HEADLINES

Economy

US: Leading economic index falls slightly more than expected in Jan. The Conference Board released a report showing its reading on leading US economic indicators fell by slightly more than expected in the month of Jan. The report said the Conference Board's leading economic index fell by 0.4% in Jan after dipping by a revised 0.2% in Dec. Economists had expected the index to decrease by 0.3% compared to the 0.1% dip originally reported for the previous month. (RTT)

EU: Eurozone construction output rebounds in Dec. Eurozone construction output recovered in Dec after falling for two straight months, data from Eurostat showed. Construction output advanced 0.8% from Nov, when it was down by 0.4%. Building construction expanded 1.1%, while civil engineering dropped 0.6% in Dec. YoY, total construction output advanced 1.9%, offsetting Nov 1.9% decline. Data showed that construction output in the EU27 moved up 1.3% on month taking the annual growth to 2.4% in Dec. (RTT)

EU: German residential construction to slump 35% by 2026. Germany as well as Europe as a whole are set to see a massive decline in residential construction in the coming years due to rising costs, the think tank ifo institute said, citing the latest projections by the Euroconstruct forecasting network. Only about 1.5m housing units are forecast to be built in Europe by 2026, which is a 13% decline on 2023, the ifo institute said. This translates to an expected decline of 35% in Germany. (RTT)

UK: BoE Chief Bailey says rate cut expectations not unreasonable. BoE Governor Andrew Bailey said it is not unreasonable for the markets to expect interest rate cuts this year. The BoE does not endorse the market curve, Bailey told lawmakers on the Treasury Select Committee. The governor said UK inflation need not fall to the 2 percent target in order to cut interest rate. Bailey also said the bank will not make a prediction regarding when or how much the rate will be reduced. At the Feb meeting, the central bank had kept the bank rate unchanged at 5.25%. (RTT)

China: Slashes mortgage reference rates to revive property market. China announced its biggest ever reduction in the benchmark mortgage rate as authorities sought to prop up the struggling property market and broader economy. The 25-basis point cut to the five-year loan prime rate (LPR) was the largest since the reference rate was introduced in 2019 and far more than analysts had expected. (Reuters)

Japan: Export growth beats consensus on cars, chip gear gains. Japan’s exports grew more than expected in Jan, providing much-needed support for the economy, as shipments of cars and chip-related gear advanced. Exports rose 11.9% in Jan from a year earlier, beating economists’ forecast of a 9.5% gain, the finance ministry reported. Imports declined for a 10th month, falling 9.6%, spurred by slides in coal and liquefied natural gas. That compared with the consensus for an 8.7% decline. (Bloomberg)

Hong Kong: Jobless rate stable at 2.9%. Hong Kong's unemployment rate held steady in the Nov-Jan period, labour force statistics from the Census and Statistics Department showed. The seasonally adjusted unemployment rate came in at 2.9% in the Nov-Jan period, the same as in the Oct-Dec period. The data showed that the underemployment rate remained unchanged at 1.0%. On an unadjusted basis, the unemployment rate dropped to 2.7% from 2.8%. (RTT)

South Korea: BOK to keep policy rate unchanged until Q3 despite easing inflation. The Bank of Korea will keep its key policy rate on hold for a ninth consecutive meeting on Feb. 22, according to all economists polled by Reuters, who stuck to their long-held view the first rate cut would come in the third quarter. Despite inflation declining to a six-month low in January, most Bank of Korea board members see the need for monetary policy to stay restrictive for some time to bring it down to the bank's 2.0% target. (Reuters)

Markets

Green Packet: Signs deal with Malaysian partner to develop tourism digital platform for Sri Lanka. Green Packet has teamed up with another Malaysian firm to develop a tourism digital platform for Sri Lanka, with an initial investment of up to RM13m. Its wholly owned subsidiary Kiplepay SB has entered into a JV agreement with Tass Tech International SB, which was awarded the project to develop and maintain the digital platform by the Sri Lankan government in May 2019. (The Edge)

MST: Brings advanced tech to golf scene. MST Golf Group is collaborating with Trackman, a provider of indoor golf technology, to bring the latter’s cutting-edge technology to Asia. MST Golf Arena at La Piazza in Jakarta is the first facility in Asia equipped with Trackman’s iO technology, specifically designed for indoor golfing. The addition of Trackman iO at MST Golf Arena sets a new standard for precision, innovation and immersive gameplay within the indoor-golfing landscape. (StarBiz)

Swift Haulage: Aims to grow warehousing contribution to 25%. Swift Haulage is eyeing a 25% contribution from its warehousing and container depot services segment from the current 15%. The company is looking at investing in warehouses within the next three to five years to match the market demand. It is looking at investing about RM30m this year to construct another warehouse in the northern region, specifically Penang, as it is aggressively expanding the warehousing and container depot services segment. (StarBiz)

YTL: Seek government funding for KL-Singapore high-speed rail. YTL Corp and a consortium led by the rail unit of Berjaya Land are seeking some form of government financial support in their bids to revive the Kuala Lumpur-Singapore High-Speed Rail (HSR) project. This runs contrary to the narrative coming from the current administration under PM Datuk Seri Anwar Ibrahim who have stated that it was open to the revival of the 350km-long line project as long as it was privately funded. (The Malaysian Reserve)

SunCon: To stay active in data centre initiatives. Sunway Construction Group (SunCon) remains actively involved in data centre initiatives, having secured its second data centre project in Johor and pursuing more opportunities in this sector. Its outstanding order book now stands at RM5.3bn, with RM2.5bn in new orders secured up to Dec 2023. It is optimistic of registering positive growth for the financial year ending 2024, based on its existing order book. (StarBiz)

AEON Malaysia: Appoints Naoya Okada as MD effective 1 March. AEON Co (M) has appointed Naoya Okada as managing director effective 1 March 2024. Okada takes over from Keiji Ono who will be returning to AEON Japan to take on a new assignment. The board acknowledges and welcomes Okada as he has been instrumental in AEON’s growth as deputy MD and COO since 2022. In Malaysia, Ono has strategically improved the foundation of the management structure. AEON will continue to rejuvenate the management to move on to the next stage of growth strategy. (The Malaysian Reserve)

MARKET UPDATE

The FBM KLCI might open with a negative bias today after US stocks ended lower yesterday, with the Nasdaq showing the largest declines as chipmaker Nvidia stumbled ahead of its highly awaited earnings report, while gains in Walmart kept losses on the Dow Industrials in check. Shares of the chip designer Nvidia tumbled 4.35%, its biggest daily percentage fall since October 17, while the broader Philadelphia semiconductor index declined 1.56% as other chip stocks followed. The S&P 500 lost 30.06 points, or 0.60%, to end at 4,975.51 points, while the Nasdaq Composite lost 144.87 points, or 0.92%, to 15,630.78. The Dow Jones Industrial Average fell 64.19 points, or 0.17%, to 38,56.80. Europe's benchmark stock index snapped a four-day winning streak on Tuesday, weighed down by basic resources and energy stocks, while French industrial gases firm Air Liquide jumped to an all-time high after hiking its 2025 margin target. The continent-wide STOXX 600 closed 0.1% lower, after ending at a two-year high on Monday and nearing a record high, supported by upbeat earnings from industry heavyweights and expectations of more than four rate cuts this year.

Back home, the FBM KLCI climbed further and closed at a fresh 20-month high on Tuesday as consumer stocks led gains, while energy stocks at the broader market surged. The benchmark index closed at 1555.59, its highest since June 1, 2022, after rising 16.98 points or 1.10%. The gain also marked the KLCI’s best day since Feb 13, 2024. China's five-year loan prime rate was lowered by 25 basis points to 3.95%, bigger than the five to 15bp cuts forecast by economists. The one-year rate was left at 3.45%, helping blue chips CSI 300 to finish the day up 0.2%, after an earlier fall, and Hong Kong's Hang Seng index to rise 0.6%.

Source: PublicInvest Research - 21 Feb 2024