Economy

US: Weekly jobless claims unexpectedly drop below 200,000. The initial jobless claims fell to 190,000, a decrease of 15,000 from the previous week's unrevised level of 205,000. The dip surprised economists, who had expected jobless claims to rise to 214,000. With the expected drop, initial jobless claims declined to their lowest level since hitting a matching figure in the week ended Sept. While initial jobless claims continue to be noisy due to seasonal adjustment factors, the unexpected drop in the latest week is a frustrating reminder for the Fed that the labour market remains tight as employers hold onto workers. (RTT)

US: Housing starts slump less than expected in Dec. New residential construction in US fell for the fourth straight month in Dec although the decrease was much smaller than expected. The report said housing starts slumped by 1.4% to an annual rate of 1.382m in Dec after tumbling by 1.8% to a revised rate of 1.401 million in Nov. Economists had expected housing starts to plunge by 4.8% to an annual rate of 1.359m from the 1.427m originally reported for the previous month. The building permits also dove by 1.6% to an annual rate of 1.330m in Dec after plummeting by 10.6% to a revised rate of 1.351m in Dec. (RTT)

EU: ECB rate hikes have a long way to go. The ECB is set to continue its interest rate hikes for some time ahead as the minutes of the latest policy session in Dec revealed that many policymakers had sought a jumbo raise of 75bps due to the prospect of inflation staying high for too long, but eventually agreed on a smaller half basis point lift in a bid to have more room for higher rates in the future. Elsewhere, ECB President Christine Lagarde and fellow policymaker Klaas Knot also signalled that interest rates have to rise further as inflation remained uncomfortably elevated, and the former even cautioned markets against pricing in smaller hikes. A large number of members initially expressed a preference for increasing the key ECB interest rates by 75bps, as inflation was clearly expected to be too high for too long. (RTT)

EU: Eurozone current account swings to surplus of EUR14bn. Euro area current account balance turned to a surplus for the first time in 9 months in Nov, underpinned by the improvement in foreign trade. The current account surplus for Nov was EUR14bn, versus a EUR1.0bn shortfall in Oct. Prior to Nov, the current account balance had remained negative since March. Data showed that the goods trade balance also swung to a surplus of EUR7.0bn in Nov from a deficit of EUR3.0bn. At the same time, the services trade showed a surplus of EUR18.0bn, up from EUR13.0bn in Oct. (RTT)

UK: Lenders to tighten credit conditions in Q1. UK lenders are set to tighten their credit conditions, applicable to both secured and unsecured lending to households in first quarter of the year. Banks reported a fall in the availability of secured credit to households in 4Q and they expect another fall over 1Q. Similarly, the availability of unsecured credit to households that include credit card and other unsecured lending, decreased in the three months ended Nov and lenders projected the availability to fall further in the next 3 months to Feb. Regarding credit to the corporate sector, banks said the supply remained unchanged in 4Q, but it is set to drop only slightly over the coming quarter. (RTT)

Japan: Trade gap narrows in Dec. Japan's trade deficit narrowed to a 5-month low in Dec but the whole year shortfall was the biggest on record. Exports increased 11.5% on a yearly basis in Dec, slower than the 20.0% rise in Nov. The annual growth was forecast to slow more markedly to 10.1%. Similarly, growth in imports eased to 20.6% from 30.3% in the previous month. Economists had forecast a faster growth of 22.4%. The trade deficit narrowed more than-expected to a 5-month low of JPY1.45trn from JPY2.03trn in Dec. The expected level was JPY1.65trn. The slowdown in exports growth reflected weaker rise in export prices as the yen rallied further last month. (RTT)

Hong Kong: Jobless rate falls to 3.5%. Hong Kong's unemployment rate decreased for the 8th month in a row in Dec. The seasonally adjusted unemployment rate fell to 3.5% in the Oct to Dec period from 3.7% in the Sept to Nov period. The underemployment rate fell marginally to 1.5% in the 3 months to Dec from 1.6% in the preceding period. The number of unemployed decreased by around 12,700 to 126,000. Meanwhile, total employment rose by around 8,300 to 3.67m in Oct to Dec period. (RTT)

Australia: Jobless rate steady at 3.5%, employment unexpectedly falls. Australia's unemployment rate remained unchanged in Dec, but employment logged an unexpected fall and hours worked contracted as consecutive interest rate hikes by the Reserve Bank started to hit the labour market. The unemployment rate held steady at a seasonally adjusted 3.5% in Dec. The rate was forecast to remain unchanged at Nov's initially estimated 3.4%. Employment declined 14,600 in Dec from the previous month, confounding expectations for an increase of 22,500, and Nov's increase of around 58,200. (RTT)

Indonesia: Central bank raises key rate to 5.75% to tame inflation. Indonesia's central bank decided to raise its key interest rate for the 6th policy session at its Jan meeting, to ensure headline inflation remains within the target range of 2% to 4% in the second half of the year. The Board of Governors hiked the BI 7-day reverse repo rate by 25bps to 5.75%. In Dec, the central bank had raised interest rates by the same 25bps. The deposit facility rate was also raised by a quarter-point to 5.00% and the lending facility rate to 6.50%. (RTT)

Markets

Datasonic: Says still in talks with African nation for digitisation, land management job. Datasonic Group has clarified that it is still in talks with the West African nation of Guinea about a project involving the printing of secure documents, digitisation and improvement of land management services. “The board of directors of Datasonic wishes to clarify that the company is in the midst of negotiations on the collaboration with Guinea’s Ministry of Urban Planning, Housing and Territorial Development (MUHAT)”. (The Edge)

Kumpulan Jetson: To dispose of industrial land in Gombak for RM35m. Kumpulan Jetson has proposed to dispose of a 1.62- hectare industrial land in Gombak, with a factory complex built on it, for RM35m. “The proposed disposal will unlock the value of and monetise the long-held property investment,” the group said, adding that the proceeds will be largely allocated to finance working capital and to pare down long-term debt. (The Edge)

YTL Power International: Gets RM1.1bn financing facility to fund data centre development. YTL Power International’s wholly owned unit has been granted a RM1.1bn Islamic term financing facility to fund the development of a data centre in Kulai, Johor. The facility was emplaced to YTL DC South SB for the development of the 48MW IT load hyperscale data centre (HDC), the joint mandated lead arrangers, Maybank and OCBC Bank. (The Edge)

CapitaLand Malaysia: Expects occupancy recovery momentum to sustain in 2023 despite challenging macro environment. CapitaLand Malaysia Trust is “slightly optimistic” that its portfolio occupancy rate would sustain its recovery momentum going into 2023 despite a challenging macroeconomic condition. “We are slightly optimistic in terms of occupancy, simply because I think the momentum is on our side. We are also mindful of the fact that the macro environment is a challenging one,” said the CEO. “But if you look at the trend over the last two quarters, occupancy has been inching up, and this thing tends to have a momentum of itself. All of these operating data, at least on a historical basis, are going up, so that helps in our conversation, and we are seeing more interest on the ground”. (The Edge)

Ecobuilt: Bags RM93m project to develop a business complex in Penang. Ecobuilt Holdings has bagged a construction works project worth RM92.5m to develop a business complex in Penang. The group said its wholly owned subsidiary Rexallent Construction SB has accepted the LOA dated Jan 5 issued by ADM Design & Management SB. Under the project, Rexallent is appointed as the contractor for the development of a three-storey logistics business complex along Lebuhraya Tun Dr Lim Chong Eu. Ecobuilt said the building for Aman Duta SBis expected to be completed by Sept 4. (The Edge)

Aneka Jaringan: To remain vigilant. Aneka Jaringan continues to monitor and assess its business risks such as volatile material prices, energy prices and labour costs. “The group continues to assess and monitor risks while selectively tendering for projects. We have secured RM52m in contracts in financial year ending Aug 31, 2023 (FY23) and we are also increasing capacity in Indonesia to leverage on the country’s growing infrastructure needs while monitoring developments on the new Indonesian capital of Nusantara in which we believe would present us a lot of opportunities,” the MD. (StarBiz).

Market Update

The FBM KLCI might open lower today as Wall Street stocks fell on Thursday after central bankers vowed to “stay the course” on fighting inflation, and as investors analysed a new batch of data for clues about the health of the US economy. The benchmark S&P 500 index closed 0.8% lower, while the technology-heavy Nasdaq Composite lost 1%. European shares also closed lower, with the regional Stoxx 600 sliding 1.6%. The stock index declines on Thursday followed data releases giving the latest signals about the state of the world’s largest economy. Initial claims for US unemployment benefits fell to 190,000 in the week ending January 14 from 205,000 in the previous week, a report showed, indicating labour market resilience despite the Fed’s efforts to tighten monetary policy. Microsoft’s announcement on Wednesday of plans to cut 10,000 workers only added to the gloom, while consumer goods conglomerate Procter & Gamble’s shares slid after reporting on Thursday that net sales slipped in its latest quarter from a year earlier.

Back home, Bursa Malaysia rebounded from Wednesday’s losses to end slightly higher on Thursday, supported by positive local sentiment following Bank Negara Malaysia’s (BNM) decision to maintain the overnight policy rate (OPR). At the closing bell, the benchmark FBM KLCI grew 0.72 point, or 0.05%, to 1,496.22 from Wednesday’s closing of 1,495.5. Elsewhere in equity markets, Hong Kong’s Hang Seng index fell 0.1% and China’s CSI 300 added 0.6%, with both indices up sharply in recent months thanks to Beijing’s reversal of strict zero-Covid policies in December.

Source: PublicInvest Research - 20 Jan 2023