Economy

• US: Treasury yields retreat ahead of big week for economic data. US Treasury yields pulled back as investors geared up for another big week of economic data. The yield on the benchmark 10-year Treasury note was down around 5bpts at 4.094%. Last week, it reached levels last seen in Dec. The yield on the 2-year Treasury bond slid around 2 basis points to 4.385. Yields move inversely to prices. The moves come as markets try to gauge when the Fed will begin cutting interest rates, which will be a key determinant of the trajectory of the economy and markets this year. (CNBC)

• US: Leading economic index edges slightly lower In Dec. Continuing to signal underlying weakness in the US economy, the Conference Board released a report showing a modest decrease by its index of leading US economic indicators in the month of Dec. The Conference Board said its leading economic index edged down by 0.1% in Dec after falling by 0.5% in Nov. Economists had expected the index to decrease by 0.3%. The report said the lagging economic index also dipped by 0.2% in Dec following a 0.5% increase in Nov. (RTT)

• EU: Dutch consumers slightly less negative in Jan. Dutch consumers remained slightly less pessimistic in Jan as both opinions about the economic climate and willingness to buy improved, data from the Central Bureau of Statistics showed. The consumer confidence index rose to -28 in Jan from -29 in Dec. However, the indicator in Jan was well below the 20-year average of -10 points. Among its components, the economic climate index stood at -39 in Jan versus -41 in Dec, indicating that households were less pessimistic about the economy. (RTT)

• EU: Estonia producer prices fall further. Estonia's producer prices declined for the seventh straight month in Dec, and at a faster pace, figures from Statistics Estonia showed. The producer price index fell 4.4% YoY in Dec, after a 3.3% decline in Nov. On a monthly basis, producer prices decreased by 0.8% in Dec. Compared with the same month last year, the index was mostaffected by price decreases in electricity and heat energy production as well as in the manufacture of wood and wood products, paper products, and food products. (RTT)
   
• UK: BoE may start cutting interest rates in Q2 as inflation eases. It is a close call whether the BoE starts trimming borrowing costs next quarter or in July-Sept, with only a slim majority of economists expecting it to do so before July as inflation falls towards its target. That is a turnaround from a Dec poll when more than two-thirds of respondents expected no move until at least the third quarter as inflation is now seen falling faster. Inflation surged to a 41-year high of 11.1% in late 2022 and has proved tricky to tame even though the BoE raised interest rates 14 times from Dec 2021 to Aug 2023, taking Bank Rate to a 15-year peak of 5.25%. (Reuters)
• China: Keeps lending rates unchanged. China left its benchmark lending rates unchanged after the central bank maintained its medium-term lending facility rate last week. The People's Bank of China maintained its one-year loan prime rate, or LPR, at 3.45%. Likewise, the five-year LPR, the benchmark for mortgage rates, was left unchanged at 4.20%. The one-year LPR was last reduced by 10bpts in Aug and the five-year LPR was cut by similar 10bpts in June. (RTT)

• Japan: BOJ to debate signs of progress towards price goal, policy seen steady. The BoJ is widely expected to retain its ultraeasy monetary settings, as policymakers assess the progress made by the economy towards meeting the conditions for phasing out the decade-long accommodative policy. While the BOJ has its eyes set on ending negative interest rates, many in the bank likely prefer to spend more time determining whether wage increases will broaden enough to keep inflation sustainably at its 2% target. None of the economists polled by Reuters expect the central bank to end its negative rate policy at the conclusion of its two-day meeting, though many see it happening as early as April. Markets widely expect the BOJ to maintain its short-term rate target at -0.1% and that for the 10-year bond yield around 0%. (RTT)

• Taiwan: Export orders plunge 16%. Taiwan's export orders declined at the steepest pace in sixteen months after recovering in the previous month, according to data released by the Ministry of Economic Affairs. Export orders fell 16.0% YoY in Dec, reversing a 1.0% increase in Nov, which was the first rise in fifteen months. Meanwhile, orders were expected to decrease slightly by 0.25%. Orders for transport equipment declined the most by 30.7%, followed by information and communication products, which slid by 25.3%. (RTT)

• Hong Kong: Inflation eases further to 2.4%. Hong Kong's CPI moderated for the second straight month in Dec, data released by the Census and Statistics Department showed. The CPI climbed 2.4% YoY in Dec, slower than the 2.6% rise in Nov. Economists had expected inflation to slow to 2.5%. Food costs alone grew 2.3% annually in Dec, though slower than the 2.7% rise in the prior month. The downward trend in inflation was also attributable to a 4.8% fall in utility costs. (RTT)

Markets

• Axiata (Underperform, TP: RM2.00): Link Net considering sale of stake in Indonesia fibre business. PT Link Net is considering selling a stake in its fibre business to raise as much as USD500m (RM2.3bn) to fund an expansion, according to people with knowledge of the matter. The unit of Axiata Group is seeking an adviser to help with a potential sale, which could raise USD400m to USD500m. Considerations are preliminary and Link Net could decide against a deal. (The Edge)

• Samaiden: Bags RM100m Kulim project with JS Solar. Samaiden Group and JS Solar SB have won a contract worth RM100m from NUR Renewables SB to develop a solar power plant at Kulim Hi-Tech Park in Kedah. The project, which involves the development of a ground-mounted 50MWac solar power plant (first phase), is to supply green energy to all customers located at KHTP. This is the first phase in NUR's ambitious 500MWac solar project, which it plans to develop in collaboration with UEM Lestra. (BTimes)

• TAS Offshore: Bags shipbuilding contracts worth RM22.6m. TAS Offshore (TAS) via its wholly-owned subsidiary has secured shipbuilding contracts for three units of tugboats with a total value of approximately RM22.6m. The contracts were signed with an existing customer from Indonesia. It said these vessels are expected to be delivered in 3Q2025. The revenue generated from the contract is expected to contribute positively to its earnings for the financial year ending May 31, 2026. (The Edge)

• Bina Darulaman: Teams up with Chinese firm to pursue industrial waste management project. Bina Darulaman has teamed up with Shanghai Youzhu Industry Co Ltd to pursue an industrial waste management project. The collaboration is aligned with the Kedah Development Plan 2035 and is an integral component to the company's new strategic business plan. (The Edge)

• Rapid Synergy: Reveals land disposal involves freehold parcel in KL worth RM39m. The land in question is a freehold piece of land that was amalgamated from three parcels in Sri Hartamas here. The company did not however say how big the land was. Negotiations are in the final stage, with the sale and purchase agreement for the transaction finalised for approval by the company’s board and the purchaser. The SPA is expected to be concluded on Jan 23. (The Edge)

• IPO: HE Group oversubscribed by over 63 times. A total of 22m shares were made available for the public which received 12,201 applications for 1.4bn shares valued at RM396.4m, for the overall 63.4 times oversubscription rate. For the Bumiputera portion, 7,533 applications for 801.9m shares were received, representing an overall oversubscription rate of 71.9 times. (BTimes)

• IPO: Public portion of Master Tec's IPO oversubscribed by 7.11 times. The 51m shares made available for the public received a total of 7,276 applications for 413.7m shares with a value of RM161.3m. Half of the 51m shares that were offered under the Bumiputera category saw 2,475 applications for 80.3m shares received, representing an oversubscription rate of 2.15 times. (The Edge)

MARKET UPDATE

• The FBM KLCI might open higher today after the S&P 500 posted a second straight record high close yesterday as tech stocks added to recent gains and investors awaited upcoming corporate reports for clues on this year's profit outlook. The Dow Jones Industrial Average rose 138.01 points, or 0.36%, to 38,001.81, the S&P 500 gained 10.62 points, or 0.22%, to 4,850.43 and the Nasdaq Composite added 49.32 points, or 0.32%, to 15,360.29. The MSCI world equity index which tracks shares in 49 nations, gained 0.29%. Europe's STOXX 600 index rose 0.77%. 
  
  Back home, Bursa Malaysia closed higher for the second consecutive day on Monday, thanks to bargain-hunting activities in selected heavyweights and small-cap stocks. At the closing bell, the FBM KLCI rose 4.82 points to 1,491.19 from last Friday's close of 1,486.37. Earlier in Beijing, the central bank again skipped a rate cut in its market operations on Monday. China and Hong Kong shares slumped, as relentless foreign outflows and a surge in shortselling pummelled confidence already hurt by the region's creaking economy. China's blue-chip CSI300 Index dropped 1.6% to its lowest closing level in nearly five years while in Hong Kong, the benchmark Hang Seng Index tumbled 2.3% to its lowest level in 14 months.

Source: PublicInvest Research - 23 Jan 2024