Economy

US: Wholesale inventories post smallest gain in 2-1/2 years, sales muted. US wholesale inventories recorded their smallest increase in nearly 2-1/2 years in Dec, suggesting that businesses were holding back on placing new orders for goods amid stagnation in sales as higher interest rates curb demand. The Commerce Department said that wholesale inventories edged up 0.1% as previously reported last month. That was the smallest gain since Jul 2020. Stocks at wholesalers increased 0.9% in Nov. Inventories would be unrevised. Inventories are a key part of GDP. There were increases in wholesale stocks of motor vehicles and electrical equipment. (Reuters)

US: Treasury yields hold near one-month highs as Fed seen more hawkish. US Treasury yields held near one-month highs on Wed as investors adjusted for the likelihood that the Fed will hike interest rates further than previously expected, following a blockbuster jobs report for Jan. The jobs report on acknowledged that interest rates may need to move higher than expected if that sort of economic strength threatens the Fed’s progress in lowering inflation. (Reuters)

EU: Sticky inflation means the ECB could be far from a policy pivot. ECB is set to hike interest rates again with policymakers in Frankfurt shifting their focus to core inflation and trying to predict when sky-high consumer prices might fall. Euro area inflation has dipped in the last few months as energy prices have come down. But core inflation, which strips out energy and food, keeps on rising at a steady pace. The euro area economy is proving more resilient than expected and even avoided a contraction in the last quarter of the year. France and Spain recorded growth which made up for the shrinking output of Italy and Germany. (CNBC)

EU: China remains Germany's main trading partner for seventh year. Trade between Germany and China rose to a record level last year, making the Asian country Germany's most important trading partner for the seventh year in a row despite political warnings in Berlin about excessive dependence. Goods worth around EUR298bn (USD320bn) were traded between the two countries, up around 21% from 2021. In 2022, Germany imported goods worth EUR191bn from China, a third more than in 2021. Exports of German goods to China increased by only 3.1% to around EUR107bn. Overall, Germany had a trade deficit with China of around EUR84bn. (Reuters)

UK: Uncertain economic outlook, high inflation weigh on UK job placements. On-going economic uncertainty coupled with the cost pressures forced the British employers to take a more cautious approach on staff hiring. Permanent staff appointments declined for the fourth consecutive month, albeit at a weaker pace as firms often preferred to take temporary staff to fill vacancies. As a result, temporary billings grew the most since last Sep. There was a strong increase in demand for staff, with overall vacancies rising at the fastest rate in three months. Temp vacancies grew at a stronger rate than permanent staff demand. (RTT)

China: Car sales plunge 38% in Jan as subsidies, tax cut end. China's passenger car sales slumped 38% in Jan, reversing a 2.4% gain in the previous month as demand weakened after a tax cut on combustion engine cars and subsidies on EV expired. Sales of new energy cars that include pure battery EVs and plug-in hybrids also fell 6.3% in Jan after a blistering 90% growth in 2022. Despite signs of easing demand in the world's largest car market, China's central government did not extend a 50% purchase tax cut on combustion engine vehicles when it expired at the end of Dec. (Reuters)

India: Fuel demand slips in Jan from nine-month peak. India's fuel demand slipped in Jan after hitting a nine-month peak in Dec, hit by lower mobility due to cold weather in parts of the country and a slowdown in industrial activity. Consumption of fuel, a proxy for oil demand, was about 4.6% lower than the previous month at 18.7MT in Jan. Sales of diesel fell 7.6% in Jan from a month ago to 7.1MT, while sales of gasoline, or petrol, fell 5.3% to 2.82MT. India's manufacturing industry started the year on a weaker note, expanding at its slowest pace in three months in Jan as output and sales growth slackened. (RTT)

Singapore: Government spending could exceed 20% of GDP by 2030, GST and other tax moves help to close funding gap. Singapore is expecting government expenditure to rise to about 19% to 20% of GDP between the financial years of 2026 to 2030, and possibly exceed 20% by the end of the decade. Healthcare will be a key driver of this anticipated increase in national spending, which currently stands at 18% of GDP. On the other hand, total government revenue made up of operating revenue, such as tax and non-tax collections, and the Net Investment Returns Contribution (NIRC) is now at about 18.5% of GDP. (CNA)

Malaysia: Retail sales growth eases slightly to 22.7%. Malaysia's retail sales growth eased for the sixth straight month in Dec, though marginally. The value of retail sales logged an annual growth of 22.7% in Dec, following a 22.8% gain in Nov. Further, this was the slowest rate of growth since April 2022, when sales had risen 20.9%. (RTT)

Markets

UEM Sunrise (Neutral, TP: RM0.33): KLCC land buy falls through as conditions precedent not met. UEM Sunrise’s plan to buy a freehold land situated near the KLCC has fallen through after conditions precedent under the SPA were not fulfilled within the conditional period, which expired on Feb 7. As the SPA had lapsed, the vendor Nipponkey SB will refund the deposit, including any interest accrued, within 14 days. (The Edge)

EG Industries: Proposes 10% private placement to raise RM22m. EG Industries has proposed a private placement to raise RM22.4m to fund its business expansion and working capital. The placement entails the issuance of up to 40.9m new shares, representing 10% of EG Industries’ issued share to independent investors. The assumed issue price of 54.75 sen represents a discount of 9.95% to the five-day VWAP of EG Industries’ shares up to the LPD, of 60.80 sen. (The Edge)

Ingenieur Gudang: To acquire interest in 164 units of retail lots at commercial complex. Ingenieur Gudang is buying a firm that has acquired the interest in 164 units of retail lots in a commercial complex in Pandan Perdana. The Group is buying Deluxe Mission SB from its sole owner, Soon Boon Fei, for RM8m. Deluxe Mission intends to repurpose and lease the retail lots in Pandan Safari Lagoon Shopping Complex and Water Theme Park to prospective e-commerce entrepreneurs. (The Edge)

Hektar REIT: Sees gain of RM41.6m from revaluation of six assets. Hektar REIT carried out a revaluation on six of its investment properties, resulting in a net fair value gain of RM41.6m. The total value of the six properties; Subang Parade, Mahkota Parade, Wetex Parade,Central Square, Kulim Central, and Segamat Central, rose to RM1.2bn at at Dec 31, 2022, from RM1.2bn previously. The net asset per unit rose to RM1.269, from RM1.188. (The Edge)

Crescendo: Buys three plots of land in Johor for RM67.5m. Crescendo Corp (CCB) is buying three plots of land measuring 109.855 acres in Kota Tinggi, Johor, to expand its landbank. The group is buying the plots, located near its existing development in Bandar Cemerlang, from Johor Land for RM67.55m. The plots are located in a strategic location and they will enable the CCB Group to further expand its landbank near its existing development. (The Edge)

Pharmaniaga: Successfully installs Malaysia’s first pre-filled syringe filling line. The vaccine plant is part of Pharmaniaga LifeScience’s ongoing expansion plan towards becoming the world’s first halal vaccine manufacturing plant. Besides the PFS filling machine, the plant has also commissioned other PFS packing equipment, including denester, automatic visual inspection (AVI) machine, plunger insertion machine, labelling and two-in-one combi unit of washer-steriliser. (The Edge)

Ecomate: Proposes transfer to Main Market. After spending over a year listed on the ACE Market of Bursa Malaysia, Ecomate Holdings eyes a move to the Main Market. The Group proposed a transfer to the Main Market to enhance the company’s prestige and reputation, as well as promote its corporate image. (The Edge)

Market Update

The FBM KLCI might open lower today after US equities fell on Wednesday as investors turned cautious on comments from Federal Reserve officials that US interest rates would have to rise to combat inflation. The blue-chip S&P 500 ended 1.1% lower as traders’ concerns lingered that rates may rise more than they expected since last week’s blockbuster US jobs report. The headline number of the payrolls report released last Friday was far higher than economists expected and led to a sell-off in US stocks and bonds. Fed chair Jay Powell on Tuesday stressed the need for further rate rises to cool the economy. US markets initially responded positively to Powell’s comments. The tech-heavy Nasdaq shed 1.7%, weighed down by an 7.4% fall for Google parent Alphabet after a technology glitch on its new artificial intelligence software disappointed investors. Equities in Europe gave up early gains as US markets headed lower. The benchmark Stoxx 600 finished 0.3% higher, while Germany’s Dax closed up 0.6%. The FTSE 100 rose 0.3%, hitting an intraday record high before easing back.

Back home, the FBM KLCI extended its decline for a second consecutive day, dragged by selling pressure mainly in banking and telecommunication stocks, amid mixed sentiments in regional bourses. At the closing bell, the benchmark FBM KLCI fell 5.63 points or 0.38% to 1,470.75 compared with Tuesday's close of 1,476.38. In the region, the Hang Seng index closed flat, down less than 0.1%, while the Chinese CSI 300 fell 0.4%. Elsewhere, Japan's Nikkei 225 lost 0.29%.

Source: PublicInvest Research - 9 Feb 2023