Economy

US: New US jobless claims rise again as labour market cools. The number of Americans filing initial claims for unemployment benefits rose last week, indicating the labour market continues to cool in the year's fourth quarter. New state unemployment benefit claims rose by 12,000 last week to 218,000, according to the Labor Department. A Reuters poll showed economists expected an increase to 210,000 initial claims for the week ended Dec 23. The rolls of those receiving benefits after one week of aid rose 14,000 from the week prior, reaching 1.88m. Continued unemployment claims, a measure for hiring, have increased since mid-Sept, indicating those already out of work may be having difficulties getting a job. (Reuters)

US: Pending home sales unexpectedly unchanged in Nov. After reporting a steep drop in US pending home sales in the previous month, the National Association of Realtors released a report showing pending home sales were unexpectedly unchanged in the month of Nov. NAR said its pending home sales index stayed at 71.6 in Nov after tumbling by a revised 1.2% in Oct. Economists had expected pending home sales to jump by 1.0% compared to the 1.5% slump originally reported for the previous month. (RTT)

UK: Economy set to escape hard landing in boost for Rishi Sunak. Britain’s economy probably will avoid a recession in 2024 and strengthen in the second half of the year as consumers benefit from falling inflation and the easing of a lengthy cost-of-living crisis. In aggregate, the 52 economists surveyed by Bloomberg believe the Treasury and the BOE will engineer a soft landing for the economy next year, with growth of 0.3% and a recession averted. If the economy is to decide the outcome of the election, which must be called by Jan 2025, Prime Minister Rishi Sunak’s best chance is to wait until the summer, judging by forecasts for the year ahead. (Bloomberg)

China: PBOC pledges to stimulate consumer prices amid deflation fears. China vowed to step up existing monetary policy and stimulate consumer prices, which last month continued their slide, falling at the steepest pace in three years. The PBOC vowed to implement a prudent monetary policy in targeted and effective manner, and reaffirmed its pledge to push consumer prices higher, according to a PBOC statement. China’s Nov consumer prices fell 0.5% from a year earlier, and producer costs dropped 3%, more than expected and deeper into negative territory, underscoring the challenges facing the economic recovery. (Bloomberg)

Japan: Bank of Japan's Ueda prepares ground for rate hike with salvo of comments. BOJ governor Kazuo Ueda continued to prepare the ground for the nation’s first interest rate increase since 2007, with another round of comments that further build the case for a move in the spring, while not ruling out the less probable option of a Jan hike. “It’s possible to make some decisions even if the bank doesn’t have the full results of spring wage negotiations from small- and middle-sized businesses,” the governor said. (Bloomberg)

Japan: Retail sales climb 5.3% on year in Nov. The value of retail sales in Japan was up 5.3% in Nov, the Ministry of Economy, Trade and Industry said - coming in at JPY13.82trn. That was up from the 4.1% increase in Oct. On a seasonally adjusted monthly basis, retail sales rose 1.0% after slipping 1.7% in the previous month. Sales from large retailers gained 1.0% on month and 5.0% on year in Nov. Commercial sales added 0.9% on year and fell 0.2% on month to JPY50.68trn, while wholesale sales lost 0.7% on year and 0.3% on month at JPY36.86trn. (RTT)

Hong Kong: Home prices fall to lowest since 2017 as rents rise. Hong Kong’s home prices dropped to the lowest in almost seven years as high interest rates continue to weigh on buyers’ appetite, driving them to rent instead. Residential prices fell 2% in Nov from a month earlier, a seventh straight decline, according to government data. The price index is now at its lowest since early 2017. In contrast, rents in the city rose for a 10th month to the highest in four years. Expensive borrowing costs are discouraging homebuyers, prompting them to ride out the tightening cycle by renting apartments. (Bloomberg)

Markets

UMS: Disposes 45% stake in associate for RM6m in related party transaction. Equipment and engineering parts provider UMS Holdings has disposed of its entire 45.1% stake in oil and gas equipment supplier MKS SB to its major shareholder NGT Holdings SB for RM6.1m in a related party transaction. The disposal, by UMS’ wholly-owned unit Aqua Terra Union Oilfield Supply SB (ATU), sees the group booking expected gains of RM5.4m, as its cost of investment in MKS totalled RM714,802. The rationale for this disposal is to take advantage of the expected gain arising from this disposal. UMS expects the disposal to be completed before end-2023. (The Edge)

ARB: Largest shareholder Liew Kok Leong steps down as executive chairman. Datuk Seri Liew Kok Leong has stepped down as the executive chairman of ARB, less than three months after being redesignated to the position. Liew cited pursuing other interests as the reason for his resignation, which is effective immediately. Liew, 50, was redesignated as ARB chairman on 11 Oct, succeeding Khor Ben Jin, who had resigned from the position to pursue personal interests and commitments. Before his recent role, Liew had been a board member since 30 Aug 2018. (The Edge)

Coastal Contracts: Still in talks with Pemex about contract extension. Coastal Contracts is still in negotiations with Mexico’s national oil company Petroleos Mexicanos (Pemex) on the Perdiz gas plant and jack-up gas compression service unit (JUGCSU) contract extension. The discussion with Pemex for a two-year contract extension was expected to be finalised in Jan. The indicative value of contract extension is around USD70m to USD80m. (StarBiz)

LSH Capital: Minority shareholders waive exit offer entitlement as firm seeks transfer to ACE Market. Lim Seong Hai Capital (LSH Capital), which is seeking a transfer from the LEAP Market to the ACE Market of Bursa Malaysia, has obtained undertaking letters from its minority shareholders to waive their entitlement to an exit offer. The company said it is seeking Bursa's approval for relief from having to offer the shareholders a reasonable cash alternative to the exit offer. (The Edge)

IPO: Wentel Engineering inks IPO deal with TA Securities. Wentel Engineering Holdings has signed an underwriting agreement with TA Securities Holdings for the company’s IPO on the ACE Market of Bursa Malaysia. In a statement, Wentel said its IPO entailed a public issue of 273.2m new shares and an offer for sale of 46m existing shares. TA Securities will underwrite 57.5m of the public issue shares, representing the portion made available to the Malaysian public via balloting. (StarBiz)

IPO: Master Tec to price IPO at 39 sen apiece to raise over RM111m. Wires and cable manufacturer Master Tec Group, en route for an ACE Market listing on 29 Jan next year, has set an issue price of 39 sen per share for its IPO exercise to raise RM111.4m, of which about 45% or RM49.7m will go to a selling shareholder via an offer for sale. The IPO comprises a public offering of 285.6m new shares, or 28% of the enlarged share base of 1.02bn. Of the RM111.4m to be raised, the remaining RM61.7m or 55% for the company will come from the public issue portion of 158.1m new shares. (The Edge)

MARKET UPDATE

The S&P 500 finished marginally higher, closing in on a new alltime high. The broad market index added 0.04%, putting it within striking distance of its highest closing level of at 4,796.56 set in January 2022. The Dow Jones rose 0.1%, notching a fresh record closing high. The Nasdaq Composite was flat. European stocks closed lower as global markets searched for new record highs to close out the year. The German’s DAX and French CAC were down 0.2% and 0.5% respectively while the UK’s FTSE 100 was flat. Shares in Asia-Pacific closed mostly higher, with markets in mainland China and Hong Kong gaining 1.4% and 2.5% respectively while Australia's S&P/ASX 200 hovering near a twoyear high. Japan's Nikkei 225 bucked the trend to post slight declines. Trading volumes are expected to be thin during the last two days of the trading year, with fewer data points on the economic calendar and all major central bank meetings out of the way.

Back home, FBM KLCI closed 0.2% or 3.19 points higher to settle at 1,457.41. Wires and cable manufacturer Master Tec, which will be listed on the ACE Market on 29 January 2024, has set an issue price of 39 sen per share for its IPO exercise. Meanwhile, ECA Integrated Solution reported a 21.3% increase in FY23 core earnings. However, results came in below our expectations due to lower-than-expected 4Q revenue and higher expenses.

Source: PublicInvest Research - 29 Dec 2023