Economy

US: Job openings lowest in nearly two years in Feb. US job openings in Feb dropped to the lowest level in nearly two years, suggesting that the labor market was cooling. Job openings, a measure of labor demand, decreased 632,000 to 9.9m on the last day of Feb, the lowest level since May 2021. Data for Jan was revised lower to show 10.6m job openings instead of the previously reported 10.8m. Economists had forecast 10.4m job openings. (Reuters)

US: Factory orders post second straight monthly decline in Feb. New orders for US-manufactured goods fell for a second straight month in Feb amid ebbing demand for civilian aircraft and there were signs that business spending on equipment remained weak in the first quarter. Factory orders dropped 0.7% after decreasing 2.1% in Jan. Economists had forecast orders falling 0.5%. Orders increased 3.0% on a YoY basis in Feb. Rising borrowing costs as the Fed fights high inflation have cooled demand for goods, which are typically bought on credit. Demand could come under pressure following the recent failure of two regional banks, which stressed the financial sector. (Reuters)

EU: German exports rise significantly more than expected in Feb. German exports rose significantly more than expected in Feb due to strong demand from the United States and China, posting their biggest increase in 10 months. Exports increased by 4.0% on the previous month. A Reuters poll had predicted a MoM rise in exports of 1.6%. Exports had risen 2.5% MoM in Jan. In Feb, exports to EU countries rose 2.0% on the previous month, while exports to the US and China increased by 9.4% and 10.2% respectively compared with Jan. Imports grew by 4.6% compared with Jan, versus analysts' expectations for a 1.0% rise. The increase follows five consecutive monthly contractions. (Reuters)

EU: Mortgage default risk in Portugal is low. The risk of default on mortgages in Portugal is low despite the steep rise in interest rates by the ECB because there are so many people in work. In Portugal, around 90% of the stock of 1.4m mortgages has variable rates indexed to three-month, six-month and 12-month Euribor rates. Centeno, who is governor of the Bank of Portugal, said that contrary to what happened in the sovereign debt crisis that led to the country's international bailout in 2011, "this time the Portuguese economy was prepared to face a crisis like this. Portugal's monthly unemployment rate fell to 6.8% in Feb from a revised reading of 7.0% in Jan. (Reuters)

EU: Eurozone house prices fall most since 2008. Eurozone house prices registered its biggest quarterly fall since late 2008, data from Eurostat showed on Tuesday. House prices slid 1.7% in the fourth quarter, which was the biggest sequential fall since the fourth quarter of 2008. This followed a 0.8% gain in the third quarter. Compared with the last year, house prices increased 2.9%, much weaker than the 6.6% increase in the third quarter. House prices in the EU decreased 1.5% on quarter and increased 3.6% from the prior year. The 1.5% fall was the sharpest decrease since the first quarter of 2009. (RTT)

EU: Spain unemployment declines sharply in Mar. Spain's unemployment declined sharply in Mat to the lowest level for the month since 2008. The number of registered unemployed decreased 48,755, or 1.67% from the previous month. This monthly decline was the largest in the last two decades. Registered unemployment totalled 2.86m in Mar, the lowest figure for the month since 2008. Compared to the same period last year, the number of people out of work plunged 246,503. (RTT)

China: Consumer recovery still dubious as nearly 60% of households prefer to save. Most Chinese households still prefer to save than spend, new central bank data shows, a blow to government efforts to revive consumption after dropping hardline Covid restrictions late last year. Lingering concerns about jobs and income continue to be the primary reasons for the caution, the PBOC said in a quarterly survey of 20,000 depositors. It found that 58% urban residents were in favour of having more deposits in the first quarter, down 3.8ppts from the fourth quarter of last year. (SCMP)

Australia: Pauses rate hikes to assess tightening impact, Q1 inflation in focus. Australia's central bank on left its cash rate unchanged at 3.6% to break a run of 10 straight hikes, saying it wanted additional time to assess the impact of past increases as the economy slows and inflation has peaked. Wrapping up its April policy meeting, the RBA did warn that "some further tightening of monetary policy may well be needed" to ensure that inflation returns to target . Markets had been wagering on a pause, while analysts were split on whether the bank would hike again given the still high level of inflation. (Reuters)

Singapore: Manufacturing sector logs slight contraction. Singapore's manufacturing sector deteriorated marginally after stabilizing in the previous month amid continuing contraction in the electronics sector, the results of the latest purchasing managers' survey. The PMI for the factory sector dropped marginally to 49.9 in Mar from 50.0 in Feb. In the latest PMI reading, factory output and supplier deliveries moderated, new orders contracted, inventory contraction slowed, and new exports contracted faster. (RTT)

Markets

Gamuda (Outperform, TP: RM5.10): ALR reaches understanding with Kesas, Sprint and Litrak on warranty claims. . Amanat Lebuhraya Rakyat (ALR) has reached an understanding with Kesas Holdings (Kesas), Sistem Penyuraian Trafik KL Barat Holdings SB (Sprint) and Lingkaran Trans Kota Holdings (Litrak) pertaining to warranty claims by ALR, said Gamuda. Gamuda said Kesas has agreed to accept the claims from ALR relating to survey fees and vehicle replacement totalling RM1.25m. On ALR’s claim on land-related matters, the filing said Kesas has agreed to, jointly with Gamuda, resolve the matter with the government under the concession agreement terms. Pending the resolution, ALR shall retain a sum of RM960,000 while agreeing to waive any interest payable by ALR on the amount. (Bernama)

Pharmaniaga: Reassures vendors and suppliers financial obligations will be met, access to medicine remains uninterrupted. Pharmaniaga is reassuring all of its vendors and suppliers that the group will meet its financial obligations by the end of the month at the earliest. The group said it is confident the current delay in payments will be resolved and normalised, following its meeting with the Pharmaceutical Association of Malaysia. (The Edge)

Sunway Construction: Receives additional RM606.6m worth of works for South Quay Square project . Sunway Construction Group (SunCon) has signed a second supplemental agreement for additional works amounting to RM606.6m in regards to the South Quay Square project. With the additional contract, the revised sum for the project is now at RM1.36bn. (The Edge)

Al-'Aqar Healthcare REIT: Private placement fixed at RM1.20 a unit . Al-'Aqar Healthcare REIT has fixed the issue price of its impending private placement exercise at RM1.20 per new unit. The REIT said the issue price represents a discount of approximately 9.5% to the volume weighted average price of the units for the five market days up to and including April 3 of RM1.3254 per unit. (The Edge)

South Malaysia Industries: Lodges complaint with SC on alleged CMSA breach . South Malaysia Industries (SMI) has lodged a complaint with the Securities Commission Malaysia (SC) alleging that over 20 parties comprising companies and individuals acting in concert have accumulated more than 33% equity stake without making a mandatory general offer. SMI alleged that the group of parties including Prolexus and YB Ventures was acting in concert with Honsin Apparel SB and Hi-Q Media (M) SB. Meanwhile, Prolexus has denied that it breached the Capital Markets and Services Act 2007 in its acquisition of shares in SMI, and said it will not succumb to demands that it make an MGO to acquire the remaining shares it does not own in the loss-making property developer. (The Edge)

Southern Cable: Orderbook swells to RM609m with TNB’s contract addendum. Southern Cable Group's orders in hand have grown to RM609.3m from RM578.4m as at Dec 31, 2022 after it received a contract addendum from TNB. (The Edge)

Coastal Contracts: Wins contracts for sales of two vessels for RM287.3m. Coastal Contracts Bhd’s wholly-owned subsidiaries have secured contracts for the sales of two units offshore support vessels for an aggregate value of approximately RM287.3m. (StarBiz)

Market Update

The FBM KLCI might open lower today as US Treasuries rallied and the dollar weakened on Tuesday after demand for workers in the world’s biggest economy fell, raising hopes that the Federal Reserve could soon hit the brakes on its monetary tightening campaign. The yield on two-year US Treasury notes — which move with interest rate expectations — fell 0.13 percentage points to 3.84%. The yield on benchmark 10-year Treasuries fell 0.07 percentage points to 3.34%. The dollar slipped 0.5% against a basket of six other major currencies. The moves came after data from the US Bureau of Labor Statistics showed job openings fell from 10.6mn in January to 9.9mn in February, the lowest monthly figure since May 2021. Lay-offs fell by 215,000 to 1.5mn, while voluntary departures rose 146,000 to 4mn. The S&P 500 fell 0.6%, ending a four-day rally, while the tech-heavy Nasdaq Composite dropped 0.5%, as markets weighed the potential effect of a cooling labour market on economic growth and inflation. Europe’s region wide Stoxx 600 closed flat and London’s FTSE 100 fell 0.5%.

Back home, Bursa Malaysia retreated from Monday's gains to end marginally lower on Tuesday, dragged by profit-taking, particularly for large-cap stocks. At the closing bell, the FBM KLCI had declined 3.78 points to 1,429.61, from Monday's close at 1,433.39. The regional markets finished mixed with the Shanghai Composite gained 0.49% and the Nikkei 225 rose 0.35%. The Hang Seng lost 0.66%.

Source: PublicInvest Research - 5 Apr 2023