Economy

US: Fed minutes reveal debate about rate hike after banking turmoil. With the collapse of SVBk coming not long before the Federal Reserve's latest monetary policy meeting, the minutes of the meeting revealed some debate about raising interest rates. The minutes of the March 21-22 meeting showed some participants considered leaving rates unchanged to allow more time to assess the effects of the banking sector turmoil. However, these participants also observed that actions taken by the Fed and other government agencies had helped calm conditions in the banking sector. They consequently determined it would be appropriate to raise interest rates by another 25 bps in light of elevated inflation and the strength of the recent economic data. Meanwhile, other partisans noted they would have considered a 50 bps increase at the meeting given persistently high inflation. Due to the potential for the banking sector turmoil to tighten financial conditions and weigh on economic activity and inflation, however, they judged it prudent to increase the target range by a smaller increment. (RTT)

US: Consumer prices inch up 0.1% in March, annual growth slows to 5.0%. CPI inched up by 0.1% in March after climbing by 0.4% in Feb. Economists had expected consumer prices to rise by 0.3%. The uptick in consumer prices came as a continued advance in prices for shelter more than offset a steep drop in energy prices. The report also showed the annual rate of consumer price growth slowed to 5.0% in March from 6.0% in Feb. The YoY growth was slower than the 5.2% expected by economists and marks the smallest 12-month increase since May 2021. Meanwhile, the report said core consumer prices, which exclude food and energy prices, rose by 0.4% in March after advancing by 0.5% in Feb. The increase matched economist estimates. (RTT)

Japan: New BOJ chief vows to keep stimulus, shuns premature tightening. Bank of Japan Governor Kazuo Ueda said the central bank must pay more attention to the risk of failing to meet its 2% inflation target with premature monetary tightening, rather than being behind the curve in combating too-high price growth. While other countries are experiencing elevated inflation, the situation is “quite different” in Japan. Ueda said it is possible that Japan could risk being behind the curve in addressing the risk of too-high inflation by keeping monetary policy ultra-loose for a prolonged period. But the BOJ must pay more attention to (the risk of) failing to achieve 2% inflation with a premature end to easy policy, rather than that of a delay in raising interest rates. (Reuters)

South Korea: Export prices climb 2.0% In March. Export prices in South Korea were up 2.0% on month in March - accelerating from the 0.8% gain in Feb. On a yearly basis, export prices tumbled 6.4% after slipping 2.6% in the previous month. Individually, export prices for agricultural, forestry and marine products were down 2.3% on month and 6.6% on year, while manufacturing products rose 2.0% on month and fell 6.4% on year. Import prices were up 0.8% on month and down 6.9% on year after rising 1.9% on month and easing 0.7% on year in Feb. (RTT)

India: Inflation eases to 15-month low; industrial production growth improves. India's CPI eased more-than-expected in March to its lowest level in 15 months amid a slowdown in food prices to be back within the Reserve Bank of India's target range, while industrial production growth improved slightly in Feb. The CPI climbed 5.66% YoY in March, which was slower than the 6.44% rise in Feb. Economists had forecast the rate to drop to 5.80%. In the same period last year, inflation was 6.95%. Inflation returned within RBI's tolerance band of 2-6% for the first time since Dec. (RTT)

Canada: Bank of Canada leaves interest rates unchanged for second straight meeting. The Bank of Canada once again left interest rates unchanged, citing expectations consumer price inflation will continue to ease in the coming months. Canada's central bank held its target for the overnight rate at 4.50% for the second straight meeting after signalling in Jan that it expects to keep rates at their current level while it assesses the impact of the cumulative rate hikes. The decision to leave rates unchanged comes as the bank expects consumer price inflation to fall quickly to around 3% in the middle of this year from 5.2% in Feb and then decline more gradually to the 2% target by the end of 2024. Recent data is reinforcing Governing Council's confidence that inflation will continue to decline in the next few months. (RTT)

Argentina: Central bank mulls another rate hike to tame 100% inflation. Argentina central bank board have been discussing the idea of another potential interest rate hike from the current 78% level. The possible hike would be the second in a row after a sharp rise in the benchmark rate last month when rampant inflation forced the bank to tighten monetary policy, dashing earlier hopes of an economy-boosting cut if prices cooled. The possibility of a new rate rise has been raised, but it is not yet defined. Most probably the central bank will raise the reference rate again and continue betting on the nominal race: rate versus inflation, which could help buy time however, that this would continue to worsen the bank’s balance sheet, with fewer reserves and greater debt. (Reuters)

Markets

FGV (Neutral, TP:RM1.61): Subsidiaries sued for RM25m on fraud, trespassing claims . FGV Holdings announced that its subsidiaries Sri Kehuma SB and Yapidmas Plantation SB (YPSB) are being sued over alleged fraudulent transactions and continuing trespass on lease agreements for 41 parcels of land. The subsidiaries were served the writ of summons dated 13 Mar 2023 by the plaintiff Euggne Kousai, who is seeking damages of RM24.9m. Kousai claimed to be the registered owner of the 41 parcels of land, which were held under native title, said the agribusiness and food company. (The Edge)

AAX: Makes second application for more time to submit regularisation plan. AirAsia X (AAX) has submitted an application to Bursa Securities for a further three-month extension from 29 Apr 2023 until 28 Jul 2023 for the company to submit its regularisation plan to Bursa Securities. AAX had previously submitted an application for a six-month extension up to 28 Apr 2023 for the group to submit its regularisation plan and the stock exchange approved this application. (Bernama)

MYEG: Wins tender for workers village in Penang. My EG Services’ sub-subsidiary MY EG Lodging SB has secured a tender from Penang Development Corp for the setting up of a workers village and related facilities at Batu Kawan Industrial Park 3 in Seberang Perai Selatan. The project is for MY EG Lodging to lease a land measuring 8.39 acres at a value of RM20.39m for 30 years to build and operate the workers village and related facilities at its own cost. The workers village, which is estimated to accommodate 7,500 foreign workers, will comply with Jabatan Tenaga Kerja Semenanjung Malaysia guidelines and will be certified with GreenRE. (StarBiz)

Glomac: To acquire remaining 49% stake in construction unit Glomac Bina. Glomac has proposed to acquire the remaining 49% stake in Glomac Bina SB from the group's executive chairman and major shareholder Tan Sri Mohamed Mansor Fateh Din and another major shareholder, Mohd Yasin Loh Abdullah. The property developer said the acquisition of the stake for RM16.2m will enable Glomac Bina to become a wholly-owned subsidiary of the group. The proposed acquisition will enable Glomac to streamline its group structure and gain 100% control in Glomac Bina to be in the position to drive the future strategic direction of Glomac Bina. (The Edge)

MMS Ventures: Targets to grow its ODM business. MMS Ventures (MMSV) seeks to expand its original design manufacturing (ODM) business amid anticipation of slow sales in the semiconductor segment this year. The company said its ODM business showcases its design and development strengths, albeit marketed under global branding. The ODM/OEM segment made up 20.5% of the group’s RM52.87m revenue for the FYE 31 Dec 2022 (FY2022). (StarBiz)

Duopharma Biotech: Sets up Indonesian subsidiary. Duopharma Biotech has established a wholly-owned subsidiary, PT Duopharma Healthcare (PT DHI) Indonesia, in Indonesia. It had received confirmation of approval from Indonesia's Ministry of Law and Human Rights on 11 Apr. PT DHI is a limited liability company, with a current authorised and issued capital of Rp10bil comprising 10,001 shares. (StarBiz)

Market Update

The FBM KLCI might open with a negative bias today after Wall Street stocks edged lower on Wednesday as investors appeared spooked after Federal Reserve staffers predicted a recession this year. The benchmark S&P 500 closed 0.4% lower while the tech heavy Nasdaq Composite dropped 0.9%. In Europe, the region wide Stoxx 600 rose 0.1%, while Germany’s Dax rose 0.3%, and London’s FTSE 100 added 0.5%. Back home, Bursa Malaysia snapped a three-day winning streak to end marginally lower on Wednesday, dragged by profit-taking. At the closing bell, the FBM KLCI had slipped by 1.15 points to 1,434.74, from Tuesday's close at 1,435.89. The regional equities were mixed, with Hong Kong’s Hang Seng index down 0.8% and China’s CSI 300 flat. Japan’s Topix and South Korea’s Kospi added 0.8% and 0.1%, respectively.

Source: PublicInvest Research - 13 Apr 2023