Economy

US: Fed minutes reveal some participants favored larger rate hike. While the Federal Reserve's decision to further slow the pace of interest rate hikes at the latest monetary policy meeting was unanimous, the minutes of the meeting revealed some participants favored a larger rate increase. The minutes of the Jan 31-Feb 1 meeting, released, said a "few participants" favored raising rates by 50 bps compared to the 25 bps rate hike that was ultimately announced. "The participants favoring a 50-basis point increase noted that a larger increase would more quickly bring the target range close to the levels they believed would achieve a sufficiently restrictive stance, taking into account their views of the risks to achieving price stability in a timely way," the Fed said. The Fed members eventually agreed to raise the target range for the federal funds rate by 25 bps to 4.50 to 4.75%. The minutes noted all participants continued to anticipate that ongoing rate increases would be appropriate to achieve the Fed's dual goals of maximum employment and inflation at the rate of 2% over the longer run. (RTT)

US: Mortgage interest rates jump to highest level since Nov – MBA. The average interest rate on the most popular US home loan rose last week to its highest since Nov as bond markets took fright that the Fed might have to continue tightening policy through summer to subdue inflation, data from the Mortgage Bankers Association (MBA) showed. The average contract rate on a 30-year fixed-rate mortgage jumped by 23 bps to 6.62% for the week ended Feb. (Reuters)

EU: Italy inflation slows more than expected to 10.0%. Italy's consumer price inflation eased more than expected in Jan, on lower energy and fresh food prices, but core price growth accelerated due to increase in prices across a broad range of goods and services, latest figures from the statistical office ISTAT showed. The consumer price index rose 10.0% YoY following an 11.6% increase in Dec. The flash estimate was 10.1%. Meanwhile, core inflation that excludes prices of energy and unprocessed food climbed to 6.0% from 5.8%. (RTT)

EU: German business confidence improvement signals resilience. Germany's ifo business confidence indicator climbed for the fourth month in a row in Feb, underpinned by stronger expectations, suggesting the resilience of the biggest euro area economy that may indeed avoid a modest recession. The ifo business confidence index rose to an eight-month high of 91.1 from 90.1 in Jan, survey data from the Munich-based ifo institute showed. Economists had forecast a score of 91.4. "The German economy is gradually working its way out of a period of weakness," ifo institute President Clemens Fuest said. (RTT)

Taiwan: Cuts 2023 growth outlook on trade, inflation pressures. Taiwan cut its forecast for growth this year as weak exports continue to drag on the economy, while inflation is likely to pick up more than expected, potentially injecting uncertainty into the central bank’s monetary policy strategy. GDP is likely to grow 2.12% in 2023 from a year prior, Taiwan’s Directorate General of Budget, Accounting and Statistics. That compares to the department’s most recent estimate of 2.75%, given in Nov. (Bloomberg)

Hong Kong: Government to hand out consumption vouchers, cuts tax. Hong Kong Financial Secretary Paul Chan unveiled consumption vouchers, salaries tax cuts and a new scheme to attract talent as well as investment for the economic revival. In the budget 2023-24, Chan said "I believe that Hong Kong's economy will visibly recover this year, and I remain positive." But the economic recovery is still in its initial stage, he added. The city's economy is forecast to rebound this year with GDP set to expand in the range of 3.5% to 5.5%. (RTT)

Markets

Nestle: To acquire Wyeth Nutrition Malaysia for RM165m. Nestle (M) has proposed to acquire Wyeth Nutrition (M) SB (Wyeth Malaysia) for RM165m. Nestle Products entered into a conditional share purchase agreement with Wyeth (HK) for the proposed acquisition of 1.96m ordinary shares in Wyeth Malaysia. The acquisition, which is subject to regulatory requirements and shareholders’ approval as it is a related party transaction, marks Nestle Malaysia’s aim to solidify its footprint in the premium infant and adult nutrition segments. (StarBIz)

DNeX: CGP reach out-of-court settlement over SilTerra dispute. A lawsuit against two subsidiaries of Dagang NeXchange (DNeX) in relation to a shareholders agreement signed in July 2021 was struck out on Feb 22 after the parties reached an out-of-court settlement.The High Court also struck out an application for injunction against DNeX Semiconductor SB (DSSB) and SilTerra Malaysia SB. (The Edge)

K Seng Seng: Funds stake buy in four firms via share placement. K Seng Seng Corp (KSSC) is acquiring 51% stake each in four private companies for RM19.1m cash that it will raise via a private placement. The manufacturer and trader of stainless steel products has proposed to raise up to RM22.4m from the private placement to expand its production in the metal-related industry. The placement entails the issuance of up to 17.3m new shares representing 10% of KSSC issued shares to independent investors. (The Edge)

Malaysian Genomics: Ties up with Divine Genes for genetic test distribution. Malaysian Genomics Resource Centre has inked a collaboration with Divine Genes SB on the improvement and international distribution of genetic tests for reproductive health. In a joint statement, the parties said Divine Genes’ genetic test for reproductive health will be added to Malaysian Genomics’ genetic test portfolio, which will market and distribute these tests in Malaysia and overseas. Both parties will also cooperate in improving the product. (StarBiz)

SAM Engineering: 3Q profit drops 24% as equipment segment slows. SAM Engineering’s net profit fell 23.87% to RM19.2m for its third quarter ended Dec 31, 2022 from RM25.2m a year earlier, due to lower contribution from its equipment and aerospace segments. Earnings per share slipped to 3.54 sen from 4.65 sen. The lower profit from the equipment and aerospace segments was the result of start-up costs in Thailand, escalation of manpower cost, higher utility and interest expenses. (The Edge)

Tune Protect: Turns a profit in 4Q. Tune Protect Group, fresh off its first profitable quarter since 3Q21, says it is poised to capitalise on the expected travel recovery in the region. For the fourth quarter ended Dec 31, 2022, Tune Protect returned to the black with a net profit of RM558,000, which compares to a net loss of RM12.1m in the previous corresponding quarter. (StarBiz)

Careplus: Widens net loss in Oct-Dec on low ASP, decrease in sales order from key customers. Careplus Group’s net loss widened to RM18.9m in the three months ended Dec 31, 2022, from RM15.9m in the corresponding period in 2021. The decline in the glove maker’s performance was mainly caused by an acute oversupply and margin compression, which resulted in low average selling price (ASP) and lower sales order from key customers. (The Edge)

Market Update

The FBM KLCI might open flat today as US stocks fell on Wednesday after investors pored over the minutes of the Federal Reserve’s last meeting, which indicated that most central bankers backed its recent quarter-point increase but some favoured a bigger rise. In New York, the blue-chip S&P 500 index lost 0.2% and the tech-heavy Nasdaq Composite gained 0.1%, paring earlier gains from before the release of the minutes. The summary of the Fed’s latest policy meeting, which ended on February 1, revealed that almost all officials backed its decision to raise its benchmark interest rate by a quarter of a percentage point, but a few preferred a half-point increase. The Europe-wide Stoxx 600 declined 0.3% and Germany’s Dax was flat. London’s FTSE 100 declined 0.6%.

Back home, Bursa Malaysia ended lower on Wednesday amid lacklustre trading, in line with the downbeat performance in regional markets. At the closing bell, the benchmark FBM KLCI had fallen 10.01 points or 0.68% to end at 1,464.0, compared with Tuesday's close at 1,474.01. In the regional markets, Japan’s benchmark Topix index fell 1.1%, while China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks slipped 0.9% and Australia’s S&P/ASX 200 fell 0.3%.

Source: PublicInvest Research - 23 Feb 2023