Economy

US: House gets update on nation's USD31trn debt ahead of Biden budget proposal. US House Republicans and Democrats showed no sign of surrendering their partisan positions after a briefing on the nation's USD31trn debt before President Joe Biden is due to unveil his 2024 spending plan. Biden said his proposal will cut the nation's deficit by nearly USD3trn over 10 years, though it relies on tax increases to do so while Republicans are pushing for sharp cuts to domestic spending. (Reuters)

US: S&P 500 barely gains as investors eye upcoming jobs data, rate hikes. The S&P 500 index closed slightly higher while the Dow dipped as investors grappled with mixed messages from Federal Reserve Chair Jerome Powell and US economic data ahead of upcoming labour and inflation reports that are expected to determine the central bank's future rate hiking path. In his second day of testimony to Congress, Powell reaffirmed his message of higher and potentially faster interest rate hikes. (Reuters)

US: Job openings stay elevated as labour market remains tight. US job openings fell less than expected in Jan and data for the prior month was revised higher, pointing to persistently tight labour market conditions that likely will keep the Federal Reserve on track to raise interest rates for longer. But the Labour Department's monthly Job Openings and Labour Turnover Survey, or JOLTS report, also hinted at some cracks in the labour market. Layoffs rose to a two-year high in Jan and job cuts were higher than initially thought in 2022. Fewer people voluntarily quit their jobs. (Reuters)

EU: Eurozone economy stagnates in Q4. Euro area economy stagnated in the fourth quarter, following a downward revision, as positive contributions from the government consumption and foreign trade were offset by contractions in household spending and investment. Gross domestic product remained flat sequentially in the fourth quarter after expanding 0.4% in the preceding period, data from Eurostat showed. (RTT)

EU: German industrial output recovers, retail sales unexpectedly fall. Germany's industrial production rebounded at a stronger-than-expected pace in Jan, but retail sales unexpectedly fell again indicating that private consumption could act as a drag on economic growth this year. Industrial production grew 3.5% on a monthly basis to offset the revised 2.4% decline in Dec, data from Destatis revealed. Output was forecast to grow 1.4%. (RTT)

EU: Italy retail sales rebound 1.7% in Jan. Italy's retail sales rebounded strongly at the start of the year, driven by more sales of food and non-food items, data from the statistical office ISTAT showed. The value of retail sales climbed 1.7% MoM in Jan, reversing a slight 0.2% fall in Dec.. (RTT)

UK: Permanent job placements decline amid looming economic uncertainty. UK permanent job placements declined for the fifth consecutive month in Feb as firms were reluctant to recruit staff amid lingering economic uncertainty, a survey report compiled by S&P Global showed. Permanent staff appointments decreased at a quicker pace than in Jan, the KPMG/REC Report on Jobs, based on the responses of around 400 consultancy firms, revealed. (RTT)

Japan: Leading index at 26-month low. Japan's leading index declined further in Jan to the lowest level in more than two years, preliminary data from the Cabinet Office showed. The leading index, which measures future economic activity, dropped to 96.5 in Jan from 96.9 in the previous month. Further, this was the lowest reading since Nov 2020, when it was 96.2. The coincident index that measures the current economic situation also weakened to an 8-month low of 96.1 in Jan from 99.1 in the previous month. (RTT)

Markets

UEM Sunrise (Neutral, TP: RM0.33) : Nipponkey files lawsuit for several agreement breaches . The agreements involved comprise a sale and purchase agreement in Kuala Lumpur, two disposal and land transfer agreements in Tanjung Kupang, Johor Bahru, and another 12 disposal and land transfer agreements in the same area in Johor Bahru. Its claims include the defendants paying RM1.67m to Nipponkey, other general damages and costs, and interest at 5% p.a. calculated from date of the action until date of full and final payment. (The Edge)

Bermaz Auto (Neutral, TP: RM2.20): Order backlog of some 7,000 units to fuel earnings. Of the order backlog, about 3,000 units are booked under the automotive SST exemption. The SST exemption, which ended on 30 Jun last year, applies 100% for locally assembled or completely-knocked-down passenger cars, and 50% for imported or completely-built-up passenger cars. (The Edge)

Pekat Group: Surrenders moneylending licence. Pekat Group has decided to surrender the moneylender license as the business is no longer feasible due to the change in the group's business strategy. The company has on 8 March received a letter dated 30 Jan from the Ministry of Local Government Development to take note of the surrender of the license. There is no operational and financial impact on the group as it has not commenced its moneylending business since being granted the licence on 26 Aug 2022. (StarBiz)

Toyo Ventures: Bursa publicly reprimands for withdrawing proposed dividend. Bursa Malaysia Securities has publicly reprimanded Toyo Ventures over the company’s decision to withdraw its final dividend for the financial year ended 30 Sep 2021 (FY2021) two months after proposing it. Paragraph 8.26(1) of the Main Market Listing Requirements expressly states that once the dividend had been declared or proposed, a listed issuer must not make any subsequent alteration to the dividend entitlement. (The Edge)

KESM Industries: Invests RM140m for new test equipment. KESM Industries has invested close to RM140m largely for new test equipment as car makers shifted to full gear to expand the electric vehicles (EV) market. Some of these new installations have now been approved for manufacturing and expect progressive volume growth in the later part of this year as the automotive market remains strong. (StarBiz)

G Capital: Signs supplemental solar PPA with Federal Packages . G Capital’s 70%-owned subsidiary, Solarcity Malaysia SB, has signed a supplemental solar power purchase agreement (SPPA) with Federal Packages SB. G Capital noted in the SPPA, Solarcity and Federal Packages agreed to revise the capacity of the facility to 4,500 kwp from 5,500 kwp previously. (StarBiz)

Sunview: Partners Kulim Technology Park for solar PV projects for two years. Sunview Group, through its wholly-owned subsidiary Fabulous Sunview SB, has formed a strategic business alliance agreement with Kulim Technology Park Corp. The agreement pertains to promoting and developing potential rooftop and large-scale solar photovoltaic (PV) projects in Kulim Hi-Tech Park (KHTP) for two years from 8 March. (The Edge)

Market Update

The FBM KLCI might open higher today after US equities rose slightly on Wednesday as markets digested further remarks from Federal Reserve chair Jay Powell on the pace and duration of higher interest rate rises to fight inflation. The blue-chip S&P 500 advanced 0.1% while the tech-heavy Nasdaq Composite gained 0.4%. The moves came after Powell spoke to lawmakers in Washington, where he emphasised that no decision had been made on interest rates ahead of the central bank’s meeting later this month. Successive data releases since February have shown an economy in the grips of sticky inflation despite a year-long campaign of higher interest rates. The latest was data released on Wednesday showing that private employers had added more jobs than expected in February — 242,000 according to ADP, versus the 200,000 expected. The data comes ahead of the monthly non-farm payrolls and unemployment data on Friday, which will be very closely watched by investors. European equities recouped most of their early losses by the afternoon. The region-wide Stoxx 600 closed up 0.1%, while London’s FTSE 100 also rose 0.1% and the CAC 40 in Paris lost 0.2%. Germany’s Dax edged up 0.5% after stronger-than-expected industrial production data.

Back home, Bursa Malaysia ended lower on Wednesday amid the downbeat performance of regional markets, in tandem with negative cues from Wall Street overnight following the hawkish pivot by the US Federal Reserve. At the closing bell, the benchmark FBM KLCI had dipped 4.01 points to 1,454.66, from Tuesday's closing at 1,458.67. The moves followed heavy declines in many of Asia’s biggest markets. The Hang Seng in Hong Kong dropped 2.4% and South Korea’s Kospi lost 1.3%.

Source: PublicInvest Research - 9 Mar 2023