HEADLINES

Economy

US: Economy on solid ground as weekly jobless claims fall. Initial claims for state unemployment benefits dropped 2,000 to a seasonally adjusted 210,000 for the week ended 16 March. Economists polled by Reuters had forecast 215,000 claims in the latest week. Claims have been mostly bouncing around in a 200,000-213,000 range since Feb. Despite a flurry of high-profile layoffs at the start of the year, employers have largely been hoarding labor after struggling to find workers during and after the COVID-19 pandemic. Unadjusted claims decreased 12,730 to 189,992 last week. Applications in California plunged by 5,369, while filings in Oregon fell 2,580. They more than offset notable increases in Michigan and Missouri. (Reuters)

US: Existing home sales rise to one-year high in Feb. U.S. existing home sales increased to a one-year high in Feb as supply improved, a trend that together with retreating mortgage rates could support activity during the spring selling season. Home sales jumped 9.5% last month to a seasonally adjusted annual rate of 4.38m units, the highest level since Feb 2023. The monthly increase in sales was also the largest since Feb 2023. Economists polled by Reuters had forecast home resales would fall to a rate of 3.94m units. Home resales are counted at the closing of a contract. The sales in Feb likely reflected contracts signed in the prior two months. The rebound occurred despite a plunge in pending home sales in Jan. Housing inventory surged 5.9% to 1.07m units last month. It was up 10.3% from one year ago. (Reuters)

EU: Euro zone business activity close to stabilising in March, PMI survey shows. Euro zone business activity was within a whisker of returning to growth in March, outperforming expectations, according to a survey which showed inflationary pressures bucked a recent trend and eased this month. HCOB's preliminary composite PMI, compiled by S&P Global, rose to 49.9 this month from Feb's 49.2, ahead of expectations in a Reuters poll for 49.7 but marking its tenth month below the 50 level separating growth from contraction. (Reuters)

UK: Inflation 'moving in right direction' for rate cuts, BoE says. Britain's economy is moving towards the point where the BoE can start cutting interest rates, Governor Andrew Bailey said as two of his colleagues dropped their calls for a rate hike in the face of easing inflation. Sterling fell, shares jumped and government bond prices rose after the two policymakers, who previously voted for higher rates, changed position and joined in an 8-1 decision by ratesetters to keep borrowing costs at their 16-year high of 5.25%. It was the first time since Sep 2021 that none of the MPC members had voted for a hike, reflecting how inflation has fallen from a peak of over 11% in 2022 to 3.4% in the 12 months to Feb. Bailey said there had been "further encouraging signs that inflation is coming down," but he also said the BoE needed more certainty that price pressures were fully under control. (Reuters)

Japan: Factory activity declines slow, service sector picks up. Japan's factory activity shrank at a slower pace in March, while further expansion in the service sector supported overall growth in the private sector, a business survey showed. The data comes after the BoJ made a historic policy shift this week by ending radical stimulus and raising interest rates for the first time in 17 years. The flash au Jibun Bank Japan manufacturing PMI rose to 48.2 in March from 47.2 in Feb. Manufacturers saw a sustained, albeit softer decline in production," said Usamah Bhatti at S&P Global Market Intelligence, which compiled the survey. Deterioration in the subindexes of output and new orders eased in March. Sustained falls in new orders and gains in employment suggest spare capacity in the sector and the backlog of work dropped to the lowest level since August 2020. (Reuters)

Japan: Exports rise as demand in major markets improves. Japan's exports grew for a third straight month in Feb demand improved in the U.S., China and the European Union, offering some hope for policymakers seeking to revive growth after weak performance last year. Exports rose 7.8% in Feb from the same month a year ago, Ministry of Finance data showed, faster than the 5.3% gain expected by economists in a Reuters poll. The trade data comes days after the central bank ditched years of unconventional easing in a shift towards normalising policy. Exports have been a source of concern for policymakers who worry about the fragile recovery in the world's fourth-largest economy, which narrowly dodged recession late last year. Imports rose 0.5% YoY in Feb versus the median estimate for a 2.2% increase. The trade balance came to a deficit of JPY379.4bn (USD2.52bn), versus a median estimate for a deficit of JPY810.2bn. (Reuters)

Indonesia: Prabowo set to keep Indonesia on Jokowi's growthfocused path. Indonesian President Joko "Jokowi" Widodo's growth-focused economic policy looks set to continue into the next administration with successor Prabowo Subianto also planning aggressive fiscal spending. “We will use the strong foundation [Jokowi] has built, especially in the economic sector, to work faster, harder, to bring results as quickly as possible to the Indonesian people," Prabowo said after the General Election Commision certified his victory. Indonesia, the world's fourth-most populous country with 270m people, has leveraged its abundant natural resources to expand its economy around 5% a year. Prabowo aims to accelerate this growth to turn Indonesia into one of the five largest economies by 2045. (Nikkei Asia)

Markets

Sime Darby (Neutral, TP: RM2.73): Now owns 100% of UMW. Sime Darby has completed its acquisition of UMW Holdings Bhd, with the latter effectively becoming its wholly-owned subsidiary. Sime Darby group CEO Datuk Jeffri Salim Davidson said the group’s foremost priority now is to complete the integration of UMW into the wider Sime Darby ecosystem. “Leveraging our collective strengths, especially in the automotive and industrial sectors, this will enable us to reinforce our competitive edge and expand our domestic footprint to further drive long-term growth,” he said in a statement. (StarBz)

T7 Global: Plans to raise up to RM42m via private placement for working capital. T7 Global is planning to raise up to RM41.6m via a private placement of a maximum of 90.5m shares or 10% of its enlarged share base. The group said the proceeds to be raised will go mainly towards funding work capital for the contracts awarded by Carigali Hess Operating Company SB as well as Hibiscus Oil & Gas Malaysia Ltd to its wholly-owned unit Tanjung Offshore Services SB. (The Edge)

Master Tec: Says unaware of reason for share price surge. Master Tec Group said it was not able to explain the recent surge in its share price that reached new record highs. The electric cable maker, listed less than two months ago, said it was not aware of any corporate development that had not been previously announced in response to Bursa Malaysia’s unusual market activity (UMA) query. “We are not aware of any rumour or report concerning the business and affairs of the group that may account for the trading activity,” Master Tec said in an exchange filing. (The Edge)

SunCon: Secures RM748m job to build data centre in Selangor. Sunway Construction Group (SunCon) said it has secured a RM747.8m job to construct a data centre in Selangor. The group said its wholly owned unit Sunway Construction SB entered into a projects of services request with a USheadquartered multinational technology corporation for the job. SunCon did not provide the name and other details of the multinational corporation. It said the works are scheduled to commence not later than May 15 and expected to be completed by the second quarter of 2027. This marks SunCon's second project this year, bringing its total outstanding order book to RM6.9bn. (The Edge)

Epicon: Wins RM89m Perak building contract. Epicon has secured a contract worth RM89.1m for a housing project in Sungai Terap in Kinta, Perak, via its wholly owned subsidiary, Transnational Builder SB, effectively raising the group’s outstanding order book to RM929m. The company said the letter of award from Syarikat Majuperak was for the main building works of 601 units of single-storey terrace houses and four units of electrical substations under a Rumah Perakku development. (StarBiz)

PTT Synergy: Secures RM299m job. PTT Synergy Group has bagged a RM299m construction contract from Prima Wahyu SB. The group said the contract was for the proposed construction of the Palekbang-Kota Baru bridge and connecting roads in Tumpat and Kota Baru, Kelantan, for the East Coast Economic Region Development Council. (StarBiz)

MARKET UPDATE

The FBM KLCI might open higher today after global share benchmarks rallied farther into uncharted territory yesterday and yields on government debt mainly fell after the Swiss National Bank became the first major central bank to ease policy in this cycle, a day after the Federal Reserve maintained its outlook for 2024 rate cuts. Wall Street closed with all three major indices extending their streak of record highs, on the heels of similar milestones earlier in Japan and Europe and in gold. The Dow Jones Industrial Average was up 269.24 points, or 0.68%, the S&P 500 gained 16.9 points, or 0.32% and the Nasdaq Composite gained 32.43 points, or 0.2%. Europe’s STOXX 600 index extended its record run to another high and was up 0.9%.

Back home, Bursa Malaysia rebounded from two consecutive days of declines to close higher on Thursday, spurred by bargain-hunting activities amid the recent market sell-off. At the closing, the FBM KLCI rose 5.62 points to 1,541.41 from Wednesday’s close of 1,535.79. Elsewhere, Japan’s Nikkei and Taiwan weighted index each climbed 2% to record levels.

Source: PublicInvest Research - 22 Mar 2024