Economy

US: Import prices fall in Jan; annual increase smallest in two years . US import prices dropped for a seventh straight month in Jan amid declining costs for energy products, leading to the smallest annual increase in imported inflation in two years. The report from the Labor Department, however, did little to assuage financial market fears the Fed could maintain its interest hiking campaign through the summer after data this week showed a jump in monthly consumer and producer prices in Jan, suggesting a slow disinflation journey. Import prices fell 0.2% last month after slipping 0.1% in Dec. The drop in import prices, which exclude tariffs, was in line with economists' expectations. In the 12 months through Jan, import prices increased 0.8%. (Reuters)

US: Leading economic index dips much less than expected in Jan . A report released by the Conference Board showed its reading on leading US economic indicators fell by much less than expected in the month of Jan. The Conference Board said its leading economic index dipped by 0.3% in Jan after falling by a revised 0.8% in Dec. Economists had expected the leading economic index to decrease by 0.8% compared to the 1.0% slump originally reported for the previous month. Ataman Ozyildirim, Senior Director, Economics, at the Conference Board, noted deteriorating manufacturing new orders, consumers' expectations of business conditions, and credit conditions more than offset strengths in labor markets and stock prices. "While the LEI continues to signal recession in the near term, indicators related to the labor market— including employment and personal income—remain robust so far," said Ozyildirim. (RTT)

EU: Eurozone current account surplus rises in Dec . The euro area current account surplus increased in Dec largely due to the rise in primary income, the ECB reported. The current account surplus totalled EUR16bn compared to a surplus of EUR13bn in the previous month. The surplus on goods trade remained unchanged at EUR8bn, while the surplus on services trade decreased to EUR14bn from EUR18bn. Meanwhile, primary income increased to EUR7bn from EUR2bn. Moreover, the deficit on secondary income narrowed to EUR13bn from EUR15bn. In 2022, the current account registered a deficit of EUR106bn or 0.8% of euro area GDP, compared with a surplus of EUR 282 billion or 2.3% of GDP in 2021. (RTT)

UK: Consumers bought more in Jan but overall gloom persists . British consumers unexpectedly increased their shopping in Jan, but the big picture remains one of weak demand from inflation-hit households relying more on discounts at retailers to make ends meet. Official data published showed that sales volumes rose by 0.5% from Dec for only the second MoM increase since Aug 2021. A Reuters poll of economists had pointed to a 0.3% fall in sales last month. Fuel sales rose in Jan, reflecting a fall in prices, and discounting helped online retailers, as well as jewellers, cosmetic stores and carpet and furnishing shops, the Office for National Statistics said. But clothing store sales fell back sharply after rising for four months, and food store sales dropped again as consumers hunted for cheaper products and bought fewer items. Sales volumes in the key Christmas month of Dec fell more deeply than previously reported, dropping by 1.2% from Nov, rather than the original estimate of a 1.0% decline. (Reuters)

China: Less likely to cut rates, RRR soon after injection. China’s central bank is less likely to cut interest rates or reserve requirement ratio after injecting large amounts of cash via reverse repos, according to a report in the 21st Business Herald. The People’s Bank of China will continue to focus on “dynamically fine tuning” short-term liquidity through open market operations, Bruce Pang, chief economist at Jones Lang LaSalle Inc. was cited as saying Two RRR cuts are still expected in 2023, which will likely happen in Apr and Oct, to provide stable, long-term funding for banks, paper cited Wen Bin, chief economist at China Minsheng Bank, as saying. (Bloomberg)

Singapore: Exports plunge 25.0%. Singapore's non-oil exports declined for the fourth straight month in Jan, and at a faster-than expected pace, amid sharp falls in both shipments of electronic and non-electronic goods, data from Enterprise Singapore showed. Non-oil domestic exports, or NODX, decreased 25.0% YoY in Jan, which was worse than the 20.6% fall in Nov. Economists had expected a 22.0% fall. Electronic exports slumped 26.8%, largely led by significant contractions in the shipments of microchips, disk media products and computer parts. The non-electronic NODX logged an annual decline of 24.5%, impacted by lower foreign demand for non-monetary gold, specialized machinery, and structures of ships & boats. (RTT)

Thailand: GDP growth decelerates in 4Q. Thailand's economic growth slowed more than expected in the 4Q as increases in household spending and investment were partially offset by declines in government spending and exports, official data showed. GDP grew only 1.4% on a yearly basis in the 4Q, moderating from the 4.6% expansion in the 3Q, the National Economic and Social Development Council said. GDP was forecast to gain 3.5%. QoQ, GDP dropped 1.5%, in contrast to the 1.1% expansion in the preceding period and also confounding economists' forecast of +0.5%. In terms of production, agriculture production expanded 3.6 annually. The annual increase was from sugarcane, oil palm, maize and vegetables and fruits. On the other hand, industrial production declined 4.6%, reversing a 4.5% increase in the prior period, due to the fall in manufacturing. Meanwhile, the service sector grew 4.2%, which was slower than the 5.5% rise in the prior quarter. (RTT)

Markets

Uzma (Outperform, TP: RM0.80): Bags three-year contract with Petronas Carigali. Uzma Bhd, via its wholly-owned subsidiary Uzma Engineering SB, was awarded a three-year contract from Petronas Carigali SB for the provision of self-cleaning through tubing perforation. The company has received the letter of award dated Nov 25, 2022, and the contract commenced from Nov 30, 2022, and will end on Nov 29, 2025. (The Edge)

Vestland: Secures another construction contract in Shah Alam worth RM84m. Vestland, the construction group which debuted on Bursa Malaysia's ACE Market on Jan 31, has secured an RM84m contract to build a 35-storey service apartment in Shah Alam. The three-year contract was awarded by Mercu Majuniaga SB. (The Edge)

Haily: Wins RM78.2m construction contract to build landed properties in Johor. Haily Group has won a RM78.3m contract to build 262 units of landed residential properties in Pontian, Johor. With the latest new job win, which is its largest contract to date, Haily’s total outstanding orderbook has increased to RM660.8m. The job involves the construction of 262 units of two-storey terrace house and 2 units of TNB sub-stations. The contract will be effective for 20 months from the date of commencement, which will be confirmed at a later date. (The Edge)

Pan Malaysia, MUI: Deny breach of Companies Act involving RM90m sale of three associates. Pan Malaysia Holdings Bhd (PMH) and its 68.32% shareholder Malayan United Industries Bhd (MUI) are fighting back against a new lawsuit alleging that the sale of three firms, PM Securities SB, PCB Asset Management SB and Miranex SB to NewParadigm Capital Ventures SB for RM90m cash are in breach of Section 223 of the Companies Act 2016. (The Edge)

MyEG: Continues share buyback, raising total repurchase to RM10.7m since Feb 7. MyEG Services continued its share buyback spree on Feb 17, raising the amount spent by the company to mop up its own shares since Feb 7 to RM10.7m. The latest buyback involved four million shares at a price of between 66 sen and 68.5 apiece, for a total sum of RM2.7m. (The Edge)

Gas Malaysia: Net earnings rose 56% to RM389.5m in FY22. Gas Malaysia’s net profit rose 56% to RM389.5m in the FY22 from RM249.6m a year ago. The company's revenue also rose 30.7% to RM7.65bn in FY22 to RM5.85bn in the previous year, underpinned by a higher average natural gas selling price. For the QFY22, Gas Malaysia's net profit rose 37.4% to RM95.2m from RM69.3m a year ago, supported by higher gross profit, lower finance cost and higher finance income. (BTimes)

Malaysia Smelting: Posts 59.6% decline in 4Q profit, proposes seven sen dividend. Malaysia Smelting Corp has posted a 59.6% decline in its net profit to RM25.9m for the 4QFY22 from RM64.1m a year earlier, due mainly to lower average tin price. The average price fell to RM98,100 per tonne compared with RM158,300 in 4QFY21. (The Edge)

Berjaya Assets: Trims 2Q net loss as revenue grows. Berjaya Assets trimmed its net loss to RM1.87m for the 2QFY23, from RM1.97m a year earlier, on the back of a higher revenue, which was however offset by higher finance costs. (The Edge)

Market Update

The FBM KLCI might open lower today as a broad index of US stocks fell for the second week in a row as robust economic data continued to fan investor fears that the Federal Reserve will need to apply a brake to the US economy for longer than anticipated just last month. The blue-chip S&P 500 index closed down 0.3% on Friday, leading to a 0.3% loss for the week. The tech-heavy Nasdaq Composite shed 0.6% on Friday, but gained 0.6% across the past five sessions. The decline on Friday added to the S&P’s worst day in a month on Thursday, underscoring the readjustment in investor expectations on US interest rates after consumer and wholesale price data published last week came in hotter than expected. In Europe the benchmark Stoxx 600 dipped 0.2%, off its lows from earlier in the session, while Germany’s Dax fell 0.3% lower. France’s CAC 40 finished 0.3% lower, after reaching a record high on Thursday.

Back home, Bursa Malaysia ended lower on Friday, joining the global sell down of equities, as the US interest rate outlook strengthens. At the closing bell, the benchmark FBM KLCI had shed 7.36 points, or 0.5%, to end at 1,476.90, compared with Thursday's close at 1,484.26. In the region, Hong Kong’s Hang Seng index dropped 1.3%, while the Chinese CSI 300 fell 1.4%.

Source: PublicInvest Research - 20 Feb 2023