Economy

US: Weekly jobless claims increase, labour market still tight. The number of Americans filing new claims for unemployment benefits increased more than expected last week, but remained at levels consistent with a tight labour market. Initial claims for state unemployment benefits rose 13,000 to a seasonally adjusted 196,000 for the week ended 4 Feb. Economists forecast 190,000 claims for the latest week. Claims have remained low despite high profile layoffs in the technology industry as well as the interest rate sensitive finance and housing sectors. There is anecdotal evidence that companies are generally reluctant to lay off workers after experiencing difficulties recruiting during the pandemic. (Reuters)

US: Falling online prices point to US goods deflation continuing. Prices for online goods in the US fell 1% in Jan compared to the year before, the fifth consecutive monthly drop, according to new data that offered evidence of the momentum Fed officials see lowering overall inflation. Adobe’s Digital Price Index (DPI), structured around the same categories of goods in the CPI, rose on a MoM basis from Dec to Jan as a result of steep holiday discounting. But the YoY price drops for goods have been helping pull overall inflation measures lower, the data compiled by the US software company showed. (Reuters)

EU: German EU-harmonised Jan consumer prices rise 9.2% YoY. German consumer prices, harmonised to compare with other EU countries, rose by a less-than-anticipated 9.2% on the year in Jan. Compared with Dec, prices increased by 0.5%. Analysts had expected harmonised data to grow by 10.0% on an annual basis and increase by 1.2% on the previous month. According to non harmonised standards, German consumer prices rose 8.7% on year in Jan and 1.0% on the month. (Reuters)

EU: More rate hikes on way as Riksbank says wants stronger currency. Riksbank raised its key interest rate by half a percentage point to 3% and forecast further tightening in the coming months to combat inflation and headwinds from a weak currency. The crown strengthened sharply after the announcement, the first under new Governor Erik Thedeen, which surprised many in the market who had expected Thursday's hike to be the last in this tightening cycle. After a rapid series of rate hikes, central banks around the world are trying to gauge when to call a halt and ensure a soft landing for economies facing multiple challenges. (Reuters)

UK: BoE Chief says inflation likely to remain persistent. BoE Governor Andrew Bailey said he is concerned about the continued persistence of inflation but forecast the rate to ease sharply this year. The policymakers are concerned about persistence of inflation. That is why the monetary policy committee raised the interest rate. Nonetheless, the governor said inflation will come down rapidly this year. Last week, the BoE raised its benchmark rate by a half percentage point citing stronger-than-expected wage growth but softened its stance on future tightening. The bank rate was lifted to 4.00%, the highest since 2008. (RTT)

UK: Housing market hit by widest prices falls since 2009. Britain's housing market suffered the most widespread price falls since 2009 last month as the run of interest rate increases over the past year weighed on would-be buyers. The Royal Institution of Chartered Surveyors (RICS) house price balance, which measures the gap between the percentage of surveyors seeing rises and falls in house prices, fell to -47, the lowest since Apr 2009, from -42 in Dec. A measure of interest from buyers also fell to -47, its lowest since Oct last year. (Reuters)

Japan: LDP says it will split if Kishida seeks BOJ pivot. Members of Japan’s ruling party face the prospect of a split within the party if Prime Minister Fumio Kishida chooses Hirohide Yamaguchi as the next governor of the Bank of Japan. With the nomination of Haruhiko Kuroda’s successor likely to come next week, many members of the Liberal Democratic Party said there would be opposition within the party if Kishida chooses Yamaguchi, a former BOJ deputy governor. He spoke on condition of anonymity. The yen fluctuated against the dollar following the report, as did a benchmark index of shares in Japan. According to Asia-based FX traders, currency swings are attributed to trading algorithms operating on keyword triggers. Yamaguchi’s name recently came third in The Economist polls of potential BOJ gubernatorial candidates, with him being mentioned in local media as a possible pick. He is considered more flamboyant than the other contenders for the top post. (Bloomberg)

Taiwan: Inflation rises to 6-month high. Taiwan's CPI accelerated unexpectedly to a 6-month high at the start of the year, driven by increases in vegetable prices and the impact of the Lunar New Year's holidays. CPI rose 3.04% YoY in Jan, faster than the 2.71% increase in Dec. Economists had forecast inflation to slow to 2.69%. Further, this was the weakest inflation rate since Jul 2022, when prices had risen 3.35%. The price index for vegetables grew 28.25% annually in Jan, and that for eggs rose 15.74%. (RTT)

New Zealand: Manufacturing index improves to 50.8 in Jan. The manufacturing sector in New Zealand moved back into expansion territory in Jan with a PMI score of 50.8. That's up from the upwardly revised 47.8 reading in Dec (originally 47.2) and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Among the individual components of the survey, employment (51.0), production (52.1), deliveries (51.6) and finished stocks (52.6) all expanded, while new orders (48.8) remained in contraction. (RTT)

Markets

Cypark (Outperform, TP: RM0.85): Signs MOU to operate specialist hospital in Johor. Cypark Resources has entered into a MOU to build and operate a private hospital on a five-acre land belonging to UTM in Skudai, Johor. The renewable energy company signed the MOU with UTM and Selgate Healthcare SB — a unit of PKNS. The specialist hospital will be adopting renewable and energy efficient technologies that will be in tandem with efforts in ESG. (The Edge)

KAB: In RM230m deal with Petronas Gas. Kejuruteraan Asastera (KAB) has entered into a JV with Petronas Gas (PGB) to co-own and undertake an earlier announced RM230m power plant project in Sabah. The power plant will be the sole energy supplier to Petronas’ nearshore floating LNG facility. KAB signed a share purchase agreement with PGB to acquire a 10% stake in PGB's subsidiary Regas Terminal (Lahad Datu) SB (RGTLD), which is responsible for owning and undertaking the power plant project. KABEH also signed a shareholders' agreement with PGB to assume the role of technical partner in the joint venture. (BTimes)

Euro Holdings: Plans another private placement to raise up to RM31m; diversification into steel business. Euro Holdings has proposed to undertake another round of private placement to raise up to RM30.9m for its working capital requirements and repayment of bank borrowings. Last Dec, it managed to raise RM9.7m via the issuance of 80m shares, also for working capital and repayment of bank borrowings. In the latest proposed fundraising exercise, the office furniture maker will issue up to 264.6m new shares — representing 30% of its shares in issue — to independent third party investors at an issue price to be determined later. (The Edge)

Tien Wah: Gets 3-year extension to supply packaging materials to BAT group. Tien Wah Press Holdings will continue to manufacture and supply packaging materials for the British American Tobacco (BAT) group until Dec 31, 2025. BAT had agreed to extend the agreement with its Indonesian subsidiary PT Bintang Pesona Jagat (BPJ) by another three years. Tien Wah also has an ongoing contract to supply printed cartons to BAT for a five year period from Jan 1, 2020 to Dec 31, 2024. (The Edge)

Bina Darulaman: Secures RM34m contract from agriculture ministry. Bina Darulaman has been awarded a RM34.1m contract by the Ministry of Agriculture and Food Security to develop a tertiary irrigation system in Kedah and Perlis. The project is expected to contribute positively to the Kedah-based developer’s revenue in the financial years ending 2023 and 2024, the group said. The completion period for the project is 104 weeks from the date of site possession on Feb 27, 2023. (The Edge)

MyEG: Concession may be extended. MY E.G Services expects its concession to handle foreign workers and maids applications and renewals will be maintained at least until 2025, according to its CEO Wong Thean Soon. Besides passport renewals and visa applications, these would also include applications and renewals of foreign workers' permits and maid permits. (BTimes)

Market Update

The FBM KLCI might open lower today after Wall Street stocks fell on Thursday as investors assessed the latest batch of corporate updates and fresh labour market data for clues about the outlook for the world’s biggest economy. The benchmark S&P 500 index closed 0.9% lower, while the Nasdaq Composite lost 1%. The latter gauge had climbed as much as 1.3% earlier in the session. Those declines came as tech giant Alphabet extended its losses into a second day, with its shares sliding more than 4% after closing almost 8% lower on Wednesday. The declines followed a glitch in a Google artificial intelligence demonstration this week and reflected broader concerns over competition in the AI arena from Microsoft. Walt Disney shares finished the day 1.3% lower, but had been higher earlier in the day after activist investor Nelson Peltz called time on his proxy fight against the company. In Europe, the Stoxx closed 0.6% higher which closed at its highest level in nearly a year as the slowing pace of price growth in Germany reassured investors that the European Central Bank would not have to raise rates by more than expected.

Back home, the FBM KLCI ended lower for a third consecutive day on the lack of fresh catalysts as investors remain cautious amid the jittery performance of regional and global equity markets. At the closing bell, the benchmark FBM KLCI fell 6.11 points or 0.42% to 1,464.64 compared with Wednesday's close of 1,470.75. The regional markets finished mixed with the Hang Seng gained 1.60% and the Shanghai Composite rose 1.18%. The Nikkei 225 lost 0.08%.

Source: PublicInvest Research - 10 Feb 2023