Economy

US: Retail sales rebound strongly in Jan. US retail sales rebounded sharply in Jan after two straight monthly declines, driven by purchases of motor vehicles and other goods, pointing to the economy’s continued resilience despite higher borrowing costs. Retail sales surged 3.0% last month. Data for Dec was unrevised to show sales dropping 1.1% as previously reported. Economists poll had forecast sales would increase 1.8%, with estimates ranging from 0.5% to 3.0%. Some cautioned against reading too much into the jump in retail sales. (Reuters)

US: Manufacturing output surges in Jan. Production at US factories rebounded in Jan, but output in the prior month was much weaker than initially thought amid higher borrowing costs that are hurting the manufacturing sector. Manufacturing output increased 1.0% last month. Data for Dec was revised down to show production at factories declining 1.8% instead of the previously reported 1.3%. Economists poll had forecast factory production would increase 0.8%. Output gained 0.3% on a YoY basis in Jan. (Reuters)

US: Business inventories rise moderately. US business inventories rose moderately in Dec as businesses carefully managed stocks amid slowing demand, with the inventory to sales ratio hitting a two year high. Business inventories increased 0.3% after climbing by the same margin in Nov. Inventories are a key component of gross domestic product. Dec’s gain was in line with economists’ expectations. Inventories increased 12.7% on a YoY basis in Dec. Inventory accumulation surged in the fourth quarter, mostly reflecting an unwanted piling up of goods, as higher borrowing costs contributed to the slowest pace of growth in domestic demand in 2.5 years. (Reuters)

EU: Industrial output falls, trade deficit widens. Reflective of weak economic activity towards the end of the year, Eurozone industrial production declined more than expected and the trade deficit widened in Dec, suggesting that the currency bloc is not far from a recession. Industrial production was down 1.1% on a MoM in Dec, in contrast to the 1.4% increase in Nov. Output was forecast to fall 0.8%. All sub-components posted decline in Dec except energy output, which gained 1.3%. Production of intermediate goods slid 2.8% percent and that of durable consumer goods by 1.4%. (RTT)

EU: Greece inflation eases to 7.0%, lowest in 1 year. Greece's CPI slowed for the fourth straight month in January. The CPI rose 7.0% YoY in Jan, following a 7.2% increase in Dec. Further, this was the slowest inflation rate since Jan 2022, when prices had risen 6.2%. The overall inflation was largely led by a 15.4% rise in food and non-alcoholic beverages. Transport charges climbed 8.1% YoY in Jan, though slower than the prior month's 9.0% surge. (RTT)

China: Central Bank infuses liquidity into financial system. The PBoC added more cash into the financial system to maintain sufficient liquidity. The PBoC injected CNY499bn into the financial system via one-year medium-term lending facility. The rate on one year MLF was kept unchanged at 2.75%. The central bank also conducted CNY203bn of seven-day reverse repo operation at a rate of 2.0%. Data released last week showed that banks extended a record level of loans at the start of the year after the relaxation of pandemic related restrictions boosted demand for credit from the corporate sector. Banks extended CNY4.9trn in new yuan loans in Jan. (RTT)

Japan: Tertiary activity falls 0.4%. Japan's tertiary activity declined in Dec after rising in the previous two months. The seasonally adjusted tertiary activity index fell 0.4% MoM in Dec, reversing a 0.1% rise in Nov. Among the individual components, information services, transport and postal activities, medical, health care and welfare, living and amusement related services, and manufacturing-dependent business services declined in Dec. Meanwhile, finance and insurance, financial services, electricity, gas, heat supply and water, and retail and wholesale trade increased. (RTT)

Indonesia: Trade surplus grows on exports surge. Indonesia's trade surplus increased markedly at the start of the year, as exports grew more rapidly than imports. The trade surplus rose to USD3.87bn in Jan from USD0.96bn in the same month last year. Economists had expected a surplus of USD3.35bn. In Dec, the trade surplus was USD3.96bn. Exports logged a double-digit annual growth of 16.37% yearly in Jan, much faster than the 6.58% gain in the prior month. The expected growth rate was 12.5%. Further, this was the fastest rate of growth since Sep 2022, when exports had risen 20.17%. (RTT)

New Zealand: Set to hike rates by 25bps in Apr & May. New Zealand's central bank is likely to spread out its interest rate hikes over the next few meetings amid softer than expected data, and rate cuts may be on the horizon before year-end. The Reserve Bank of New Zealand is set to raise rates by 75bps at the upcoming meeting on 22 Feb, as policymakers signalled in Nov. In Nov, the New Zealand's central bank hiked its benchmark rate by a record 75bps to 4.25% and signalled more tightening despite looming recession. (RTT)

Markets

Farm Fresh: To acquire 65% stake in the Inside Scoop for RM83.9m. Farm Fresh has proposed to take up a 65% stake in ice cream chain The Inside Scoop SB (TISSB) for RM83.9m. The dairy producer said it will first acquire a 53% stake from the chain's existing shareholders for RM68.4m. The shareholders are TISSB co-founder Edmund Tan Jun Hua (61% interest), Derrick Wu (37.9% interest) and Harsh Rajpal (1.1% interest). Of this purchase price, RM48.4m will be paid in cash, while the remaining RM20m will be satisified via the issuance of 13.16m new shares in Farm Fresh, at an issue price of RM1.52 apiece. (The Edge)

Nexgram: Unit scraps RM62m land acquisition deal. ACE Market-listed Nexgram Holdings’s unit has terminated a deal with Melaka Corporation (MCorp) pertaining to the acquisition of a 10.031 ha piece of land in the state for RM61.53m cash. The ICT services provider said the SPA between its wholly owned subsidiary Nexgram Biomedic SB and MCorp was terminated, given the pair were unable to fulfil certain conditions required under the agreement after numerous extensions of time. (The Edge)

Infomina: Bags contract worth USD3.3m from Bank Maybank Indonesia. Infomina's wholly-owned subsidiary, PT Infomina Solution Indonesia has secured a maintenance and support contract worth approximately USD3.3m (RM14.5m) from PT Bank Maybank Indonesia TBK, boosting its ambitions of expanding into the country. In a Bursa Malaysia filing, Infomina said its Indonesian subsidiary received a letter of confirmation dated 15 Feb for the provision of technology application and infrastructure operations, maintenance and support services to Maybank Indonesia, a part of the Malayan Banking Group valued at approximately USD3.3m. (The Edge)

Revenue: EGMs fixed for 17 Feb temporarily restrained by court. Two EGMs of Revenue Group fixed for Friday (17 Feb) pertaining to the removal of directors, will not be held, pending further direction from the court following a court order earlier in the week. On Monday (13 Feb), the High Court granted an ad interim order to restrain the e-payment solution provider from proceeding with either of the EGMs, pending the determination of an interim injunction application filed by its co-founders Brian Ng Shih Chiow and Dino Ng Shih Fang. (The Edge)

Solarvest: To allocate up to RM1m for SIL2023 start-up programme. Solarvest is expected to allocate up to RM1m for its Solarvest Innovation Lab 2023 (SIL 2023) start-up accelerator programme. Its programme advisor, Gan Teck Hooi, said the majority of the allocation would be towards equity investment for the accelerator funding. SIL 2023 is a continuance and revitalisation of SIL 2021 initiated in Oct 2021, which was founded to spur innovation and entrepreneurship development in Malaysia with a key focus on green technology, financial technology, and renewable energy. (StarBiz)

Tafi: Wins RM11m theme park project. Tafi Industries has secured a RM11m construction contract to construct, test and commission, complete and hand-over for theme park work in Perak. In a statement, TAFI said its wholly-owned subsidiary TAFI Home & Office SB accepted the contract from TT5 Theme Assets SB. The contract duration is 18 months from 15 Feb 2023 to 14 Aug 2024 and is expected to contribute positively to the earnings of TAFI for the financial years ending Dec 31, 2023 (FY23) and FY24. (StarBiz)

Market Update

The FBM KLCI might open higher today as the dollar climbed and US stocks oscillated on Wednesday following stronger than expected retail sales figures, the latest in a string of economic data that has fuelled investor bets that the Federal Reserve will have to raise interest rates further to curb inflation. Wall Street’s benchmark S&P 500 finished 0.3% higher after flipping between gains and losses once data showed retail sales rose 3% month on month in January, far more than the 1.8% increase expected by economists. The tech-heavy Nasdaq Composite increased 0.9%. Interest rate sensitive short-term US government debt sold off following the retail figures, but reversed course to trade flat. The 10-year Treasury yield added 0.04 percentage points to 3.80% as the price of the debt fell. Data on Wednesday showed UK inflation slowed to 10.1% in January, more than expected. Core inflation fell to 5.8%, much lower than the 6.2% forecast by economists. London’s FTSE 100 touched the 8,000-point mark for the first time, moderating later to close 0.6% higher. Europe’s region-wide Stoxx 600 added 0.4% and Germany’s Dax rose 0.8%.

Back home, the FBM KLCI reversed earlier losses to end in positive territory on bargain-hunting during the late trading session amid the mixed performance of regional peers. At the closing bell, the benchmark index settled 4.22 points higher to end at an intraday high of 1,488.19, compared with Tuesday's close at 1,483.97. In the region, Hong Kong’s Hang Seng index shed 1.4%, China’s CSI 300 lost 0.5%, Japan’s Topix declined 0.3% and South Korea’s Kospi shed 1.5%.

Source: PublicInvest Research - 16 Feb 2023