Economy

US: New York manufacturing index indicates significant contraction in Jan. New York manufacturing activity has seen a significant contraction in the month of Jan. The New York Fed said its general business conditions plunged to a negative 32.9 in Jan from a negative 11.2 in Dec, with a negative reading indicating a contraction. Economists had expected the index to climb to a negative 4.5. (RTT)

EU: German economic sentiment strengthens on favourable energy markets. Germany's economic sentiment turned positive in Jan for the first time in nearly a year, underpinned by more favourable energy market conditions, government energy price caps, and a better export situation as a result of China's current measures to lift Covid pandemic restrictions. The ZEW Indicator of Economic Sentiment surged 40.2 points to +16.9 in Jan. The score was forecast to climb slightly to -15.0. Further, the indicator turned positive for the first time since February 2022, the month in which the war in Ukraine began. (RTT)

UK: Jobless rate remains unchanged, wage pressures rise further. The UK unemployment rate remained unchanged in the three months to Nov and wage pressures intensified despite the economy heading into a recession. ILO jobless rate held steady at 3.7% in the three months to Nov, as expected. Average earnings excluding bonuses increased 6.4% in the three months to Nov, which was the fastest since records began in 2001, excluding the height of the coronavirus pandemic. Economists had forecast an increase of 6.3%. (RTT)

China: Zero Covid policy damps China 2022 GDP growth. China's strict zero-covid policy took the economic growth to one of the weakest in decades, but the lifting of stringent measures over Dec is widely expected to boost industrial production, exports and retail sales in the new year. The second largest economy grew only 3.0% in 2022, marking the weakest expansion in decades. By a bigger margin, the GDP growth missed the government's full year target of around 5.5%. In 2021, the economy had expanded about 8.1%. The full year 2022 figure was better than 2.2% expansion in 2020, which was the weakest since 1976, after the Covid-19 pandemic. In 4Q, GDP posted an annual growth of 2.9%, which was weaker than the 3.9% expansion seen in 3Q. On a quarterly basis, GDP remained flat, confounding expectations for a decline of 0.8%. (RTT)

Japan: Government to present nominees for BoJ top jobs on Feb 10. Japanese government is set to present its nominees for the new Bank of Japan (BoJ) Governor and two deputy chiefs on Feb 10. The Japanese parliament convenes on Jan 23. There is also the likelihood of the date of presenting nominees being pushed forward by several days depending on developments in the parliament. Present BoJ Governor Haruhiko Kuroda's term ends on April 8. He had become the central bank chief in 2013. His two deputies, Masayoshi Amamiya and Masazumi Wakatabe, are set to step down on March 19. Amamiya and, former deputy governors Hiroshi Nakaso and Hirohide Yamaguchi are leading the race to be the next BoJ chief. The central bank is set to review the side-effects of its massive monetary easing during the policy session on Jan 17 and 18, and may make additional policy adjustments to correct the distortions in the yield curve. (RTT)

Australia: Consumer confidence logs biggest monthly rise in 21 months. Australia's consumer confidence improved for the second straight month in Jan to mark its biggest monthly rise since April 2021, as consumers got a temporary boost due to an interval from the Reserve Bank's rate hikes, although the overall economic picture is still gloomy. The Westpac Melbourne Institute Index of Consumer Sentiment rose 5.0% to 84.3 in Jan from 80.3 in Dec. This is the largest increase in the index since April 2021, and prior to that, since Oct 2020 when consumers were responding to positive news around the pandemic. The survey revealed that the lift in confidence was because Jan was the first month since April last year that did not see an increase in the RBA cash rate. (RTT)

Singapore: Exports slump 20.6% on weaker demand. Singapore's non-oil exports declined for the third straight month in Dec, and at a faster-than-expected pace, amid sharp falls in both shipments of electronic and non-electronic goods. Non-oil domestic exports, or NODX, decreased 20.6% YoY in Dec, which was worse than the 14.7% fall in Nov. Economists had expected a 16.8% fall. Electronic exports plunged 17.9%, largely led by significant contractions in the shipments of microchips, disk media products and computer parts. The non-electronic NODX logged an annual decline of 21.3%, impacted by lower foreign demand for non monetary gold, specialized machinery, and primary chemicals. On a monthly basis, the NODX decreased 3.3% in Dec, after a 9.2% fall in the previous month. Meanwhile, economists had forecast a 1.0% renewed rise at the end of the year. In Dec, non-oil domestic exports to the top 10 markets as a whole decreased, primarily as a result of China, Indonesia, and Hong Kong, while those to South Korea and Japan increased. (RTT)

Markets

Sunway Construction: Wins RM218.8m solar PV contract. Sunway Construction Group has accepted a letter of award (LoA) worth RM218.8m from Gopeng Bhd for the construction of a solar photovoltaic energy generating facility in Perak. It said the scope of the works will include the design, engineering, procurement, construction, testing and commissioning (EPCC) of a solar photovoltaic energy generating facility with ancillary equipment and facilities, with generating capacity of 50MW. The EPCC works are to be commenced immediately on Jan 17, 2023, adding that the duration for the completion of the job is 20 months from the commencement date. (StarBiz)

F&N: 2023 to remain challenging amid rising raw material prices, supply chain instability. Fraser & Neave Holdings (F&N) expects the business environment in 2023 to be as challenging as last year, with increasing prices of raw materials, potential instability in global supply chains, and the risk of a recession that will have repercussions across the entire commodity landscape. The group would continue to strengthen its cost management measures amid expected inflation for commodity goods and raw materials, as well as lingering effects from the COVID-19 pandemic, such as supply chain disruptions and heightened freight costs. (StarBiz)

DNeX: Inks two production sharing contracts with PETRONAS. Dagang Nexchange (DNeX) has signed two production sharing contracts (PSCs) with PETRONAS for discovered oil and gas resources in Malaysia. The group said the first PSC is for the development and production of oil and gas resources in the Meranti cluster located 80km offshore Kuala Terengganu. Meanwhile, the second PSC is for the development and production of oil and gas resources in the A Cluster located 290 km off the coast of Miri, Sarawak, offshore Malaysia. (StarBiz)

EP Manufacturing: Teams up with TNB on localisation of battery and swapping station. EP Manufacturing has entered into a MOU with Tenaga Nasional Bhd (TNB) to explore the possibility of localising the production of battery and battery swapping stations for the Asean market. The MOU also involves deploying battery swapping stations via TNB subsidiary Tenaga Switchgear SB’s network in Malaysia and the Asean region. EP Manufacturing said the MOU was signed by its indirect wholly-owned unit, EP Blueshark SB, and Tenaga Switchgear on Jan 17, and will be effective for 12 months. (The Edge)

G3 Global: Makes cash call again, plans to raise up to RM18.3m via 30% private placement. Less than seven months after G3 Global completed its 20% private placement that raised RM18.2m, the group has proposed another cash call to raise up to RM18.3m. G3 plans to place out up to 870.83m new shares or 30% of its share capital in the latest private placement. The group also announced that it wants to amend its utilisation plan for gross proceeds raised from the previous private placement, the bulk of which was originally earmarked for the group's diversification into the healthcare business, including the distribution of Covid-19 test kits. (The Edge)

Ancom Nylex: 2Q net profit jumps 70% to RM20.6m. Ancom Nylex, which posted a 70.2% jump in net profit to RM20.6m in the 2Q ended Nov 30, expects to perform satisfactorily for the current financial year. The integrated chemical group’s revenue stood at RM531.3m in 2Q against RM532.9m a year ago while earnings per share stood at 2.34 sen for the quarter from 1.64 sen a year prior. (StarBiz)

Market Update

The FBM KLCI might open lower today as US stocks traded in a tight range on Tuesday after contrasting fourth-quarter results from investment banks Goldman Sachs and Morgan Stanley, while China revealed underwhelming annual gross domestic product data. Wall Street’s blue-chip S&P 500 oscillated between small gains and losses as it reopened after a long weekend, before closing 0.2% lower. Gains in real estate and consumer-focused stocks offset weakness in basic materials and financials. The tech-heavy Nasdaq Composite added 0.1%. Morgan Stanley was one of the S&P 500’s top performers, rising 5.9% after higher net revenues at its wealth management division overshadowed a 40% year-on-year drop in net income. Rival Goldman Sachs, in contrast, was one of the index’s biggest fallers, dropping 6.4% after its profits sank by two thirds in the final three months of last year. Investors on Tuesday also responded to news that China’s GDP growth last year fell far short of Beijing’s 5.5% target, while the country’s population declined for the first time in 60 years. Despite the weak full-year numbers, some investors focused on the economic bounce delivered in the final months of 2022 after Beijing’s abrupt abandonment of its strict zero-Covid policies. In Europe on Tuesday, the regional Stoxx Europe 600 added 0.4% and London’s FTSE 100 dipped 0.1%, closing slightly below its record high. Germany’s Dax gained 0.4%.

Back home, Bursa Malaysia shook off earlier losses to end at its intraday high on Tuesday, lifted by late buying of selected telecommunications and media, as well as industrial products and services counters. At the closing, the benchmark FBM KLCI had risen 5.82 points or 0.39% to close at 1,499.38, just a whisker below the 1,500 psychological levels, from Monday's closing at 1,493.56. The CSI 300 index of Shanghai- and Shenzhen-listed shares, which has climbed about 17% since the start of November, held on to its recent gains on Tuesday, closing flat while Hong Kong’s Hang Seng dipped 0.8%.

Source: PublicInvest Research - 18 Jan 2023