Economy

US: Industrial production rebounds modestly following resolution of auto strikes. The Fed released a report showing a modest rebound in US industrial production in the month of Nov. The report said industrial production rose by 0.2% in Nov after slumping by a downwardly revised 0.9% in Oct. Economists had expected industrial production to climb by 0.3% compared to the 0.6% decrease originally reported for the previous month. (RTT)

EU: Eurozone’s rising recession risk fails to shift ECB on cuts. The chances of a eurozone recession rose as private-sector activity worsened — strengthening the case for interest-rate cuts that the ECB is so far resisting. Data showed S&P Global’s purchasing managers’ index (PMI) contracted for a seventh month in Dec, falling to 47. That defied economist expectations for a slight uptick, with readings for manufacturing and services signalling a slump. Despite that weakness, however, ECB policymakers were united in rejecting talk of imminent reductions in borrowing costs, which they ramped up by 450 bps in just over a year to tackle soaring inflation. (Bloomberg)

EU: Trade surplus rises in Oct. The euro area trade surplus increased in October due to the increase in exports amid falling imports, Eurostat reported. The trade surplus rose to a seasonally adjusted EUR10.9bn from EUR8.7bn in Sept. Exports increased 0.7% on month, while imports dropped 0.3%. On an unadjusted basis, the trade balance posted a surplus of EUR11.1bn in Oct, in contrast to a deficit of EUR 28.7bn in the same period last year. Exports decreased 2.4% from a year ago. At the same time, imports registered a double-digit decline of 16.3%. Another data from Eurostat showed acceleration in the labor cost. The hourly labor costs rose by 5.3% YoY, faster than the 4.5% increase in the second quarter. (RTT)

UK: Private sector growth gains momentum on services activity. The UK private sector activity posted its strongest growth in six months in Dec, thanks to a faster recovery in the service economy, flash survey results from S&P Global showed. The Chartered Institute of Procurement & Supply flash composite output index rose more-than-expected to 51.7 in Dec from 50.7 in Nov. The score was seen at 50.9. Although the score suggested the fastest rise in activity since June, the reading remained weaker than the long-run survey average. (RTT)

China: Mixed data calls for more stimulus. China's industrial production and retail sales strengthened notably in Nov but the low base of comparison made data less reliable to conclude that the recovery is as strong as the figures indicate and adds pressure for more support measures. Industrial production posted an annual growth of 6.6% in Nov following a 4.6% rise in Oct, the National Bureau of Statistics reported. The rate also exceeded economists' forecast of 5.6%. Growth in retail sales accelerated to 10.1% from 7.6% in the previous month. But this was weaker than the 12.5% expansion economists had forecast. During Jan to Nov, fixed asset investment registered a steady growth of 2.9%, slightly below forecast of 3.0%. In Nov, the urban unemployment rate held steady at 5.0%. (RTT)

Japan: Manufacturing sector weakens further in Dec – Jibun. The manufacturing sector in Japan continued to contract in Dec, and at a faster pace, the latest survey from Jibun Bank revealed with a flash Performance of Manufacturing Index score of 47.7. That's down from 48.3 in Nov and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction. Companies reported a sharp and accelerated decline in new work, which in turn led to a slightly quicker reduction in factory output. At the same time, employment across the sector was unchanged amid signs of excess capacity, with backlogs of work falling markedly overall. Input costs rose sharply and at the quickest rate for three months, but output charges rose to the weakest extent since July 2021. (RTT)

Indonesia: Trade surplus narrows to USD2.4bn in Nov, misses expectation. Indonesia's trade surplus narrowed in Nov to US2.4bn as imports increased more than expected, while exports extended their weakening trend, data from the statistics bureau showed. Southeast Asia's biggest economy has seen its shipments declining by value in the past months due to falling commodity prices and slowing global demand. In Nov, exports fell 8.56% on a yearly basis to USD22bn versus expectations of a 9.36% drop in a Reuters poll. Shipment of Indonesia's coal and palm oil, which are its top commodities, were down 34.25% and 12.60% on an annual basis, respectively, as prices continued to weaken in Nov. (Reuters)

Markets

Tenaga Nasional (Outperform, TP: RM11.50): Partners with Western Digital for renewable energy in Malaysia. Western Digital will work with TNB Renewables SB, a unit of Tenaga Nasional (TNB), to incorporate renewable energy (RE) into its operations in Malaysia. Both parties have signed the Corporate Green Power Agreement (CGPA) under the Corporate Green Power Program (CGPP). Under the CGPA, Western Digital will acquire RE from TNB Renewables, which is focused on developing and owning the RE plant locally and in Southeast Asia. The new solar power generation facility will be built for Western Digital's consumption in Kedah. (BTimes)

FGV: Upsizes sukuk programme to RM3bn, extends tenure to perpetual. FGV Holdings has upsized its sukuk murabahah programme to up to RM3bn in nominal value, from the initial sum of RM500m two years ago. The tenure of the sukuk programme will also be extended from 8 years to perpetual, with each tranche having a minimum tenure of 1 year. (The Edge)

Hiap Huat: Acquires 60% stake in petroleum products supplier for RM2m. Hiap Huat Holdings has proposed to acquire a 60% interest in petroleum products supplier KL Bunkering (M) SB (KLB) for a purchase consideration of RM2.1m. Through the acquisition of KLB, the group has the potential for a storage terminal capable of handling both import and export cargo of various petroleum and biofuel products at the port presenting a strategic competitive advantage (The Edge)

Priceworth: To buy properties adjacent to its timber complex to facilitate expansion. Priceworth International Bhd has proposed to acquire a firm that owns properties suitable for the expansion of the group's existing timber businesses and shipyard operation in Sandakan, Sabah for RM46.7m. Priceworth has signed a separate settlement agreement with several logs suppliers which collectively owe the group RM54.6m. The acquisition is expected to be completed within a month. (The Edge)

Pestech: Unit fails in bid to get order to preserve interests pending disposal of appeals. The High Court dismissed an application by its unit, Pestech Technology SB (PTech), for an Erinford injunction to preserve PTech's interests pending the disposal of its appeals at the Court of Appeal. PTech has appealed against an earlier decision by the High Court to dismiss an injunction application to restrain Maybank Islamic from making payment of a performance bond to Syarikat Pembenaan Yeoh Tiong Lay (SPYTL) related to the Gemas-Johor Bahru electrified double-track project. (The Edge)

Petra Energy: Divests vessel for USD3.95m, declares special dividend. Petra Energy, is selling the accommodation work barge Petra Lyra for USD3.9m to Great Sky Investments Corp. Petra Energy aims to monetize the non-performing asset, save on annual costs, and utilise part of the proceeds for working capital, and the remainder for special dividend. (The Malaysian Reserve)

IPO: Jati Tinggi posts 3Q net profit of RM1.4m. Jati Tinggi Group, which is slated to list on the ACE Market of Bursa Malaysia on Dec 20, has posted a net profit of RM1.4m in 3QFY23. Revenue for the current quarter under review totalled RM33.1m. Jati Tinggi aims to raise RM18m from its public issue of 66.8m new shares, at an issue price of 27 sen per share. (The Edge)

MARKET UPDATE

US markets ended mixed last Friday, though ending higher for the week with investor sentiment continuing to be buoyed by an apparent positive turn by the Federal Reserve with regard to interest rate movements, whereby three cuts are now expected in 2024. The Dow Jones Industrial Average inched 0.2% higher, thought the S&P 500 finished fractionally lower (-0.36pts). European markets were mixed in reaction to a deluge of key policy decisions from major central banks. Both the Bank of England and European Central Bank (ECB) kept respective benchmark rates unchanged, though the former pushed back against market expectation by retaining its hawkish guidance on monetary policy. The ECB lowered its growth and inflation forecasts for the euro area and announced plans to speed up the shrinking of its balance sheet meanwhile. On the day, UK’s FTSE 100 fell 1.0% as Germany’s DAX was largely unchanged. France’s CAC 40 inched 0.3% higher meanwhile. Earlier in the day, Asian markets ended mostly higher with Hong Kong leading the gains. This is despite data coming out of China showing uneven recoveries. Industrial production expanded at the fastest pace since February 2022 though retail sales growth underwhelmed. The Shanghai Composite Index fell 0.6%. The Hang Seng Index and Nikkei 225 rallied 2.4% and 0.9% higher respectively however.

Source: PublicInvest Research - 18 Dec 2023