Economy

EU: Eurozone industrial output falls for third month. Eurozone industrial production declined for the third straight month in Nov. As expected, industrial output posted a monthly fall of 0.3% in Nov. Nonetheless, the pace of decrease softened from 0.7% decrease in Oct and 0.8% fall in Sept. The decline was driven by the 2.0% fall in durable consumer goods and 0.8% decrease in capital goods output. Production of intermediate goods was down 0.6%. Offsetting these declines, energy and non-durable consumer goods output gained 0.9% and 1.2%, respectively. On a yearly basis, the drop in industrial output deepened to 6.8% from 6.6% in Oct. Industrial production in the EU27 slid 0.2% on month in Nov and declined 5.8% from the same period last year. (RTT)

EU: Germany skirts recession at the end of 2023 but faces prolonged slump. Europe’s largest economy contracted by 0.3% YoY in 2023, as high inflation and firm interest rates bit into growth. The decline in economic output eases to 0.1% when adjusted for calendar purposes. The overall economic development in Germany stalled in 2023 in the still crisis-ridden environment. Despite the recent declines, prices remained high at all levels of the economy. Added to this were unfavourable financing conditions due to rising interest rates and lower demand from home and abroad. German inflation ticked up by 3.8% YoY in Dec on a harmonized basis. Germany’s manufacturing sector, excluding construction, fell by a sharp 2%, led by lower production in the energy supply sector. Weak domestic demand last year and “subdued global economic dynamics” also stifled foreign trade, despite a drop in prices. Imports fell by 1.8%, declining more sharply than exports and leading to a positive trade balance. (CNBC)

EU: Italy trade surplus grows in Nov. Italy's foreign trade surplus increased notably in Nov from a year ago as imports fell faster than exports. The trade surplus rose to EUR3.9bn in Nov from EUR1.5bn in the corresponding month last year. That expected surplus was EUR5.2bn. In Oct, there was a surplus of EUR4.7bn. Exports fell 4.4% annually in Nov after a 3.1% rebound in Sept. Outgoing flows to non-EU countries decreased by 3.4%, and those to EU countries dropped by 5.4%. Data showed that imports declined 8.9% annually in Nov, following a 9.2% fall in the prior month. On a seasonally adjusted basis, both exports and imports slid by 2.4% and 0.6%, respectively, in Nov from a month ago. As a result, the trade surplus shrank to EUR2.8bn from EUR3.8bn in Oct. (RTT)

EU: Ireland trade surplus shrinks to EUR4.1bn. Ireland's foreign trade surplus decreased in Nov as imports rose amid a plunge in exports. The seasonally adjusted trade surplus dropped to EUR4.1bn in Nov from EUR7.1bn in the previous month. In the corresponding month last year, the trade balance showed a surplus of EUR4.8bn. Exports logged a monthly decrease of 11.0% in Nov, while imports increased by 9.0%. On an unadjusted basis, exports declined 3.0% annually in Nov, while imports were 2.0% lower compared to last year. As a result, the trade surplus fell to EUR4.2bn from EUR5.0bn last year. Exports to Great Britain climbed by 11.0% annually in Nov. A 25.0% sharp decline in imports was seen due to weak domestic demand for mineral fuels, lubricants, and related materials. (RTT)

China: Keeps MLF rate unchanged unexpectedly. China's central bank maintained the rate on medium-term lending facility unchanged unexpectedly as any reduction would add downward pressure on the renminbi. The People's Bank of China added CNY995bn via the MLF, which is set to mature in one year. The interest rate was 2.5%, unchanged from the previous operation. Markets widely expected a reduction in the MLF rate. The central bank also conducted CNY89bn of seven-day reverse repo operations at an interest rate of 1.8%. The latest operation resulted in a net injection of CNY216bn into the banking system with CNY779bn of MLF loans to expire this month. The operations were intended to keep reasonable and ample liquidity in the banking system. (RTT)

Japan: Machine tool orders fall 9.9%. Japan's machine tool orders declined for the twelfth straight month in Dec due to weak domestic and foreign demand, preliminary data from the Japan Machine Tool Builders Association. Machine tool orders fell 9.9% YoY in Dec, which was slower than the 13.6% plunge in the previous month. Domestic demand was 10.5% lower in Dec compared to last year, and foreign orders contracted by 9.7%. On a monthly basis, machine tool orders grew 9.2% in Dec, following a 3.4% rebound in Nov. (RTT)

India: Wholesale prices rise 0.73%, less than forecast. India's wholesale prices increased for the second straight month in Dec, though at a slower-than-expected pace. The wholesale price index rose 0.73% YoY in Dec, following a 0.26% gain in Nov. Economists had expected a 0.90% increase for the month. The upward trend was primarily due to the increase in prices of food articles, machinery and equipment, other manufacturing, other transport equipment, and computer, electronics, and optical products. Food prices grew at a faster rate of 5.39% annually in Dec versus a 4.69% gain a month ago. Similarly, costs for primary articles climbed at an accelerated pace of 5.78%. (RTT)

Markets

Sime Darby (Neutral, TP: RM2.41): To compulsorily acquire remaining UMW shares after accumulating 96.81% stake. Sime Darby is to compulsorily acquire the remaining shares of UMW Holdings after accumulating 96.81% of the industrial group's shares. Sime Darby will invoke the CMSA to compulsorily acquire any remaining offer shares from shareholders who have not accepted the offer, or failed to transfer their shares to the group. (The Edge)

George Kent: Expands to Vietnam with new water meter assembly plant. George Kent has ventured into Vietnam with a new subsidiary that will operate an assembly plant capable of producing 600,000 water meters annually, and is set to commence operations in the 2Q of 2024. (The Edge)

Econframe: Buys industrial property builder for RM56m in construction foray. Econframe has acquired industrial property builder ETA World SB for a purchase consideration of RM56m. The total door system solutions provider said it has entered into a conditional share sale agreement with ETA Industries SB for the proposed acquisition. (The Edge)

Sunview: In talks for renewable energy projects in Cambodia. ACE Market-listed Sunview Group is in talks with a few Cambodian companies for the proposed development of some renewable energy facilities in Cambodia, in its bid to expand its business abroad. The renewable energy player’s wholly-owned unit Fabulous Sunview SB has inked a strategic business alliance agreement with “a few” undisclosed Cambodian companies for the development of the RE plants, according to Sunview executive director and CEO Ong Hang Ping. (The Edge)

Tien Wah: Inks Vietnam JVco deal. Tien Wah Press Holdings has entered into an agreement with Cat Loi Joint Stock Company (CLC) to form a JVco to undertake the business of production of paper packaging, print packaging and other business activities in Vietnam. (The Edge)

MST Golf: Swings into Indonesia. MST Golf aims to reach a total of 61 retail outlets by the end of 2024, with regional expansion underway as planned during its IPO. The golf retailer, which went public on July 20, 2023, has been expanding its footprint steadily. It has recently opened its first store in Indonesia and is operating a total of 49 retail outlets, with 40 in Malaysia, eight in Singapore and one Indonesia. (The Edge)

IPO: Alpha IVF receives approval to list on ACE Market. Alpha IVF Group has received approval from Bursa Malaysia Securities to list on the ACE Market. Alpha IVF is a fertility care specialist currently operating in Malaysia and Singapore, providing assisted reproductive services (ARS) with a primary focus on in-vitro fertilisation (IVF). It currently operates two specialist centres in Malaysia and one specialist centre in Singapore. (StarBiz)

IPO: Metal fabricator Wentel prices shares at 26 sen ahead of RM83m listing exercise. Wentel Engineering Holdings Bhd is pricing its shares at 26 sen apiece in an ACE Market listing exercise worth RM83m, comprising RM71.0m to be raised by the company via an IPO, and an offer for sale of a 4% stake in the company by two shareholders for RM11.9m. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today after US stocks were closed for a holiday while Asian shares got off to a stumbling start today as China’s central bank wrong footed markets by skipping on a rate cut, even as data due this week is expected to show the economic recovery there remains fragile. China reports economic growth data for the fourth quarter and a slew of monthly figures on Wednesday, and investors have become used to being underwhelmed by activity as Beijing drip feeds its stimulus. Chinese blue chips, CSI300 were little changed in response, having earlier reached their lowest since early 2019. Japan’s Nikkei bucked the chary mood and climbed to a fresh 34-year peak, having already enjoyed stellar gains of 6.6% last week. They closed up 0.91%. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.21%, after losing 0.8% last week. Back home, Bursa Malaysia continued its upbeat momentum to end higher today on broad-based buying support, with the barometer index closing above the 1,500 psychological barrier last seen in August 2022. At the closing bell, the FBM KLCI rose 13.77 points to 1,501.11 from last Friday's close of 1,487.34. Elsewhere, Shanghai’s Stock Exchange added 0.15% to 2,886.29, South Korea’s Kospi improved 0.04% to 2,525.99 and Hong Kong’s Hang Seng Index eased 0.17% to 16,216.33.

Source: PublicInvest Research - 16 Jan 2024