Economy

US: Goods trade deficit widens in Jan; wholesale inventories decline. The US trade deficit in goods increased moderately in Jan, with both imports and exports rising solidly, leaving trade on track to have little or no impact on gross domestic product growth early in the first quarter. The goods trade deficit widened 2.0% to USD91.5bn. This left the goods trade deficit slightly above the fourth-quarter average. Goods imports increased 3.4% to USD265.3bn. Motor vehicle imports surged 9.0% while imports of consumer goods jumped 6.4%. There were also increases in imports of food and capital goods. But imports of industrial supplies, which include crude oil, fell as did those of other goods. (Reuters)

US: Consumer confidence retreats. US consumer confidence unexpectedly fell in Feb, with the decrease concentrated among lower-middle-income households, though Americans grew more upbeat about the labor market. The survey also showed consumers apprehensive about buying big-ticket items like motor vehicles and household appliances over the next six months. But correlation between confidence and consumer spending has been weak. A strong labor market has kept Americans spending despite worries about the future fueled by the Federal Reserve's stiff interest rate hikes to quell inflation. The consumer confidence index dropped to 102.9 this month from 106.0 in Jan. Economists polled had forecast the index would be 108.5. (Reuters)

US: House price inflation cools further in Dec. U.S. single-family home prices in Dec increased at their slowest pace since the summer of 2020 but tight supply could limit an anticipated decline in house prices. The national home price index, covering all nine U.S. census divisions, increased 5.8% YoY in Dec. That was the smallest annual gain since mid-2020 and followed a 7.6% rise in Nov. Prices increased 5.8% in 2022, pulling back from 2021’s record-setting 18.9% gain. The housing market has been hammered by the Federal Reserve’s aggressive monetary policy stance, with residential investment contracting for seven straight quarters, the longest such stretch since 2009. (Reuters)

EU: Austria's GDP growth revised down to 2.6%. Austrian economic growth improved less than initially estimated in the fourth quarter. GDP advanced 2.6% YoY in the Dec quarter, faster than the revised 2.1% rise in the September quarter. The fourth quarter figure was revised down slightly from 2.7% in the flash report published by the WIFO economic institute on January 30. The expenditure-side breakdown showed that overall consumption rose 0.8% from last year. However, spending by private households declined 0.3%, and capital formation contracted 1.0% due to falling investments in construction. Both exports and imports increased by 4.7% and 1.1% respectively. (RTT)

EU: Swiss economic growth flat in Q4 as exports and manufacturing drop. The Swiss economy showed no growth in the 4Q of 2022, as a “challenging international situation” hit manufacturing and exports. The 0% growth rate missed forecasts and marked a slowdown from the 0.2% increase in the third quarter. Adjusted for large sporting events, GDP rose 0.7% year on year in the fourth quarter. The performance was weaker than expected, with economists forecasting GDP to rise 0.4% QoQ and 3.7% YoY. GDP for 2022 as a whole, when adjusted for sporting events, increased by 2.1%, down from 3.9% in 2021. Over the past 20 years, Switzerland’s economy has grown by an average of 2.1% each year. (Reuters)

UK: Grocery price inflation hits record 17.1%. British grocery inflation hit 17.1% in the four weeks to 19 Feb another record high, dealing the latest blow to consumers struggling with a cost-of-living crisis. Market researcher Kantar said prices are rising fastest in markets such as milk, eggs and margarine. UK households now face an additional GBP811 (USD978) on their annual shopping bills if they don’t change their behaviour to cut costs. It found that rising grocery prices are the second most important financial issue for the public behind energy costs. Also a quarter of people say they’re struggling financially, versus one in five this time last year. (Reuters)

China: Foreign investment slumps to 18-year low. Investment by foreign companies in China tumbled to its lowest level in 18 years in the second half of last year, buffeted by tensions with the US, a dimming growth outlook and fears of possible backsliding on economic reforms. FDI into China totaled USD42.5bn between Jul and Dec 2022. That constituted a 73% decline on the year, the sharpest drop dating back to data in 1999. Half-year totals had averaged more than USD160bn between late 2020 and early 2022. Meanwhile, FDI by Chinese companies grew 21% to USD84.2bn. The USD41.7bn net outflow marked the first in five and a half years. (Nikkei Asia)

Japan: Housing starts rise most since Oct 2021. Japan's housing starts recovered strongly in Jan and at the fastest pace in more than a year. Housing starts climbed 6.6% YoY in Jan, reversing a 1.7% fall in Dec. That was well above the 1.1% increase economists had expected. It was the first gain in four months. Further, this was the fastest rate of growth since October 2021, when housing starts had risen 10.4%. The solid rebound in Jan was driven by a 4.8% recovery in new construction of two-by-four and a 25.0% jump in that of built-for-sale. (RTT)

Markets

Greatech Technology (Neutral, TP: RM5.03): Invests RM1.3bn in fourth manufacturing plant in Batu Kawan. Greatech Technology is investing approximately RM1.3bn to expand its fourth manufacturing plant in Batu Kawan, Penang. Its CEO Datuk Tan Eng Kee said that the new 500,000 sq ft facility, with an estimated capital expenditure of RM200m as well as an estimated operating expenditure of RM1.1bn, is designated to manufacture solar products. "The new facility constructed across 4.69 hectares in the Batu Kawan Industrial Park is expected to operate by the end of this year. (Bernama)

Yinson: Inks 15-year contract worth USD5.3bn to supply FPSO in Angola. Yinson Holdings has inked a firm contract with Eni Angola SpA, a wholly-owned subsidiary of Azule Energy, to supply a floating, production, storage and offloading asset for the Agogo Integrated West Hub Development Project in Angola. The group said the contract has an estimated aggregate value of USD5.3bn and a firm period of 15 years from the date of the final acceptance, with the option to extend for a further five years. (The Edge)

Serba Dinamik: Misses quarterly report Feb 28 deadline. Serba Dinamik Holdings said it is unable to release its quarterly report for the financial period ended Dec 31, 2022, within the timeframe not later than Feb 28, 2023. SDHB said the delay was due to a significant loss of manpower and loss of critical personnel. "The board would like to stress that they are taking serious steps towards identifying suitable replacement candidates to rectify these issues," the filing said. It expects to issue and submit its quarterly report for the fiscal period by March 6, 2023. (The Edge)

Ecoscience: Plans 1-for-2 free warrants. Ecoscience International has proposed the issuance of free warrants, on the basis of one warrant for every two existing shares held on an entitlement date to be announced later. The palm oil milling services provider said the proposed warrant issuance will involve the distribution of up to 170 million warrants, at no cost, to entitled shareholders whose names appear in the record of depositors. (The Edge)

BCorp: Expects satisfactory performance in FY23. Despite the rising operating costs, Berjaya Corp Bhd (BCorp) is optimistic that its performance to be satisfactory for the remaining quarters of the financial year ending June 30, 2023 (FY23). “While the recovery of the global and domestic economies is gaining momentum postpandemic, the recent rise in global inflationary rates due to the reduction of commodities supplies and supply chain disruption as a result of Russia-Ukraine war, Covid-19 lockdowns in China and geopolitical tensions has impacted the economic recovery. (StarBiz)

MUI: Sells 4.34% stake in Pan Malaysia Corp for RM6.03m. Malayan United Industries (MUI) wholly owned subsidiary Oriental Omega SB had on Feb 27 disposed of its 33.5m shares or a 4.34% stake in confectionery and cocoa-based biscuits maker Pan Malaysia Corp (PMC) to Fortress Opportunistic Growth Fund (FOGF) and Fortress Capital Asset Management (M) SB (FCAM) for RM6.03m cash. This leaves MUI and its subsidiaries with 394.7m or 51.15% equity interest in PMC after the disposal. Of this, Oriental Omega owns a direct 2.6m shares or a 0.34% shareholding in PMC. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today after Wall Street shares closed lower at the end of a choppy session, capping the month of February with a small decline overall as investors fretted interest rates may remain higher for longer than previously thought. The benchmark S&P 500 shed 0.3% on Tuesday taking its total monthly decline to 2.6%. That fall followed a gain of more than 6% for the blue-chip index in January, and came as a series of economic data pointed to signs of persistent inflation. The Nasdaq Composite slipped 0.1% on the final day of February. The tech-heavy index ended the month 1.1% lower, after a more than 10% leap in January. European equities gave up early gains to trade slightly lower on the day. The region-wide Stoxx 600 and French Cac 40 closed down 0.1%, while Germany’s Dax ended 0.1% higher. The moves followed stronger than expected inflation data from France and Spain, two of the eurozone’s largest economies.

Back home, Bursa Malaysia ended the last trading day of February with a paltry loss, after the key index swung between gains and losses, as investors seemed to trade cautiously ahead of the release of the purchasing managers indices (PMIs) in the US and China. At the closing bell the benchmark FBM KLCI had fallen 1.31 points to 1,454.19, from Monday’s closing at 1,455.50. Hong Kong’s Hang Seng index fell 0.8%, while China’s CSI 300 rose 0.6%

Source: PublicInvest Research - 1 Mar 2023