practicable date (LPD) of RM2.1353 per share. (The Edge)

PTT Synergy: Explores collaboration on EV project . PTT Synergy Group has inked a MoU with Sany International developing (M) SB and Rootcloud Technology (Singapore) Pte Ltd to explore a collaboration in an electric vehicle (EV) project. The group said the parties intend to explore a business that provides EV support and solutions via electric battery leasing services and provision of renewable energy and zero carbon logistics instruments. (StarBiz)

Market Update

The FBM KLCI might open higher today after US stocks notched their largest weekly gains in two months as earnings season kicked off and traders took economic indicators showing easing inflation as a sign that the Federal Reserve would not have to be as aggressive in raising interest rates this year. Wall Street’s blue-chip S&P 500 rose 0.4% on Friday, taking the weekly gain to 2.7%. The Nasdaq Composite climbed 0.7%, taking gains over the past five sessions to 4.8%. The indices had their largest weekly advances since mid November, and notched back-to-back weekly gains following four weeks of consecutive losses. The week’s rally was driven by data that showed annual US inflation declined for the sixth consecutive month to 6.5%, the lowest consumer price index reading in more than a year. Rates markets priced in a higher probability that the Fed will slow the pace of its monetary tightening at its next meeting in February, with a 0.25 percentage point rise firmly expected to follow December’s half a percentage point increase. Across the Atlantic, Europe’s Stoxx 600 added 0.5%, London’s FTSE 100 gained 0.6% to nudge closer to an all-time high and Germany’s Dax added 0.2%.

Back home, Bursa Malaysia ended the week in positive territory at its intraday high on Friday, taking the cue from the improved performance of regional markets and optimism surrounding China’s reopening as well as the weakening of the US dollar. At the closing bell, the benchmark FBM KLCI advanced by 6.37 points or 0.43% to reach its intraday high of 1,495.03 from Thursday's closing of 1,488.66. Hong Kong’s Hang Seng index gained 1% and China’s CSI 300 index of Shanghai and Shenzhen-listed shares added 1.4%. Data released on Friday showed China’s exports suffered the sharpest fall in almost three years in December, declining 9.9% on an annual basis in dollar terms.

Source: PublicInvest Research - 16 Jan 2023