Economy

US: Housing starts pull back sharply in Dec but building permits jump. Housing starts slumped by 4.3% to an annual rate of 1.5m in Dec after spiking by 10.8% to a revised rate of 1.5m in Nov. Economists had expected housing starts to pull back by 8.6% to a rate of 1.4m from the 1.6m originally reported for the previous month. Single-family housing starts led the pullback, tumbling by 8.6% to a rate of 1m in Dec after soaring by 15.4% to a rate of 1.1m in Nov. (RTT)

US: Jobless claims unexpectedly drop to lowest since Sept 2022. There is an unexpected decrease in first-time claims for US unemployment benefits in the week ended Jan 13th. Initial jobless claims fell to 187,000, a decrease of 16,000 from the previous week's revised level of 203,000. Economists had expected jobless claims to inch up to 207,000 from the 202,000 originally reported for the previous week. With the unexpected decline, jobless claims dropped to their lowest level since hitting 182,000 in the week ended Sept 24, 2022. (RTT)

EU: ECB officials converge around June to start cutting rates. ECB officials who until recently had been wary of even discussing interest-rate cuts now look increasingly open to commencing them in June. Speaking this week in Davos, President Christine Lagarde and several of her colleagues dismissed investor bets on reductions before then. But they signalled the chance of a move around mid-year, when they’ll know more about inflation, wages and the stuttering economy, as well as the harm to supply chains by Yemen’s Houthi rebels. (Bloomberg)

UK: Lenders forecast rise in household loan defaults in Q1. UK lenders expect default rates on both secured and unsecured loans to households to increase in the first quarter. The default rates on secured and unsecured loans to households increased in 4Q2023 and they are set to rise again in the first quarter. Defaults for credit cards and other loans are also expected to increase in 1Q. Further, default rates on loans to businesses of all sizes were unchanged in 4Q. While defaults on loans to small and medium-sized firms are expected to move up slightly, they are set to remain unchanged for large businesses. (RTT)

Japan: Industrial output falls for first time in 3 months. Japan's industrial production declined for the first time in three months in Nov. Industrial production slid 0.9% on a monthly basis, in contrast to the 1.3% rise a month ago. The rate came in line with the estimate published in Dec. Data showed that shipments decreased 1.2% from the previous month, while inventories remained flat and the inventory ratio gained 1.8%. YoY, industrial production fell 1.4%, as estimated, reversing Oct's 1.1% increase. The capacity utilization posted a 0.3% increase, weaker than the 1.5% rise in Oct. (RTT)

Australia: Sheds 65,100 jobs in Dec. The Australian economy lost 65,100 jobs in Dec. That was way off from forecasts for an increase of 17,600 jobs following the addition of 61,500 jobs in Nov. Specifically, full-time jobs were down 106,600 after gaining 57,000 in the previous month. The jobless rate managed to hold steady at 3.9%, while the participation rate fell to 66.8% from 67.2% a month earlier. (RTT)

Markets

Magna Prima: Unit inks conditional development agreement for RM1.2bn project. Magna Prima’s wholly-owned subsidiary Twinicon (M) SB has inked a conditional development agreement with Golden Rainbow View SB to undertake a mixed development on five parcels of adjoining freehold land in Kuala Lumpur with a GDV of RM1.2bn. (StarBiz)

Gagasan Nadi: Partners Kwasa Land to develop affordable houses in Kwasa Damansara with GDV of RM1bn. Builder Gagasan Nadi Cergas has bagged a contract from Kwasa Land SB, a wholly owned subsidiary of the EPF, to jointly develop affordable houses on a parcel of land in the township of Kwasa Damansara, Selangor at an estimated construction cost of RM750m. (The Edge)

PA Resources: Bags RM1.1bn contract extension from US' First Solar. PA Resources, the country’s leading aluminium extruder company, has bagged an extension of supply agreement from First Solar, Inc, First Solar Malaysia SB and First Solar Vietnam Manufacturing Co Ltd to supply goods for production of photovoltaic modules. The total contract is valued up to RM1.08bn (USD231.9m) for the contract period of Jan 2, 2024 to July 1, 2025, and may be renewed by US-based solar technology company First Solar for another one-year period. (The Edge)

CWG: To buy label maker Unigenius for RM33m. CWG Holdings plans to acquire the entire stake in label maker Unigenius Holding SB for RM33m, which will be partially funded through a proposed cash call exercise. CWG, which manufactures the Campap brand stationery and printed materials, said it will get immediate access to a new range of paper-based printed materials by acquiring Unigenius. (StarBiz)

FM Global: Buys land in Kapar for RM18.93m. FM Global Logistics Holdings Bhd (FM) is acquiring a parcel of freehold land measuring 2.84 acres in Kapar, Klang, from Garden Sdn Bhd for RM18.9m. Last month, the group also acquired a parcel of land measuring 2.84 acres in the same area from the same vendor for RM18.9m. The proposed land acquisitions are to facilitate the group’s future expansion of its third-party logistics warehousing and distribution services. (StarBiz)

YNH Property: MARC downgrades YNH’s sukuk rating amid liquidity concerns, asset sale delays. MARC Ratings has downgraded its rating on YNH Property's Islamic Medium-Term Notes Programme (Sukuk Wakalah) to BBB+IS from AIS and concurrently placed the rating on MARCWatch Negative. This downgrade reflects growing concerns over YNH's weak liquidity position and further delays in the sale of assets, which is muchneeded for cash infusion. (The Edge)

Mercury Securities: In talks for potential strategic business acquisition. Mercury Securities Group is currently in negotiation to purchase a business, which is complementary to the existing business of the group and its subsidiaries. However, the terms and conditions of the purchase have yet to be finalised. (StarBiz)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks ended sharply up yesterday, with the S&P 500 approaching record highs as AI optimism drove gains in Nvidia and other chipmakers. USlisted shares of Taiwan Semiconductor Manufacturing (TSMC) soared nearly 10% after the world's largest contract semiconductor maker projected 2024 revenue growth of more than 20% on booming demand for high-end chips used in artificial-intelligence applications. The S&P 500 climbed 0.88% to end the session at 4,780.94 points. The benchmark is down just 0.3% from its recordhigh close in January 2022. The Nasdaq gained 1.35% to 15,055.65 points, while the Dow Jones Industrial Average rose 0.54% to 37,468.61 points. Data showed the number of Americans filing new claims for unemployment benefits fell last week to a late- 2022 low, suggesting solid job growth in January. European shares closed higher, boosted by upbeat earnings and the release of minutes from the ECB's meeting last month, which showed policymakers were confident inflation was falling back down to target. The pan-European STOXX 600 index rose 0.59% and MSCI's gauge of stocks across the globe gained 0.73%.

Back home, Bursa Malaysia closed broadly weaker but was off its intraday low, with decliners outnumbering gainers on selling pressure across the board, amid the negative sentiment surrounding the market. At the closing bell, the FBM KLCI fell 12.03 points to 1,479.18 from Wednesday's close of 1,491.21. Emerging market stocks rose 0.37%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.39% higher, while Japan's Nikkei lost 0.03%.

Source: PublicInvest Research - 19 Jan 2024