Economy

US: Housing starts rebound 9.8% in Feb, much more than expected. After reporting decreases in new US residential construction for six straight months, showing a substantial rebound in housing starts in the month of Feb. Housing starts spiked by 9.8% to an annual rate of 1.45m in Feb after slumping by 2.0% to a revised rate of 1.32m in Jan. Economists had expected housing starts to rise to an annual rate of 1.32m from the 1.31m originally reported for the previous month. The rebound by housing starts largely reflected a surge in multi-family starts, which soared by 24.0% to a rate of 620,000. Single-family starts also jumped by 1.1% to a rate of 830,000. (RTT)

US: Import prices show first annual decrease since Dec 2020. The Labor Department said import prices dipped by 0.1% in Feb after falling by a revised 0.4% in Jan. Economists had expected import prices to slip by 0.2%, matching the decrease originally reported for the previous month. The modest decrease in import prices came amid a continued slump in prices for fuel imports, which plunged by 4.9% for the second straight month. (RTT)

EU: Mainland Norway GDP contracts on fall in car purchases. The Mainland Norway economy contracted in Jan on a sharp fall in car purchases. GDP fell 0.2% MoM in Jan, in contrast to the revised 0.3% increase in Dec. The pace of decline matched economists' expectations. Overall Norway GDP also decreased 0.2% after a 0.3% gain in Dec. (RTT)

EU: ECB hikes rates despite market mayhem, pledges support if needed. The ECB announced a further rate hike of 50 bps, signalling it is ready to supply liquidity to banks if needed, amid recent turmoil in the banking sector. The ECB had signalled for several weeks that it would be raising rates again at its March meeting, as inflation across the 20-member region remains sharply above the targeted level. (CNBC)

UK: Employers offer 5% pay rises in three months to Jan. British employers agreed pay rises averaging 5% during the three months to the end of Jan, well above historic norms, and a tight labour market means pay settlements are likely to remain high. Incomes Data Research (IDR) said the median pay rise at major British employers had risen from 4.3% in the three months to the end of Oct and 3.4% in the 1QFY22. (Reuters)

UK: Unveils USD291bn bond-sale programme. The UK plans to sell more gilts than anticipated in the coming fiscal year, with a higher-than-average proportion slanted toward short-maturity notes that appeal to a broad pool of investors. The Debt Management Office (DMO) said it will issue GBP241.1bn (USD291bn or RM1.31trn) of government bonds, compared with the GBP233bn (RM1.26trn). (Bloomberg)

China: Sets the pace for global tourism. As China lifted more travel restrictions after it optimised its Covid-19 response, its recovering outbound and inbound travel is injecting new impetus into the global tourism market. China began allowing travel agencies and online tourism services providers to offer group tours to a second list of 40 destinations, including France, Greece, Spain, Italy, Denmark and Brazil, according to the Culture and Tourism Ministry. (StarBiz)

Australia: Bad loans to rise but banks can take shocks. Australia’s slowing economy and rising interest rates are likely to drive higher housing and business loan losses for banks, while adding that lenders unquestionably strong capital requirements mean they can withstand any shock. The RBA is in the midst of its most aggressive tightening campaign in a generation, having raised interest rates by 3.5ppts since May from a record low 0.1%. (Bloomberg)

New Zealand: NZ on brink of recession after economy contracts. New Zealand’s economy contracted by more than expected in the final three months of 2022, putting the nation on the brink of recession and sending the currency lower. GDP fell 0.6% from the third quarter, when it gained a revised 1.7%. Economists forecast a 0.2% drop. From a year ago, the economy expanded 2.2%, compared with the median estimate of 3.3% growth. (Bloomberg)

Markets

Pasdec: Sells mini hydro power plant project amid cost escalation. Pasdec Holdings has decided to sell its subsidiary that is developing the 5MW mini hydro power plant project in Bentong, Pahang, for RM1.2m, while recouping RM10.8m of advances provided to the subsidiary. It is divesting its 100% equity interest in Pasdec-Mega SB to SPAC SB. The construction costs to complete the project has escalated significantly from the original budgeted costs. (The Edge)

MGB: Bags RM47m contract to build houses in Puchong. MGB Bhd has bagged a RM46.8 million contract to build 155 double storey terrace houses at the D’Island Residence township in Puchong from LBS Bina Group. With the contract in hand, the group’s current outstanding order book is approximately RM1.88bn. (The Edge)

Inta Bina: Bags RM80m contract to build houses in Ijok. Inta Bina Group has secured a RM79.9m contract from Eco World Development to build houses near Bandar Puncak Alam in Ijok, Selangor. The construction period is 16 months, commencing from the date of site possession on April 14 (The Edge)

Ancom Nylex: Accepts methanol supply agreement from Petronas Chemical Labuan (PCML) for 5 years. The agreements entail PCML supplying methanol to Ancom's wholly owned subsidiary Perusahaan Kimia Gemilang SB and the 51%-owned subsidiary Ancom Kimia SB. The duration of the contract was for 5 years commencing Jan 1 to Dec 31, 2027. (The Edge)

Sunway REIT: Acquires 6 hypermarkets for RM520m. The hypermarkets are located in Kinrara, Putra Heights, USJ, Klang, Ulu Kelang and Plentong. Its property value will increase to RM9.7bn upon completion of the proposed acquisition. The proposed acquisition is expected to increase income stability of Sunway REIT through fixed rental payments from the lessee (GCH Retail (Malaysia) SB) under the triple-net lease agreements. (StarBiz)

TT Vision: Secures RM23.6m contract for solar cell inspection equipment. The contract is expected to be fulfilled within six to nine months during FY23. Given this latest batch of purchase orders, the Group expects the revenue contribution from the solar cell inspection equipment segment to total revenue in FY23 to be higher. (StarBiz)

Microlink: Bags RM17.8m contract from LPPSA. Microlink Solutions has bagged a RM17.8m contract from Public Sector Home Financing Board (LPPSA) for the maintenance and support services for the loan management system. The contract is for a period of 5 years, commencing from April 1, 2023 with no clause on renewal in the LoA. (StarBiz)

Pertama Digital: To raise RM87.8m in share placement. Pertama Digital entered into a conditional subscription agreement with Macquarie Bank Ltd to subscribe up to 43m new ordinary shares in Pertama Digital. The proposed placement represents about 10% of Pertama Digital’s total issued shares. (StarBiz)

Market Update

The FBM KLCI might open higher today after US stocks rose and nerves around banking stocks in Europe eased on Thursday as the world’s central banks calmed investors with promises to maintain financial stability.

On Wall Street, the S&P 500 added 1.8% while the Nasdaq Composite gained 2.5%. The KBW Nasdaq Bank index, which has sold off heavily this week following the collapse of Silicon Valley Bank, rose 2.6%. Reports that US banks would work together to shore up First Republic Bank with a $30bn deposit gave investors some confidence on Thursday that a full-scale banking crisis could be averted. Treasury secretary Janet Yellen also told a Senate committee that the banking sector was “sound” and that “Americans can feel confident that their deposits will be there when they need them”. In Europe, the benchmark Stoxx 600 rose 1.4% and FTSE 100 added 0.9% as investors were reassured by comments from the European Central Bank that it was prepared to provide liquidity support to the euro area financial system “if needed”. That came a day after the Swiss National Bank said it would step in to offer liquidity support to lender Credit Suisse, whose shares rose by a fifth in Zurich. The Euro Stoxx 600 banks index, which contains the region’s biggest lenders, reversed early losses to trade up 1.2%.

Back home, Bursa Malaysia retreated from Wednesday's gains to end lower on Thursday, in tandem with the weaker regional market performance, following a large-scale selldown of global equities overnight. At the closing bell, the benchmark FBM KLCI had fallen 12.33 points, or 0.88%, to 1,391.60, from Wednesday's close at 1,403.93. Japan’s Topix shed 1.2%, South Korea’s Kospi lost 0.1% and Australia’s S&P/ASX 200 fell 1.5%. Hong Kong’s Hang Seng and China’s CSI 300 dropped 1.7% and 1.2%, respectively.

Source: PublicInvest Research - 17 Mar 2023