Economy

US: Fed to allow emergency bank lending program expire on March 11. The Fed said a funding lifeline created for banks last year after the collapse of Silicon Valley Bank threatened to spark a wider financial crisis would close as scheduled in March. The Fed also will immediately raise the interest rate on new loans from the Bank Term Funding Program (BTFP) for the remainder of its life, effectively ending what had become a popular and profitable arbitrage opportunity for US lenders. The sun-setting of the program on March 11 had been signaled by Fed officials as fear in the banking system abated. (Reuters)

EU: ECB keeps rates unchanged for third time. The ECB held its key interest rates steady for a third policy session in a row and stuck to its stance that policy would remain restrictive for as long as needed, and did not give any signal regarding the possibility of a rate cut in the near future. The Governing Council left the main refinancing rate, or refi, at 4.50%, in the first rate-setting session of the year. The deposit facility rate was retained at a record high 4.00% and the lending rate was kept at 4.75%. (RTT)

EU: Norway keeps rates on hold, will remain unchanged for some time. Norway's central bank kept its benchmark interest rate unchanged at 4.50%, as unanimously expected by analysts, and the cost of borrowing would likely stay at that level for some time ahead. The prospects for the Norwegian economy did not appear to have changed materially since Dec, Norges Bank's monetary policy committee said in a statement, while adding it would take time before the full effects of previous rate hikes are seen. The central bank in Dec raised the benchmark rate in a surprise decision even as inflation had come off earlier highs, aiming to stamp out price pressures and shore up the currency. (Reuters)

EU: German business sentiment weakens in Jan. Germany's business confidence weakened unexpectedly in Jan, survey results from the ifo Institute showed. The business confidence index fell to 85.2 in Jan from 86.3 in Dec. The reading was forecast to climb to 86.7. Companies assessed their current situation as worse. Moreover, their expectations for the months ahead were more pessimistic. The current situation index posted 87.0, down from 88.5 a month ago. Likewise, the expectations indicator dropped to 83.5 in Jan from 84.2 in the previous month. (RTT)

EU: French manufacturing confidence steady at 99. Confidence among French manufacturers remained stable for the third straight month in Jan, as a gain in their own production outlook was offset by a decline in past production opinions, monthly data from the statistical office INSEE revealed. The manufacturing sentiment index came in at 99 in Jan, the same as in the previous three months. The Dec score was revised down from 100. The expected score was also the long-term average of 100. (RTT)

UK: Retail sales dive in Jan at fastest pace in 3 years. British retail sales volumes slid in Jan at the fastest pace for three years, according to an industry survey which echoed weak official data published. The Confederation of British Industry's (CBI) monthly retail sales balance, a gauge of sales versus a year ago, fell in Jan to -50 from -32 in Dec, the lowest reading since Jan 2021 when Britain was in a Covid-19 lockdown. While the latest sign showed that retailers are still feeling the strain from the rise in prices and interest rates over the last two years, other surveys have painted a healthier picture of the wider business economy. (Reuters)

Hong Kong: Trade deficit widens in Dec. Hong Kong's trade deficit increased in Dec from a year ago as imports grew faster than exports, data from the Census and Statistics Department showed. The visible trade deficit rose to HKD59.9bn in Dec from HKD51.6bn in the same month last year. In Nov, the shortfall was HKD27.9bn. The visible trade gap of HKD59.9bn was equivalent to 13.4% of the value of imports. The annual rise in exports was 11.0% in Dec, faster than the 7.4% gain in Nov. (RTT)

South Korea: Q4 GDP expands 0.6% on quarter. South Korea's GDP climbed a seasonally adjusted 0.6% on quarter in the Q4 2023. That was unchanged from the Q3 reading, and it exceeded estimates for an increase of 0.5%. Real gross domestic income (GDI) increased by 0.4% on quarter. On the expenditure side, private consumption rose 0.2% as final consumption expenditure of resident households abroad increased, though expenditures on goods decreased. Government consumption increased by 0.4%, with increased expenditures on goods and social security benefits in kind such as expenditures on health care benefits. (RTT)

Markets

TNB (Outperform, TP: RM11.50): Forges alliance with China's utilities to revolutionise Asean power grid. Tenaga Nasional is spearheading a "transformative partnership" with China's stateowned power utilities, aimed at revolutionising the Asean Power Grid through cutting-edge, high-voltage direct current technology. This strategic move underscores TNB's commitment as a regional energy leader dedicated to advancing sustainable energy solutions. (BTimes)

IHH Healthcare (Outperform, TP: RM7.63): Partners Pelaburan Hartanah for new 260-bed medical block. The new purpose-built medical block for Gleneagles Hospital Kuala Lumpur, to be completed by 2027, is envisioned to encompass 470,000 square feet gross floor area with over 260 beds, subject to regulatory approvals. The new facility will be leased from PHB for an initial period of 20 years. (BTimes)

Sime Darby Property (Outperform, TP: RM0.80): To start selling affordable homes in JV with Lagenda Properties. Sime Darby Property and Lagenda Properties will set up a joint venture, Seed Homes Lagenda, to develop affordable homes. Seed Homes Lagenda's maiden project will be in Gurun, Kedah via the acquisition of a 249-acre of land from Sime Darby Property. A township of 3,000 affordable homes the development seeks to capitalise on its strategic location and spillover effects of the potential industrial growth in Gurun. (BTImes)

Wasco (Neutral, TP: RM1.00): To dispose of Shah Alam land for RM40m. Wasco is disposing a parcel of land together with storage buildings erected on site in Shah Alam for RM40 million to Array Metal (M) SB. The freehold land, measuring 18,363 sqm, is located along Jalan Bukit Kemuning in Section 34. Wasco had spent RM10.2m for the acquisition and related costs, and it has a carrying value of RM7.4m as at end-2022. (The Edge)

MISC: Adds one FPSO, one VLCC to current fleet. MISC has added two vessels to its current fleet, namely the floating production storage offloading vessel (FPSO) Marechal Duque de Caxias and Eagle Veracruz, the group’s latest liquefied natural gas (LNG) dual-fuel very large crude carrier (VLCC). Eagle Veracruz will be the third vessel delivered to Shell Tankers (Singapore) on long-term charter while FPSO Marechal Duque de Caxias will sail in mid-Feb to its production location in the Mero Field offshore Brazil. (The Edge)

Kumpulan Jetson: Plans RM90m share capital reduction; cash call to part-fund majority stake buy in property developer. Kumpulan Jetson has proposed to undertake a share capital reduction (SCR) as well as a private placement exercise to partially fund the acquisition of majority ownership in Melaka property developer Magical Era (M) SB. The SCR will entail the reduction and cancellation of RM90m issued share capital which will be used to eliminate the group's accumulated losses. (The Edge)

Fajarbaru: Appointed to develop RM192m affordable housing project in Putrajaya. Fajarbaru is appointed as developer for the integrated development of Residensi Cemara in Precinct 11, Putrajaya. The construction and property development outfit added that the project has a GDV of RM192m with a development period of three years. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after the S&P 500 climbed to its fourth straight record high close on Wednesday, as Netflix surged following blowout quarterly results and a strong report from ASML fueled gains in chipmakers. Riding optimism about Wall Street's most valuable companies, Microsoft hit an all-time high, lifting its market value above $3 trillion for the first time. The S&P 500 climbed 0.5% to end the session at 4,894.16 points. The Nasdaq gained 0.2% to 15,510.50 points, while Dow Jones Industrial Average added 0.6% to 38,049.13 points. Earlier Europe's STOXX 600 index closed up 0.3%.

In the region, Shanghai and Hong Kong stocks built on their recent rally today as traders awaited fresh pledges of stimulus from Chinese officials a day after they announced a measure to boost bank lending, though other Asian markets fluctuated. The 50 basis point cut to the reserve requirement ratio (RRR) was the first since September and twice as big as usual, which analysts said showed officials were getting increasingly worried about the economic outlook. Equities jumped more than 3% in Shanghai, while Hong Kong was also well up, having piled on around 6% in the previous two sessions.

Source: PublicInvest Research - 26 Jan 2024