Economy

US: Failure to raise US debt ceiling would lead to economic and financial catastrophe. The US government risks economic and financial catastrophe if the House fails to pass a bill to raise the USD31.4trn debt ceiling. The nation hit the statutory limit last month, but Republican members of Congress are holding out on raising it to negotiate changes in federal spending rules with the White House before drafting a bill. The Treasury Department under Yellen has taken several temporary measures to help the government avoid default. (CNBC)

US: Jobs report shows increase of 517,000 in Jan, crushing estimates, as unemployment rate hit 53-year low. The employment picture started off 2023 on a stunningly strong note, with nonfarm payrolls posting their biggest gain since July 2022. Nonfarm payrolls increased by 517,000 for Jan, above the DJI’s estimate of 187,000 and Dec’s gain of 260,000. The unemployment rate fell to 3.4% versus the estimate for 3.6%. (CNBC)

US: Financial conditions may tighten further. US stocks may fall further, and bond yields rise, as the Fed continues its current round of interest-rate hikes in coming months. Financial conditions have already tightened significantly, starting even before the US central bank began raising interest rates last March to fight 40-year-high inflation. Assuming the Fed follows through on its projections from Dec for the policy rate to go to 5.1% by May and for inflation to fall to 3.1% by then, the Fed will have delivered the sharpest round of policy tightening on record. (Reuters)

EU: Euro zone yields rise as hopes for quick end of tightening cycle fade. Eurozone investor confidence strengthened to hit an 11-month high in Feb, replacing recession expectations with signs of stagnation. The investor sentiment index improved to -8.0 in Feb from -17.5 in Jan. This was the highest reading since March 2022. With the fourth consecutive rise, the sentiment indicator is gradually heading toward the zero line. (RTT)

EU: Rise in Eurozone sentix investor confidence eases recession fears. Eurozone government bond yields rose and spreads between core and periphery yields widened as investors’ hopes for a quick end to the monetary policy tightening cycle were fading. Borrowing costs plunged as remarks from the ECB, the Fed and the BoE fuelled speculation that the rate hiking path would be shorter than previously expected. The day after, robust US economic data and hawkish comments from ECB policymakers triggered a sharp bond sell-off, driving euro area borrowing costs back up. (Reuters)

UK: Car registrations rise 14.7% in Jan. UK car registrations increased for the sixth straight month in Jan on the back of strong demand for hybrid electric vehicles. Car registrations grew by 14.7% on a yearly basis in Jan, following an 18.3% rise in Dec. Data showed that 131,994 new cars were registered at the start of the year. This was the best start to the year since Jan 2020's pre Covid 149,279 units and marks the sixth successive month of expansion. (RTT)

UK: Construction activity registers another downturn. The UK construction sector posted another contraction in Jan as rising interest rates and high inflation led to the steepest fall in house building since early 2020. The Chartered Institute of Procurement & Supply construction Purchasing Managers' Index fell to 48.4 in Jan from 48.8 in Dec. This was the biggest decline since May 2020. (RTT)

Thailand: Inflation slows more than expected to 9-month low. Thailand's CPI slowed at a faster than expected pace at the start of the year to its lowest level in nine months on the back of lower food and energy prices. The CPI rose 5.02% YoY following a 5.89% increase in Dec. Economists had forecast 5.12% inflation. The latest inflation rate was the lowest since April last year, when it was 4.65%. (RTT)

Markets

Cypark (Outperform, TP: RM0.85): Gets nod to operate SMART waste-to-energy plant in Port Dickson. Cypark Resources will operate a solid waste modular advanced recovery and treatment waste-to-energy (SMART WTE) plant at Ladang Tanah Merah, Port Dickson in Negeri Sembilan. Cypark received the confirmation of feed-in-tariff commencement (FiTCD) on Feb 3 from SEDA. (The Edge)

IJM Corp (Outperform, TP: RM1.97): Appoints Lee Chun Fai as group CEO, MD. IJM Corporation has appointed Lee Chun Fai as its group CEO and MD effective from April 1 this year. Lee is currently the deputy CEO and deputy MD and will succeed Liew Hau Seng, who announced his intention to retire effective from March 31. IJM chairman, Tan Sri Krishnan Tan said Lee's appointment resulted from a robust succession planning process through which the company expects a seamless transition. Lee has been instrumental in building the group's portfolio of local concession assets into the powerhouse it is today, with road concessions such as the New Pantai Expressway and Besraya. (BTimes)

Hibiscus Petroleum (Trading Buy, TP: RM1.18): East Coast drilling exploration with ConocoPhillips Australia shows extensive potential. Hibiscus Petroleum’s associate company in Australia, 3D Oil Ltd’s (TDO) recent planning activities for the East Coast drilling exploration campaign with ConocoPhillips Australia have resulted in the programme being potentially more extensive than previously announced. Hibiscus Petroleum said the planning outcome also provides a transformational opportunity for the company at a time of critical energy instability. (The Edge)

Tropicana Corp: To sell another land in Johor to KSL for RM21m. Tropicana Corp is selling a 10.85-acre land in Pontian, Johor, to KSL Holdings for RM21.3m. The original cost of investment for the freehold land in 2013 amounted to RM7.67m, adding that the expected gain from the disposal would be RM1.6m. The latest sale comes after two previous disposals to KSL by Tropicana last year. (The Edge)

UEM Edgenta: Inks 3 MoUs strengthen position in international healthcare business. UEM Edgenta, through Edgenta Healthcare Support, has entered into memorandum of business exploration (MOBE) partnerships with WAS, First Ambulance Services and Optima Electro Hydraulic Ltd Co to strengthen its position in the international healthcare business. WAS is a German-based company and the world's leading manufacturer of special vehicles and ambulances with over 20 years of experience. The company, in exploration potentials with WAS and First Ambulance, will provide solutions to uplift healthcare services in the country and other regions simultaneously. (BTimes)

IPO: Topvision seeks withdrawal from LEAP Market to pave way for ACE Market. Topvision Eye Specialist’s directors and major shareholders are proposing to voluntarily withdraw its listing from the LEAP Market, paving way for future listing on the ACE Market. Datuk Kenny Liew Hock Nean and Dr Peter Chong Kuok Siong, who collectively own a 67% stake in the company announced the proposal, which requires shareholders’ approval via an EGM. The remaining 33% stake or 84.4m shares in the company are held by 20 minority shareholders. (The Edge)

Market Update

The FBM KLCI might open lower today as US stocks and government bonds sank and the dollar strengthened on Monday after last week’s blockbuster jobs report raised the likelihood of further interest rate increases. Wall Street’s blue-chip S&P 500 closed 0.6% lower and the tech-heavy Nasdaq Composite lost 1% as the most recent non-farm payrolls report continued to dim sentiment. Concerns that borrowing costs may still have further to rise were stirred on Monday after Raphael Bostic, president of the Fed’s Atlanta branch, said the January jobs report could lead to a higher peak in interest rates.

Europe’s region-wide Stoxx 600 fell 0.8%, as did Germany’s Dax, with sentiment also eroded by weak December eurozone retail sales figures. London’s FTSE 100, which last week hit a record high, fell 0.8%. Most Asian equities declined on Monday as a rally in January for Chinese equities fizzled out and heightened US-China tensions deflated sentiment. Hong Kong’s Hang Seng index fell 2%, while China’s CSI 300 shed 1.3%.

Source: PublicInvest Research - 7 Feb 2023