PublicInvest Research

PublicInvest Research Headlines - 8 Jan 2024

PublicInvest
Publish date: Mon, 08 Jan 2024, 10:57 AM
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

All materials published here are prepared by Public Investment Bank Berhad. For latest offers on Public Invest trading products and news, please refer to: https://www.publicinvestbank.com.my/pbswecos/default.asp

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Economy

US: Economy cranks out jobs at brisk clip in Dec, wages increase. US employers hired more workers than expected in December while raising wages at a solid clip, casting some doubt on financial market expectations that the Fed would start cutting interest rates in March. There were, however, some cracks in the closely watched employment report from the Labor Department. The economy added 71,000 fewer jobs in Oct and Nov than previously reported. (Reuters)

US: Service sector slows in Dec as employment plummets - ISM survey. The US services sector slowed considerably in Dec, with a measure of employment dropping to the lowest level in nearly 3-1/2 years. The Institute for Supply Management (ISM) said that its non-manufacturing PMI fell to 50.6 last month, the lowest reading since May, from 52.7 in Nov. A reading above 50 indicates growth in the services industry, which accounts for more than twothirds of the economy. Economists polled by Reuters had forecast the index little changed at 52.6. A measure of new orders received by services businesses dropped to 52.8 last month from 55.5 in Nov. (Reuters)

EU: Inflation jump cools case for ECB rate cuts. Euro zone inflation jumped as expected last month, supporting the ECB’s case to keep interest rates at record highs for some time, even as markets continued to bet on a rapid fall in borrowing costs. Inflation across the 20-nation bloc jumped to 2.9% in Dec from 2.4% in Nov, just shy of expectations for a 3.0% reading, mostly on technical factors, such as the end of some government subsidies and low energy prices getting knocked from base figures. The data is in line with the ECB's prediction that inflation bottomed out in Nov and will now hover in the 2.5% to 3% range through the year, well above its 2% target, before falling to target in 2025. (Reuters)

UK: Slump for builders eases in Dec on rate cut hopes - PMI. Britain's construction sector showed signs in Dec that it might have seen the worst of a slump caused by the steep climb in interest rates. The S&P Global/CIPS UK construction PMI rose to 46.8 from Nov 45.5 but remained below the 50.0 growth threshold for a fourth month in a row. Companies remained worried about Britain's economic outlook, especially for commercial projects, Tim Moore, economics director at S&P Global, said. (Reuters)

Japan: Service activity expands in Dec, led by strong new business – PMI. Japan's Dec service activity expanded at a faster pace from the previous month thanks to strong demand and a lift in confidence even though the overall growth rate was modest. The service sector has been a bright spot for the world's third-largest economy, marking 16 consecutive months of growth and helping offset some of the drag on momentum from the struggles facing manufacturers. (Reuters)

India: Forecasts 7.3% 2023/24 economic growth, boosting Modi's election chances. India forecast annual growth of 7.3% in the fiscal year ending in March, the highest rate of any of the major global economies, providing a boost for Prime Minister Narendra Modi ahead of the national elections scheduled to be held before May. "These are early projections for 2023/24," the National Statistical Office (NSO) said in a statement, adding improved data coverage, actual tax receipts and spending on state subsidies could affect subsequent revisions. (Reuters)

Singapore: Retail sales rebound in Nov. Singapore's retail sales grew in Nov after declining in the previous months, preliminary data from the Department of Statistics showed. Retail sales rose 2.5% YoY following a 0.1% decline in Oct. Sales excluding motor vehicles grew 1.4% YoY, reversing a 1.0% fall in the previous month. Among different industries, the food and alcohol sector logged the biggest growth of 13.6%. Sales of automobiles and watches and jewelry grew 12.9%, mainly due to the regulations regarding the number of vehicle registrations and greater demand for jewelry. (RTT)

US: Service sector slows in Dec as employment plummets - ISM survey. The US services sector slowed considerably in Dec, with a measure of employment dropping to the lowest level in nearly 3-1/2 years. The Institute for Supply Management (ISM) said that its non-manufacturing PMI fell to 50.6 last month, the lowest reading since May, from 52.7 in Nov. A reading above 50 indicates growth in the services industry, which accounts for more than twothirds of the economy. Economists polled by Reuters had forecast the index little changed at 52.6. A measure of new orders received by services businesses dropped to 52.8 last month from 55.5 in Nov. (Reuters)

EU: Inflation jump cools case for ECB rate cuts. Euro zone inflation jumped as expected last month, supporting the ECB’s case to keep interest rates at record highs for some time, even as markets continued to bet on a rapid fall in borrowing costs. Inflation across the 20-nation bloc jumped to 2.9% in Dec from 2.4% in Nov, just shy of expectations for a 3.0% reading, mostly on technical factors, such as the end of some government subsidies and low energy prices getting knocked from base figures. The data is in line with the ECB's prediction that inflation bottomed out in Nov and will now hover in the 2.5% to 3% range through the year, well above its 2% target, before falling to target in 2025. (Reuters)

UK: Slump for builders eases in Dec on rate cut hopes - PMI. Britain's construction sector showed signs in Dec that it might have seen the worst of a slump caused by the steep climb in interest rates. The S&P Global/CIPS UK construction PMI rose to 46.8 from Nov 45.5 but remained below the 50.0 growth threshold for a fourth month in a row. Companies remained worried about Britain's economic outlook, especially for commercial projects, Tim Moore, economics director at S&P Global, said. (Reuters)

Japan: Service activity expands in Dec, led by strong new business – PMI. Japan's Dec service activity expanded at a faster pace from the previous month thanks to strong demand and a lift in confidence even though the overall growth rate was modest. The service sector has been a bright spot for the world's third-largest economy, marking 16 consecutive months of growth and helping offset some of the drag on momentum from the struggles facing manufacturers. (Reuters)

India: Forecasts 7.3% 2023/24 economic growth, boosting Modi's election chances. India forecast annual growth of 7.3% in the fiscal year ending in March, the highest rate of any of the major global economies, providing a boost for Prime Minister Narendra Modi ahead of the national elections scheduled to be held before May. "These are early projections for 2023/24," the National Statistical Office (NSO) said in a statement, adding improved data coverage, actual tax receipts and spending on state subsidies could affect subsequent revisions. (Reuters)

Singapore: Retail sales rebound in Nov. Singapore's retail sales grew in Nov after declining in the previous months, preliminary data from the Department of Statistics showed. Retail sales rose 2.5% YoY following a 0.1% decline in Oct. Sales excluding motor vehicles grew 1.4% YoY, reversing a 1.0% fall in the previous month. Among different industries, the food and alcohol sector logged the biggest growth of 13.6%. Sales of automobiles and watches and jewelry grew 12.9%, mainly due to the regulations regarding the number of vehicle registrations and greater demand for jewelry. (RTT)

Markets

Sime Darby (Neutral, TP: RM2.41): To drive EV adoption. Sime Darby’s motor division is spearheading unique after-sales services and accelerating EV adoption to reshape the automotive landscape. Sime Darby Motors, the authorised dealer for over 30 marques, including BMW, Ford, Hyundai, Jaguar, Land Rover, MINI, Porsche, BYD and Volvo in Malaysia, is dedicated to enhancing the nation’s EV charging infrastructure for widespread accessibility and convenience. With the acquisition of a 61.2% stake in UMW Holdings in Dec 2023, Sime Darby Motors will now include the Toyota and Perodua marques in its portfolio. (StarBiz)

Ecoscience: International unit sues RDS Marketing over RM2.4m unpaid dues. Palm oil refinery builder Ecoscience International’s (EIB) wholly-owned subsidiary Ecoscience Manufacturing & Engineering SB is suing RDS Marketing Malaysia SB to recover RM2.4m in unpaid dues. Ecoscience Manufacturing & Engineering has served a writ of summons and statement of claim to RDS Marketing in the High Court of Malaya in Shah Alam, Selangor. (The Edge)

Global Oriental: Acquires remaining 45% stake in car park management firm. Global Oriental, which bought a 55% stake in a car park management firm for RM27.5m late last year, has proposed to acquire the remaining 45% stake for RM22.5m. The group is buying the 45% in EdisiJuta Parking SB (EPSB) from Edisijuta SB and Cahaya Impian SB. Both acquisitions represent a price-earnings multiple of 9.9 times, based on the EPSB’s profit after tax of RM5.1m for the financial year ended 31 Dec, 2022. The takeover of EPSB will enable the group to diversify into the car park operations business. (The Edge)

Eversendai: To sell land for RM63m. Eversendai Corp (ECB) has proposed to dispose of two parcels of freehold land in Sungai Buloh for RM63m. The agreement was made by its wholly owned subsidiary, ECB Properties SB, with Pelangi Tulus SB for the disposal of the 4,088 sq m and 4,065 sq m parcels. Proceeds from the disposal will be fully utilised to repay an outstanding banking facility. The proceeds are expected to improve the groups’ gearing ratio by 6.2% from 3.6 times to 3.4 times based on a proforma balance sheet as of 30 Sept, 2023. (StarBiz)

Cahya Mata Sarawak: Hit with RM342m counterclaim by Secso in power supply dispute. Cahya Mata Sarawak (CMS) said its subsidiary has been hit with a RM342.3m counterclaim from state utility firm Syarikat SB in the pair’s arbitration proceedings over a purchase power agreement (PPA) dispute. CMS said the counterclaim against the group's 79.1%-owned subsidiary, Cahya Mata Phosphates Industries SB (CMPI), was made in Sesco’s memorial. (The Edge)

MyEG: To resume online renewal of foreign workers' temporary work permits 15 Jan. MyEG Services will be resuming online temporary work permit (PLKS) renewal services for foreign workers on 15 Jan. The e-government services provider said the service relaunch follows the completion of system enhancements mandated in the Home Ministry's letter granting an extension of the service. MyEG's three-year concession for immigration-related services was initially set to conclude in May last year, following an extension from May 2020. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after bond prices slid and a gauge of global equity performance closed a tad higher in choppy trading yesterday after a surprisingly strong US labour report increased the odds that the Federal Reserve can engineer a “soft landing” for the economy. US employers hired more workers than expected last month while raising wages at a solid clip, leading markets to initially dial back bets the Fed would start cutting interest rates in March. Stocks on Wall Street rebounded after an initial decline, lifting MSCI’s broadest index of world stocks 0.16%. On Friday, the S&P 500 gained 8.56 points, or 0.18%, to end at 4,697.24 points, while the Nasdaq Composite gained 13.77 points, or 0.09%, to 14,524.07. The Dow Jones Industrial Average rose 25.77 points, or 0.07%, to 37,466.11. In Europe, the pan-regional STOXX 600 index closed down 0.27%.

Back home, Bursa Malaysia continues its upward trajectory on Friday to end at its highest level in almost a year on strong buying in heavyweights led by YTL Corp and YTL Power International. The key regional indices also ended higher as bargain hunting emerged following the recent sell-off with a focus on financial stocks. At the closing bell, the FBM KLCI soared 0.7% or 10.35 points to settle at its intraday high of 1,487.61 from Thursday’s close of 1,477.26. Elsewhere in financial markets, Japan’s Nikkei added 0.3% as exporters got a boost from a weaker yen.

Source: PublicInvest Research - 8 Jan 2024

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