HEADLINES

Economy

US: Bid to loosen China's grip on key metals for EVs is stalling. Insiders liken it to a “panic button.” And for more than 80 years, the primary job of the National Defense Stockpile has been to keep the US military supplied with essential raw materials and protect against supply shocks. So when China surprised the markets by restricting exports of two niche industrial metals last year, top-level officials in the Pentagon-controlled agency and the White House faced an uncomfortable reality - Its panic button no longer worked. (Bloomberg)

EU: Germany likely in recession, Bundesbank says. Germany is likely in recession now as external demand is weak, consumers remain cautious and domestic investment is held back by high borrowing costs, the Bundesbank said in a regular monthly report on Monday about Europe's biggest economy. Germany has struggled since Russia's 2022 invasion of Ukraine pushed up energy costs, and its vast, industry-heavy economy is now in its fourth straight quarter of zero or negative growth, weighing on all of the euro zone. (Reuters)

EU: German homes are still overvalued despite price drop, Bundesbank. German homes are still overvalued despite a fall in prices last year as the cost of mortgages spiked, the country's central bank said. Germany's decade-long property boom has unravelled since a sudden bout of inflation forced the ECB to hike interest rates, while the domestic economy was hit by more expensive energy imports and sluggish exports. The price of owner-occupied residential property fell by just over 4% last year according to industry data. The German statistics office put the decline at 8.9% for the first nine months of the year. (Reuters)

EU: Spain trade deficit narrows in 2023. Spain's foreign trade gap decreased during the year 2023, mainly due to the maintenance of non-energy exports and the decline in imports of energy products, data from the Economy Ministry showed. The trade deficit dropped to EUR40.6bn in 2023 from EUR71.6bn in 2022. (RTT)

EU: Portugal producer prices fall further. Portugal's producer prices decreased for the tenth successive month in Jan, figures from Statistics Portugal showed. The producer price index fell 4.3% YoY in Jan, slightly slower than the 4.5% decrease in the previous month. The downward trend was largely driven by a 9.9% decline in prices for energy goods and a 7.1% fall in the intermediate goods segment. Excluding the energy group, producer prices decreased 2.8% annually in Jan versus a 2.1% decline in the prior month. On a monthly basis, producer prices moved up 0.3%, reversing a 0.3% drop in Dec. (RTT)

UK: House price inflation turns positive for first time since Aug 2023. UK house prices increased in Feb after six months of annual price falls, the property website Rightmove. House prices gained 0.1% on a yearly basis in Feb, in contrast to the 0.7% decrease in Jan. This is one of several signs of growing market momentum, the agency said. MoM, house prices rose 0.9%, following a 1.3% rise in the prior month. Rightmove said agreed sales in the first six weeks of 2024 were 16% higher than over the same period last year, suggesting that many early-bird buyers feel that 2024 offers the right conditions to move. (RTT)

China: Seen cutting mortgage reference rate for first time since June. China is widely expected to trim its benchmark mortgage reference rate at a monthly fixing on Tuesday, as banks' improving net interest margins give authorities some leeway to use monetary stimulus to shore up faltering economy growth. The loan prime rate (LPR) normally charged to banks' best clients is calculated each month after 20 designated commercial banks submit proposed rates to the PBOC. (Reuters)

Japan: Core machine orders climb 2.7% in Dec. Core machine orders in Japan were up a seasonally adjusted 2.7% on month in Dec, the Cabinet Office said, coming in at JPY838.8bn. That was in line with expectations following the 4.9% contraction in Nov. On a yearly basis, core machine orders sank 0.7% beating forecasts for a decline of 1.0% after dropping 5.0% in the previous month. For the fourth quarter of 2023, orders were down 1.0% on quarter and 2.5% on year. For the first quarter of 2024, orders are seen higher by 4.6% on quarter and lower by 0.2% on year. (RTT)

Singapore: Mass sale of prestige properties tests weak market. A mass sale of prized real estate seized in Singapore’s biggest money-laundering case is set to provide a key test of demand for a niche part of the financial hub’s property market. More than a dozen so-called shop houses, each worth millions of dollars, have been put on sale as the nation’s largest bank DBS Group Holdings Ltd. steps up efforts to reduce about SGD100m (USD74m) in exposure to the scandal, public listings show. At least five more marketed are linked to businesses that took loans from DBS, according to briefing materials and business filings seen by Bloomberg News. (Bloomberg)

Thailand: GDP grows less than forecast. Thailand's GDP grew less than expected in the fourth quarter, data released by the National Economic and Social Development Council showed. The economy expanded 1.7% on a yearly basis in final quarter of 2023. Although this was faster than the 1.4% rise seen in the third quarter, the rate missed economists' forecast of 2.5% growth. QoQ, GDP unexpectedly declined 0.6%, offsetting prior quarter's 0.6% growth. Economists had forecast a marginal 0.1% expansion. In the whole year of 2023, GDP posted an expansion of 1.9% compared to 2.5% rise in 2022. (RTT)

Markets

Dataprep: Halts RM40m private placement, mulls other fundraising for Bandung telco infra project. Dataprep Holdings has put on hold its proposed private placement of up to 30% of its enlarged share base to raise up to RM40.2m. The company this month won a 30-year concession agreement to develop a passive telecommunications infrastructure project in Bandung, Indonesia, as part of a consortium, with expected investments of around RM95.4m over three years. The proposed private placement, announced last Dec, was mainly to fund working capital for its existing projects. (The Edge)

GFM Services: Intends to raise RM14.8m via private placement for working capital. GFM Services is looking to raise RM14.8m via a private placement of 69.1m shares or 10% of its enlarged share base. Proceeds to be raised will go towards funding work capital and the purchase of machinery for the maintenance works, turnarounds and shutdowns of O&G processing plants in Pengerang, Johor. (The Edge)

PA Resources: Buys factory land for RM21m. PA Resources is proposing to acquire two parcels of industrial land in Pekan Batang Berjuntai, Selangor from Niken Steel (M) SB for RM21m. The acquisition of the two parcels of land, totalling 18 acres, will be funded via internal generated funds and bank borrowings. PA Resources will build a new factory on said land, which will double its production capacity, in phases, from 3,200 tons a month to approximately 7,000 tons. (StarBiz)

CN Asia: Bursa reprimands, and fines its directors for violating listing rules. Bursa Malaysia has publicly reprimanded CN Asia Corporation, and fined its seven directors a total of RM225,000 for breaching listing rules. CN Asia failed to obtain its shareholders’ approval before diversifying its business to include money lending services by buying Southborn Capital SB on 15 April 2021.The company signed an agreement on 15 April 2021 to fully acquire Southborn Capital but only obtained its shareholders’ ratification of the diversification on 24 June 2022. (The Edge)

Rexit: Independent advisor recommends shareholders to reject takeover offer. Shareholders of Rexit would do well to hold on to their shares and not dispose of them in an on-going unconditional mandatory takeover offer. Appointed independent advisor MainStreet Advisers SB has deemed the takeover offer for Rexit by its new substantial shareholders as not fair and not reasonable. The offer price of 85 sen per share fell below Rexit’s estimated valuations and the joint offerors also aimed to retain the company’s listing status. (The Malaysian Reserve)

Jade Marvel: MD has resigned due to other personal commitments, posts bigger 3Q loss. Jade Marvel Group’s MD Eddie Chong Wei Chuan has resigned from his position, after heading the company for about a year due to other personal commitments. Chong was appointed as ED of the company on 7 Sept 2022 and was subsequently redesignated as joint MD on 21 Nov 2022. He was later redesignated as MD on 23 Feb 2023. Separately, it announced that it has incurred a net loss of RM6.7m for 3QFY2024, which is 87.9% more than the net loss of RM3.5m a year earlier. (The Malaysian Reserve)

MARKET UPDATE

The FBM KLCI might open lower today after global shares struggled to climb on Monday after the chances of early interest rate cuts globally receded and Chinese markets recorded modest gains on their return from the lunar new year break. A holiday for US markets made for thin trading, and results from AI star Nvidia on Wednesday could challenge the latest surge in tech stocks. A red-hot U.S. CPI print on Tuesday followed by another upside surprise in producer prices on Friday left investors anxious inflation will persist. A weaker retail sales report, suggesting slower economic momentum augmented their concerns. However, US labour market numbers have continued to show plentiful jobs and elevated wage growth. British equities kicked off the week on an upbeat note, boosted by gains in pharma and biotech shares following the US FDA's approval of AstraZeneca's lung cancer drug. The blue-chip FTSE 100 index climbed 0.2% to a near sevenweek high, while the mid-cap FTSE 250 index edged 0.1% higher.

Back home, the FBM KLCI closed at its highest in nearly 20 months on Monday, with consumer stocks leading the charge, tracking gains of most Asian market indices. The benchmark index closed at 1,538.61, its highest since June 7, 2022, after gaining 5.06 points or 0.33%. The FBM KLCI rose to as high as 1,539.25. In the region, Japan's Nikkei ended flat on Monday, pressured by chip-related shares following a slump in their U.S. counterparts late last week. Chinese blue chips, CSI 300 finished up just over 1%, after tourism revenues during the Lunar New Year holiday surged by 47% compared with a year earlier as more than 61 million rail trips were taken. The country's central bank skipped another chance to cut rates on Sunday, limiting downward pressure on the yuan, but as deflation looms, analysts see scope for further policy stimulus.

Source: PublicInvest Research - 20 Feb 2024