Economy

US: Retail sales rose 0.3% in Nov vs. expectations for a decline. Consumers showed unexpected strength in Nov, giving a solid start to the holiday season as inflation showed signs of continued easing. Retail sales rose 0.3% in Nov, stronger than the 0.2% decline in Oct. The total is adjusted for seasonal factors but not inflation. Excluding autos, sales rose 0.2%, also better than the forecast for no change. Stripping out autos and gas, sales rose 0.6%. With the CPI up 0.1% on a monthly basis in Nov, the retail sales number shows consumers more than keeping up with the pace of price increases. On a YoY basis, sales accelerated 4.1%, compared with a headline CPI rate of 3.1%. The inflation rate is still above the Federal Reserve’s 2% target but is well below its peak above 9% in mid-2022. (CNBC)

US: Weekly jobless claims unexpectedly drop to 202,000. Firsttime claims for US unemployment benefits unexpectedly fell in the week ended Dec 9. The initial jobless claims slid to 202,000, a decrease of 19,000 from the previous week's revised level of 221,000. Economists had expected jobless claims to come in unchanged compared to the 220,000 originally reported for the previous week. With the unexpected decrease, jobless claims fell to their lowest level since hitting 200,000 in the week ended Oct 14th. (RTT)

EU: ECB holds rates and trims its inflation forecast. The ECB held interest rates steady for the second meeting in a row, as it revised its growth forecasts lower and announced plans to speed up the shrinking of its balance sheet. The bank was widely expected to leave policy unchanged in light of the sharp fall in euro zone inflation, as investors instead chase signals on when the first rate cut may come and assess the ECB’s plans to shrink its balance sheet. (CNBC)

UK: BoE keeps rate at 15-year high. The BoE left its benchmark rate unchanged at a 15-year high for the third straight time and retained its hawkish bias in contrast to the stance of its peer US Federal Reserve that hinted at three rate cuts next year. The Monetary Policy Committee, led by Governor Andrew Bailey, voted 6-3 to maintain the bank rate at 5.25% at the final meeting of the year. These members assessed that further tightening was necessary to address the risks of more deeply embedded inflation persistence and to return inflation to target sustainably in the medium term. (RTT)

Japan: Industrial output grows 1.3%, more than estimated. Japan's industrial production expanded more than initially estimated in Oct. Industrial production advanced 1.3% MoM in Oct, following a 0.5% recovery in the previous month, which was the first rise in three months. In the initial report, the rate of change in production was an increase of 1.0%. Shipments advanced 0.4% monthly in October, and inventories gained 0.6%. Meanwhile, the inventory ratio showed a contraction of 0.3%. (RTT)

Japan: Core machine orders rise 0.7% in Oct. The value of core machine orders in Japan was up a seasonally adjusted 0.7% on month in Oct - coming in at JPY858.7bn. That beat expectations for a decline of 0.5% following the 1.4% increase in Sept. On a yearly basis, core machine orders fell 2.2% - but that also topped forecasts for a drop of 5.1% following the 2.2% drop in the previous month. (RTT)

India: Wholesale prices rise 0.26%, more than forecast. India's wholesale prices increased for the first time in eight months in Nov, and at a faster-than-expected rate. The wholesale price index, rose 0.26% YoY in Nov, reversing a 0.52% decline in Oct. Economists had expected a 0.08% slight increase for the month. The upward trend was primarily due to the rises in prices of food articles, minerals, machinery and equipment, computers, electronics and optical products, motor vehicles, other transport equipment, and other manufacturing. (RTT)

Australia: Manufacturing PMI inches higher in Dec. The manufacturing sector in Australia continued to contract in Dec, albeit it a slightly slower pace with a manufacturing PMI score of 47.8. That's up marginally from 47.7 in Nov, although it remained beneath the boom-or-bust line of 50 that separates expansion from contraction. Manufacturing output contracted at a quicker pace in the final month of the year despite a slower fall in incoming new orders. (RTT)

Markets

Sapura Energy (Underperform, TP:RM0.035): Granted second extension to submit PN17 regularisation plan. Sapura Energy Bhd has been granted a second extension of up to 31 May next year to submit its Practice Note 17 (PN17) regularisation plan, which was supposed to be due on 30 Nov 2023. “The extension of time would enable the company to continue building a robust regularisation plan based on the ongoing debt restructuring exercise, which is well underway following the confirmation for its proposed restructuring scheme approval-in-principle from the Corporate Debt Restructuring Committee,” said Sapura. (The Edge)

Ranhill: Gets non-revenue water reduction contract worth RM283.9m. Ranhill Utilities Bhd has accepted a letter of acceptance of tender (LoA) worth RM283.89mil for the nonrevenue water (NRW) reduction contract in Johor. Ranhill said this is the seventh successive NRW project in Johor it has secured through a competitive open tender process since 2011. The project, to be undertaken over the next 36 months, will contribute positively to the earnings of the group from the financial year ending 31 Dec 2024 until 31 Dec 2026. (The Star)

Crest Builder: Secures RM314.5m construction contract from UEM Land. Crest Builder Holdings wholly-owned unit Crest Builder SB has secured a RM314.5m contract from UEM Land to construct 1,334 units of serviced apartments in two 53-storey blocks in Cheras, Kuala Lumpur. In a statement on Thursday, the company said the project also comprised a level of sub-basement car park, elevated podium car parks, commercial retail and office spaces and a level of recreation facilities. It said that the construction works would take approximately 39 months to complete from its scheduled site possession date of 1 June 2024. (The Edge)

WTK: To expand product range with upgrading project in Penang plant. WTK Holdings is currently undertaking a major upgrading project for its tapes manufacturing plant in Penang. The upgrading of the plants and machineries is to expand the product range and improve operational efficiency and cost competitive advantage. (The Star)

Hiap Teck: Starts FY2024 in the red as JV losses weigh. Hiap Teck Venture slipped back into the red with a net loss of RM9.4m or 0.54 sen per share for its first quarter ended 31 Oct 2023 (1QFY2024), after three consecutive profitable quarters, as its bottomline was dragged by its share of losses from a joint venture entity. Revenue also shrank to RM407.5m on lower sales volumes due to sluggish market demand for steel products, from the RM453.8m it recorded in the immediate preceding quarter of 4QFY2023 — when the group made a net profit of RM42.6m. (The Edge)

Pestech: JV wins Sarawak power substation deal. Pestech International via its 60%-owned JV has secured a transmission substation design project worth RM109.98m, in Entinggan, Kuching, Sarawak, from Syarikat Sesco. Pestech said the development of the Entinggan Substation is expected to ensure the reliability of supply and cater for the rapid growth in the organic and industrial load in Kuching. The commencement date of the contract shall be 26 Dec 2023, with the time for completion of the whole works being 23 months from the commencement date. (The Star)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks ended firmer yesterday, with the Dow Jones Industrial Average notching its second straight record high close, lifted by optimism that borrowing rates will decrease next year following a dovish pivot by the Federal Reserve. Apple hit an intra-day record high before surrendering some of its gains to close up 0.08%. The S&P 500 climbed 0.26 % to end at 4,719.55 points. It remains down less than 2% from its record high close in January 2022. The Nasdaq Composite Index gained 0.19% at 14,761.56 points, while the Dow Jones Industrial Average rose 0.43% to 37,248.35 points. European stocks increased Thursday, as the Stoxx Europe 600 index finished up 0.87% to 476.57. The FTSE 100 index gained 1.33% to 7,648.98, the French CAC 40 index added 0.59% to 7,575.85 and the German DAX was flat at 16,752.23.

Back home, Bursa Malaysia closed on a positive note on Thursday, hitting an intraday high after taking signals from key regional indices, which were generally in the green following a positive cue from Wall Street overnight as the Federal Open Market Committee (FOMC) kept its interest rate steady. At the closing bell, the FBM KLCI gained 0.57% or 8.22 points to 1,456.26 compared with Wednesday's closing of 1,448.04. In the region, Hong Kong’s Hang Seng fell 1.07% to 16,402.19, South Korea’s Kospi added 1.34% to 2,544.18 and Japan’s Nikkei 225 lost 0.73% to 32,686.25.

Source: PublicInvest Research - 15 Dec 2023