HEADLINES

Economy

US: New home sales extend rebound but increase less than expected. The new home sales in the U.S. rebounded in the month of Jan, although the increase fell short of economist estimates. The report said new home sales climbed 1.5% to an annual rate of 661,000 in Jan after surging by 7.3% to a revised rate of 651,000 in Dec. With the increase, new home sales continued to regain ground after hitting their lowest level in a year in Nov. However, economists had expected new home sales to jump by 2.4% to a rate of 680,000 from the 664,000 originally reported for the previous month. The extended rebound in new home sales came as new home sales in the Northeast skyrocketed by 72.0% to a rate of 43,000, and new home sales in the West soared by 38.7% to a rate of 190,000. (RTT)

EU: Ireland construction output shrinks 6.3%. Ireland's construction output continued to decline in the final quarter of 2023. Construction output fell 6.3% annually in the fourth quarter, following a 7.4% decrease in the third quarter. On a quarterly basis, construction output fell at a slower rate of 0.7% in the Dec quarter, after a 3.0% growth in the prior quarter. The building sector decreased 9.2% annually, while civil engineering output grew by 9.4%. The non-residential and residential sectors declined by 11.0% and 5.0%, respectively. The construction output value fell 3.6% annually in the fourth quarter and declined 0.4% quarterly. (RTT)

EU: Spain producer prices decline at slower pace. Spain's producer prices continued to decline in Jan but the pace of decrease slowed notably. Producer prices posted an annual decrease of 3.8% after falling 6.3% in Dec. Producer prices have been falling since March 2023. However, the current 3.8% drop was the slowest in the current sequence of decline. Excluding energy, producer price inflation softened to 0.2% from 1.1% in the previous month. Within the producer price index, consumer goods prices and capital goods prices advanced 5.4% and 2.7%, respectively. Offsetting these gains, producer prices of intermediate goods slid 5.7% and energy prices plunged 12.6%. MoM producer prices gained 0.2%, in contrast to the 0.3% fall in Dec. (RTT)

UK: Retail sales decline at slowest pace in 10 months. UK retail sales declined at the slowest pace in the current ten-month run of falls in Feb. The retail sales balance rose to -7% in the year to Feb from -50% in Jan, the Distributive Trades Survey revealed. The balance was also better than economists' forecast of -33%. However, a net 15% of retailers expect sales to fall in March. The survey showed that selling price inflation moderated to its lowest since May 2021. A net 54% reported that selling prices increased in Feb compared to 73% in Nov. A similar 54% forecast annual growth in selling prices in the coming month. (RTT)

China: Regional targets point to 5% 2024 growth goal. China looks set to target 5% growth in 2024, the same pace it aimed for in 2023, based on analysis of goals announced by the country’s 31 provinces and municipalities. The 2024 target will be the single most important policy signal from the National People’s Congress, which opens March 5. Setting the same goal would still raise the bar, given last year’s growth was flattered by a comparison with a pandemic-depressed performance in 2022. A 5% goal would indicate a commitment by policymakers to support the economy in 2024. The average target set by the provinces edged down compared with 2023. But the top-performing regions in 2023 – which also made the biggest contributions to GDP – have either maintained or raised their growth targets for 2024. (Bloomberg)

Japan: Inflation holds at BOJ target, backing rate hike bets. Japan’s benchmark inflation gauge slowed less than expected in Jan, supporting the case for the Bank of Japan to continue moving toward ending its negative interest rate policy. Growth in consumer prices excluding fresh food slowed to 2% from a year ago, in line with the BOJ’s inflation target and beating the consensus estimate of 1.9%. The yen strengthened a tad after the data. The strongerthan-expected inflation data will sustain market speculation that the BOJ is nearing its first interest rate hike since 2007, a move that a majority of BOJ watchers expects to happen by April. (Bloomberg)

Markets

Capital A: Looks to raise USD400m equity from aviation business merger, group chief says. Malaysia's Capital A, parent of budget airline AirAsia, is looking to raise up to USD400m in equity from a planned merger of its aviation business, which it hopes to complete by July, its top official said. Group chief executive Tan Sri Tony Fernandes in an interview said that would be on top of a USD200m bond-raising the company is hoping to conduct in the next few weeks, as it awaits regulator and shareholder approval to complete the sale of its aviation business to long-haul unit AirAsia X. (StarBiz)

MCE: To dispose of land in Setia Alam for RM44m cash. MCE Holdings is disposing of a piece of freehold land in Setia Alam, Selangor for RM43.7m cash. MCE’s unit Vantage Realm SB entered into a conditional sale and purchase agreement with Mega First Corp’s indirect wholly owned unit Grant Ascent SB for the disposal, which has an estimated net pro forma gain of RM5.8m. The land, measuring approximately 13,263.38 sq m, was purchased by MCE in 2014 from Bandar Setia Alam SB. (The Edge)

MRCB: TH Properties and MRCB launch Padang Residences in RM3.09b Kota Semarak mixed development in KL. TH Properties SB and Malaysian Resources Corp Bhd (MRCB), through a 70:30 joint-venture company named 59 Inc SB, officially launched serviced apartment Padang Residences. Padang Residences is part of the RM3.1bn Kota Semarak mixed development in Jalan Sultan Yahya Petra, Kuala Lumpur. Kota Semarak is a 27-acre (10.93-hectare) leasehold mixeddevelopment project to be developed in three phases. It will comprise serviced apartments, shop offices and a retail mall. (The Edge)

Cahya Mata Sarawak: 4Q net profit up 71% as cement business returns to profitability. Cahya Mata Sarawak’s (CMS) 4QFY23net profit jumped 71.1% to RM36.3m from RM21.2m a year prior, as the group’s cement segment returned to profitability. Revenue for the quarter rose 7.9% YoY to RM332.7m from RM308.4m. CMS has proposed a first and final dividend of two sen per share. (The Edge)

PetChem: FY23 earnings fall to RM1.69bn on RM28.67bn revenue. Petronas Chemicals Group's (PCG) net profit for the FY23 plunged to RM1.69bn from RM6.32bn garnered a year ago. PetChem said the moderating economic growth and slower-thananticipated China recovery weighed in on the industry leading to lower product demand and softening prices. Concurrently, geopolitical tensions kept energy prices high, resulting in higher feedstock costs and margin compression. Revenue for the year declined to RM28.7bn from RM28.9bn. (BTimes)

WCE Holdings: Loss widens by more than threefold in 3Q on higher interest costs. Highway concessionaire WCE Holdings' net loss has widened by more than threefold to RM22.4m in its 3QFY24, from RM6.8m a year earlier, mainly due to an increase in interest expense incurred in relation to project financing for completed sections of the West Coast Expressway (WCE) project. The interest cost was recorded at RM38.8m compared with RM34.7m previously. WCE Holdings has been loss-making for the last three consecutive quarters. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower after US stocks ended with modest losses yesterday, as the focus shifted after last week's AIfuelled rally to upcoming economic data that could affect the timing of the Federal Reserve's expected interest rate cut. The release of January's personal consumption expenditures price index (PCE) ¯ the Fed's preferred inflation gauge ¯ on Thursday could dampen the recent enthusiasm should the data indicate price pressures are not cooling fast enough. Markets have all but ruled out a cut at the Fed's March meeting and have recently pushed back expectations for easing to June from May, CME's FedWatch Tool showed, on the heels of surprisingly strong consumer and producer price data. Reports on durable goods, consumer confidence and manufacturing activity are due later this week. The Dow Jones Industrial Average fell 62.30 points, or 0.16%, to 39,069.23. The S&P 500 lost 19.27 points, or 0.38%, at 5,069.53 and the Nasdaq Composite lost 20.57 points, or 0.13%, at 15,976.25. Europe's benchmark stock index dropped on Monday, led by miners, with investors bracing for crucial inflation reports throughout the week for further clues on the timing of interest rate cuts by major central banks, including the European Central Bank. The pan-European STOXX 600 closed 0.4% lower. So far in 2024, it has gained 3.4%, even closing at an all-time high on Friday, driven by stubborn expectations of early policy easing and a resilient earnings season.

Back home, Bursa Malaysia pared earlier losses on Monday to settle marginally lower as buying activities emerged towards the end of the trading session, amid the downbeat regional market performance. At the closing bell, the FBM KLCI slid 1.51 points to 1,547.6 from Friday’s close of 1,549.11. Japan's blue-chip Nikkei scaled record highs for the second consecutive trading session, supported by upbeat performances in pharmaceuticals, although profit-taking limited momentum. The Nikkei closed up 135.03 points, or 0.35%, to 39,233.71. But MSCI's broadest index of AsiaPacific shares outside Japan closed 0.43% lower 0.43%, at 526.50.

Source: PublicInvest Research - 27 Feb 2024