Economy

US: Fed's Bullard, further rate increases would "lock in" disinflation. Continued Federal Reserve rate increases will “lock in” slowing inflation even with continued economic growth, St. Louis Federal Reserve President James Bullard said. Bullard said it is likely that the economy will slow and the unemployment rate rise towards its “longer-run natural level,” something economists define as consistent with stable inflation and in the case of the United States estimated by Fed policymakers as around 4%. The unemployment rate as of Jan was 3.4%. But Bullard said that even as inflation remained high and economic output above potential, a “disinflationary” process had begun and could continue with additional Fed rate increases. (Reuters)

US: Labour market still tight, monthly producer inflation accelerates. The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, offering more evidence of the economy's resilience despite tighter monetary policy. Other data showed monthly producer prices increasing by the most in seven months in Jan as the cost of energy products surged. Even stripping out energy and other volatile components, underlying producer inflation rose at its fastest pace since last March.. (Reuters)

US: Household debt jumps to USD16.90trn. US household debt jumped to a record USD16.90trn from Oct through Dec last year, the largest quarterly increase in 20 years, as mortgage and credit card balances surged amid high inflation and rising interest rates, a Federal Reserve report showed. Household debt, which rose by USD394bn last quarter, is now USD2.75trn higher than just before the COVID-19 pandemic began while the increase in credit card balances last Dec from one year prior was the largest since records began in 1999, the New York Fed’s quarterly household debt report also said. (Reuters)

EU: Spain trade gap narrows to EUR4.51bn. Spain's foreign trade deficit declined in Dec from a year ago, as exports grew faster than imports, preliminary data from the Economy Ministry showed. The trade deficit dropped to EUR4.51bn in Dec from EUR 5.34bn in the corresponding month last year. In Nov, there was a shortfall of EUR3.31 billion. Exports climbed 16.2% YoY in Dec to EUR32.1bn. Imports grew at a comparatively slower rate of 11.1% to EUR36.6bn. On a monthly basis, both exports and imports declined by 14.1% and 10.0%, respectively, at the end of the year. (RTT)

China: Home prices fall 1.5%. China's average new home prices declined for the ninth successive month as buyers are reluctant to make more purchases amid the on-going economic crisis caused by the pandemic related woes, reports said, citing data from the National Bureau of Statistics. New house prices in 70 large and medium sized cities fell 1.5% YoY in Jan, the same pace of decrease as in the prior month. The decline did not intensify at the start of the year as a result of the country relaxing its anti-COVID measures with increased spending. In addition, home prices increased 0.1% on a monthly basis, which was the first rise in a year. (RTT)

Australia: Jobless rate climbs to 3.7% in Jan. The unemployment rate in Australia came in at a seasonally adjusted 3.7% in Jan, the Australian Bureau of Statistics said higher than expectations for 3.5%, which would have been unchanged from Dec. The Australian economy lost 11,500 jobs last month, badly missing expectations for an increase of 20,000 after shedding 14,600 in the previous month. Full-time employment was down 43,300 jobs after climbing 17,600 a month earlier. The participation rate was 66.5, missing forecasts for 66.6 which would have been unchanged. (RTT)

Hong Kong: Jobless rate falls to 3-year low of 3.4%. Hong Kong's unemployment rate decreased for the ninth month in a row in Jan to the lowest level in three years, the labour force statistics from the Census and Statistics Department showed. The seasonally adjusted unemployment rate fell slightly to 3.4% in the Nov to Jan period from 3.5% in the Oct to Dec period. Further, this was the lowest unemployment rate since the Nov to Jan period in 2020, when it was also 3.4%. The underemployment rate also fell to 1.4% in the three months to Jan from 1.5% in the preceding period. (RTT)

Markets

TNB (Outperform, TP: RM12.42): 70%-owned Sepang Power to be dissolved after voluntary wind-up . Tenaga Nasional Bhd (TNB) said its 70%-owned Sepang Power SB (SPSB) will be dissolved three months after its lodgement of the return of final winding-up meeting on Thursday (Feb 16) with the Companies Commission of Malaysia. (The Edge)

Vestland: Wins contracts totalling RM200m . Vestland has secured two contracts totalling RM200m for construction-related works in Pahang and Kuala Lumpur. In separate filings, Vestland had accepted a letter of award worth RM125m from Tafi Development SB to undertake the construction and completion of building and mechanical and electrical work for 27 shop offices, 384 townhouses and one electrical substation in Cameron Highlands, Pahang. Additionally, VRSB also accepted a letter of award worth RM75m from Tafi Home and Office SB to undertake the main building and associated works for a 39-storey service apartment and related facilities in Kepong Baru, Kuala Lumpur. (StarBiz)

AME Elite: To build RM108m Bucher Emhart Glass facility in Johor . AME Elite Consortium via its subsidiary Ipark Development SB will construct a RM108m new manufacturing facility in i Park@Senai Airport City, Johor for Emhart Glass SB (Bucher Emhart Glass). The integrated industrial space solutions provider said the new facility in i-Park@Senai Airport City would have a built up area of approximately 300,000 square feet, which would replace the existing factory at another site in Johor Bahru in order to increase production capacity. The construction of the project will commence in the second quarter of 2023 and is scheduled to be completed in 2024. (StarBiz)

Coastal Contracts: Forms partnership to develop EV charging system business . Coastal Contracts has teamed up with two companies to develop an electric vehicle charging system business in Singapore, Malaysia and Vietnam. The marine oil & gas services and energy infrastructure solutions group said it will collaborate with MECOM Power and Construction Ltd and Singapore-based Yong Mui Global Pte Ltd (YMG) in the production, marketing, and operation of the EV charging systems business. (The Edge)

Prolexus: Acquires 10% stake in South Malaysia Industries for RM16.7m . Prolexus has acquired 21m shares in South Malaysia Industries (SMI), representing a 10% stake in the property developer and car park manager. The apparel maker said the tranche of shares was purchased via open market and direct business transactions for a total of RM16.7m. Of the 21m shares, 11.7m were purchased via an open market transaction, and another 4.7m from Thien Chiet Chai. The remaining 4.6m shares were bought from Reservoir Link Holdings SB. (The Edge)

IPO: Main Market-bound Cape EMS aims to raise RM155.7m in IPO . Cape EMS plans to raise RM155.7m via its IPO to fund its expansion plans. The company, which is set to list on the Main Market of Bursa Malaysia on March 10, 2023, said the public issue will entail 173m new shares at 90 sen per share. Of the proceeds, 40.3% will go towards the setting-up of a new cleanroom facility and purchase of new automated production lines for EMS operations and 34.1% will be utilised for the construction of a new Senai 226 warehouse and installation of automated storage facilities. (StarBiz)

Market Update

The FBM KLCI might open lower today as US stocks fell on Thursday after the latest evidence of stubborn inflationary pressures in the world’s largest economy fuelled concerns about the Federal Reserve keeping interest rates high to curb price rises. The blue chip S&P 500 closed down 1.4%, marking its worst day in almost a month, while the tech-heavy Nasdaq Composite lost 1.8%. Those moves in equity markets came after the US producer price index, which tracks wholesale prices, rose at an annual rate of 6% in January, down from 6.2% in December but well above the consensus estimate of 5.4%. Investors have been watching closely for signs of persistent inflation and a still-hot US economy, with recent data already pushing up the level at which interest rates are expected to peak and reducing the number of Fed rate cuts that markets are pricing in for later this year. Europe’s benchmark Stoxx 600 share index and Germany’s Dax both finished 0.2% higher. France’s CAC 40 was a standout performer, rising 0.9% to touch a record intraday high. The UK’s FTSE 100 rose 0.2% to close above 8,000 points for the first time.

Back home, Bursa Malaysia erased earlier gains to end lower on Thursday due to profit-taking on a lack of fresh catalysts, as investors remained cautious amid the mixed performance of regional and global equity markets. At the closing, the benchmark FBM KLCI had dipped 3.93 points to end at 1,484.26, compared with Wednesday's close at 1,488.19. In the region, Hong Kong’s Hang Seng index rose 0.8%, while China’s CSI 300 lost 0.7%.

Source: PublicInvest Research - 17 Feb 2023