Economy

US: Factory orders rise moderately in Dec. New orders for U.S.- made goods rose just moderately in Dec, but a pick up is likely in the months ahead as unfilled orders continued to pile up. Factory orders gained 0.2% after rebounding 2.6% in Nov. The increase was in line with economists' expectations. Orders increased 0.8% on a YoY basis in Dec. Manufacturing, which accounts for 10.3% of the economy, is being constrained by high interest rates. The outlook is, however, promising. The Institute for Supply Management's manufacturing PMI neared the recovery zone in Jan. Civilian aircraft orders gained 0.4% in Dec after soaring 84.1% in Nov, while orders for motor vehicles, parts and trailers increased 0.9%. (Reuters)

US: Fed's Bowman sees inflation falling, calls for caution on rate cuts. Federal Reserve Governor Michelle Bowman on Friday said she expects U.S. inflation to decline further, but flagged worries about upward price pressure from rising wages and warned against cutting interest rates too soon. "My baseline outlook is that inflation will decline further with the policy rate held at the current level," Bowman said in remarks prepared for delivery to a banking conference in Maui, Hawaii, noting that recent declines in inflation have been "encouraging." (Reuters)

EU: German top ministers weigh corporate tax reform. Germany's economy and finance ministers floated the idea of reforming the country's corporate taxes, aiming to make local companies more competitive in light of numerous challenges, including high energy costs. Germany has "an overall corporate taxation that is no longer competitive and conducive to investment", Economy Minister Robert Habeck told weekly Welt am Sonntag."This is precisely why we should consider how we can, for example, finance tax relief, tax incentives for investments in the future," he said. (Reuters)

Japan: Government interest costs seen more than doubling over next decade. Japan faces more than a two-fold increase in annual interest payments on government debt to JPY24.8trn (USD169bn) over the next decade. The latest estimate, prepared by the Ministry of Finance for parliament ahead of debate on the government's budget bills, served as a reminder that the costs of financing debt could shoot up as the central bank leans toward exiting crisis-mode stimulus. (Reuters)

Japan: Economy likely returned to growth in Q4, but remains fragile. Japan's economy likely swung back to growth in the OctDec period, helped by a slight pickup in external demand, though analysts warned private consumption remains fragile, a Reuters poll showed. The expected return to expansion, albeit modest, would come at a time when the Bank of Japan is debating the likelihood of a near-term exit from its massive stimulus programme, and is closely monitoring upcoming wage talks and consumer spending. (Reuters)

South Korea: Inflation softens to six-month low, policymakers remain wary. South Korea consumer inflation slowed to a sixmonth low in Jan, official data showed but policymakers warned of an uptick amid price pressures from heightened geopolitical tensions in the Middle East. The CPI, opens new tab stood 2.8% higher in Jan than the same month the year before, compared with a rise of 3.2% in Dec and 2.9% tipped in a Reuters poll of economists. (Reuters)

Indonesia: Should be room to cut rates, awaiting stronger rupiah – central bank. Indonesia's central bank has room to lower interest rates this year to lift economic growth, but is waiting for the rupiah to strengthen against the dollar, Governor Perry Warjiyo said. "If we rush while the global condition is in disequilibrium, the rupiah could weaken and inflation goes out of control," he told a media gathering. (Reuters)

Markets

TNB (Outperform, TP: RM11.50): Suit against IWCity over alleged damage to undersea cable to go to full trial. Iskandar Waterfront City (IWCity) has failed in its bid to strike out a RM76.6m lawsuit by Tenaga Nasional Bhd (TNB) over alleged damage to the utility giant’s undersea cable in Johor. The High Court dismissed the applications by IWCity and its wholly-owned units, Tebrau Bay Construction SB and Tebrau Bay SB, to strike out the suit and awarded costs of RM8,000 per application to TNB, said IWCity. (The Edge)

T7 Global: Marks foray into Thailand waters with RM400m contract. T7 Global has marked its foray into Thailand waters with a RM400m contract for its latest mobile offshore production unit (Mopu) named TSeven Shirley which will be leased to Valeura Energy Inc, operator of the Nong Yao oil field, in support of its Nong Yao C development. T7 Global group CEO Tan Kay Zhuin said TSeven Shirley will start its journey to the Nong Yao field to continue with the remaining activities. (The Edge)

KJTS: Wins RM16.7m contract in Thailand. KJTS Group has secured a contract worth RM16.8m from Thailand-based Central World Hotel Co Ltd (Centara). The building support services said the contract is for the works of retrofit, the provision of management, supervision, personnel, materials, equipment and supplies necessary to operate and maintain the chiller plant (O&M services) and the chilled water supply at Centara Grand Hotel at Central World in Bangkok, Thailand for 15 years. (StarBiz)

TRC Synergy: Bags RM358m contract. TRC Synergy has secured a RM358m contract from Impeccable Vintage Properties SB, a wholly-owned subsidiary of Khazanah Nasional. The construction and property development group said its wholly owned subsidiary, Trans Resources Corporation SB accepted a letter of award from Impeccable Vintage. The contract is for the proposed refurbishment of the main building and infrastructure works at Subang Engineering Complex A, Sultan Abdul Aziz Shah Airport. TRC expects the project to contribute positively to its earnings and earnings per share of the TRC group in the future. (StarBiz)

PGB, Solarvest: To develop green industrial township in Johor. Paragon Globe Bhd (PGB) and Solarvest Holdings are planning to develop a solar-ready factory and green industrial township in Johor. Upon completion, the project is anticipated to yield some 12.5-megawatt peak (MWp) in total renewable energy capacity, making it one of Johor’s most energy-efficient industrial townships, said the companies in a joint statement. Solarvest will be financing the project through its Powervest solar financing programme, which will enable PGB to adopt the solutions with zero initial capital outlays. These include a combination of commercial and industrial, end-use energy, and electric vehicle charging facilities. (StarBiz)

Jiankun: Unit hit with another lawsuit from ex-JV partner concerning residential project. Jiankun International Bhd’s wholly owned unit JKI Development SB (JKID) has been hit with another lawsuit by a former JV partner Fivestar Development (Puchong) SB, demanding RM14.2m in alleged unpaid sums. The latest suit against JKID concerns the same joint venture agreements signed between the two parties in 2015 and 2016 to co-develop a residential property project in Puchong. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after US treasury yields jumped, the dollar surged and world equities rallied after a blowout US jobs report scuttled any lingering expectations of a near-term cut in interest rates and highlighted a strong economy. Nonfarm payrolls increased by 353,000 jobs in January, the Labour Department’s Bureau of Labour Statistics said, almost double the 180,000 forecast by economists. MSCI’s gauge of stocks across the globe closed up 0.64% while on Wall Street, the tech-laden Nasdaq and benchmark S&P 500 climbed 1.74% and 1.07% respectively, as investors cheered robust quarterly results from Meta Platforms and Amazon.com. Gains by the Dow Industrials were a bit more subdued, rising 0.35%, but low unemployment and a strong economy suggest corporate earnings can increase. Euro zone inflation eased as expected last month but underlying price pressures fell less than forecast, likely boosting the European Central Bank's argument that rate cuts should not be rushed. The pan-European STOXX 600 index lost 0.37%.

Back home, Bursa Malaysia ended the week on a mixed note on Friday, driven by selling in midsize and small-cap counters, while the key benchmark index maintained a positive trajectory despite reversing some of its earlier gains. At the closing bell, the FBM KLCI rose 3.60 points to end at 1,516.58, from Wednesday's close of 1,512.98. The market was closed on Thursday for the Federal Territory Day public holiday. In the region, the blue-chip CSI 300 hit a five-year low, with the Shanghai Composite 1.5% lower on the day and down 6.2% for the week, its largest weekly loss since October 2018. Elsewhere, the Hang Seng index closed down 0.21% and the Nikkei 225 added 0.41%.

Source: PublicInvest Research - 5 Feb 2024