HEADLINES

Economy

• US: Fed signals 'patience' on rate cuts as data disappoints. A week of disappointing US economic data, including stronger-thanexpected inflation and weakening spending, has Fed policymakers doubling down on their wait-and-see approach to interest rate cuts this year, but not discouraged. The latest bit of bad news came early in the form of a 0.5% MoM surge in Jan producer price index excluding food and energy, potentially undoing some of what policymakers have called "remarkable" progress on inflation. (Reuters)

• US: Consumer sentiment steady in Feb. US consumer sentiment was little changed in Feb while one-year inflation expectations ticked up, a survey showed. The University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 79.6 this month, compared to 79.0 in Jan. Economists polled by Reuters had forecast a preliminary reading of 80.0. (Reuters)

• US: Frigid weather depresses US manufacturing output in Jan. Production at US factories unexpectedly fell in Jan, weighed down by harsh winter weather. Manufacturing output dropped 0.5% last month after an unrevised 0.1% gain the prior month. The Fed attributed the decline to "winter weather." Economists polled by Reuters had forecast factory output would be unchanged. Production at factories fell 0.9% on a YoY basis in Jan. Manufacturing, which accounts for 10.3% of the economy, could be on the verge of recovery after treading water for much of 2023 following 525 basis points worth of interest rate hikes from the US central bank since March 2022. (Reuters)

• US: Housing starts unexpectedly plunge 14.8% in Jan. New residential construction in the US unexpectedly saw a substantial decrease in the month of Jan, according to a report released by the Commerce Department. The report said housing starts plunged by 14.8% to an annual rate of 1.331m in Jan from an upwardly revised rate of 1.562m in Dec. Economists had expected housing starts to rise to an annual rate of 1.470m from the 1.460m originally reported for the previous month. The Commerce Department also said building permits fell by 1.5% to an annual rate of 1.470m in Jan from a revised rate of 1.493m in Dec. (RTT)

• EU: German wholesale prices rise for first time in 4 months. Wholesale prices in Germany rose for the first time in four months in Jan, though they continued to fall compared to the same month last year mainly due to the decline in prices of mineral oil products, preliminary data from the statistical office Destatis showed. The wholesale price index rose 0.1% from the previous month after a revised 0.6% fall in Dec. Economists had forecast a 0.4% decline. This was the first monthly increase since Sept 2023, when wholesale prices rose 0.2%. On a YoY basis, wholesale prices fell 2.7% following a 2.6% decline in Dec. Prices decreased for the tenth month in a row. (RTT)

• UK: Shoppers pick up their spending, signalling quick end to recession. British retail sales jumped by the most in almost three years in Jan as consumers recovered their appetite for spending, suggesting the economy could emerge quickly from its recession in the second half of last year. Sales volumes increased by 3.4% from Dec, much stronger than the median forecast of a 1.5% increase in a Reuters poll of economists. Jan jump was the biggest since April 2021 and followed a 3.3% fall in Dec. That was the sharpest drop since Jan 2021 although the Office for National Statistics linked some of the weakness to popular Black Friday sales in Nov. (Reuters)

• China: Holds key rate steady as yuan limits room for PBOC moves. China refrained from cutting a key policy interest rate as its central bank sought to shield the yuan from volatility, underscoring the challenges policymakers face as they try to manage economic risks and pressures from deflation. The PBOC held the interest rate on its one-year policy loans at 2.5% while injecting a small amount of cash into the financial system, both moves in line with expectations among most economists surveyed by Bloomberg. (Bloomberg)

• China: New year travel and spending top pre-Covid levels. Chinese travel and spending during the Lunar New Year holiday exceeded levels from before the pandemic, adding to signs that consumption in the world’s second-largest economy is improving. Some 474m tourist trips were made around the country during the festival, which began Feb 10 and concluded Saturday. That’s up 19% from the comparable period in 2019, state broadcaster China Central Television reported, citing data from the Ministry of Culture and Tourism. (Bloomberg)

• Japan: Unfazed by recession, BOJ keeps April policy shift on table. The Bank of Japan is on track to end negative interest rates in coming months despite the economy's fall into recession, say sources familiar with its thinking, though weak domestic demand means they may seek more clues on wages growth before acting. Japan shocked analysts when data showed GDP unexpectedly contracting for two straight quarters, the technical definition of a recession, and losing its place as the world's third-largest economy to Germany. (Reuters)

• Indonesia: Retail sales growth improves in Jan. Indonesia's retail sales grew at a faster pace in Jan, led by increased demand for clothing, household equipment and food, preliminary data from the Bank Indonesia showed. Retail sales rose 3.7% YoY in Jan, following a 0.2% gain in Dec. Compared to the previous month, sales shrunk 1.0% after a 4.9% surge in the previous month when the festival holidays season boosted demand. Sales declined in the automotive fuel, clothing, culture and recreation, and food, beverages and tobacco groups. (RTT)

Markets

• SNS Network: Bagged geographical information system contract from Esri. SNS Network Technology (SNS Network) has secured a contract from Esri Malaysia SB to offer geographical information system (GIS) solutions for an undisclosed value. SNS will mainly market, distribute, and sell the GIS solutions to Esri’s existing and potential customers in Malaysia. The collaboration will allow them to foster smart city initiatives in Malaysia by leveraging Esri’s advanced GIS technology through SNS’s extensive network and expertise. (The Edge)

• MyEG: In JV to improve Philippines social services. My EG Services’ JV company, MYEG Philippines, has entered into a partnership with the Social Security System of the Philippines (SSSPH) to facilitate the online payment of loans and contributions. Members of SSSPH, a state-run social insurance programme, will have access to payment options such as e-Wallets, credit/debit cards, bank transfers and cash payments via over-the-counter channels. The aim is to streamline payment processes, fostering the overall digital enhancement of SSS PH services. (StarBiz)

• MRCB: Undertakes demolition works of Shah Alam Stadium for RM35m. Malaysian Resources Corp (MRCB) has confirmed that it was appointed by Menteri Besar Selangor Inc (MBI) to undertake the demolition works of the Shah Alam Stadium at a provisional contract value of RM35m. The proposed redevelopment was expected to take at least two years, to be completed in line with the construction of the LRT3 line nearby. (The Edge)

• KNM: Gets two offers for FBM Hudson for a total of EUR16.5m. KNM Group has received two offers for the proposed disposal of KNM Europa BV's entire stake in FBM Hudson Italiana SpA (FBM Hudson) for a total indicative consideration of up to EUR16.5m. The first offer is by Milan-based BM Carpenterie Oil & Gas for the acquisition of a 60% equity stake in FBM Hudson at an indicative consideration of up to EUR9.9m. Verona-based Officine Piccoli SpA has offered to acquire a 40% equity stake in FBM Hudson at an indicative consideration of up to EUR6.6m. (StarBiz)

• D’Nonce Tech: To raise at least RM39m via rights issue. D’Nonce Technology plans to raise at least RM39.1m via a rights issue, with the warrants priced at 9 sen each. Part of the funds raised will be used to repay bank borrowings, working capital and construction of new factory building in Thailand. It plans renounceable rights issue of up to 434.5m new ordinary shares on the basis of 1 rights share for every 1 existing share at an issue price of 9 sen, together with up to 434.4m free detachable warrants on the basis of 1 warrant for every 1 rights share subscribed for the rights issue. (The Malaysian Reserve)

• ICT Zone Asia: Mulls proposal to transfer to ACE Market. ICT Zone Asia is mulling over a proposal to transfer from the LEAP Market to the ACE Market on Bursa Malaysia, following a letter of request from its 72.9%-shareholder ICT Zone Holding. It proposed to undertake a cash exit offer together with Datuk Seri Ng Thien Phing, which will be extended through a pre-conditional voluntary general offer for all the remaining ordinary shares and irredeemable convertible preference shares in ICT Zone Asia. (The Edge)

MARKET UPDATE

• The FBM KLCI might lower today after US stocks fell last Friday with the Nasdaq showing the largest decline after a hotter-thanexpected producer prices report eroded hopes for imminent interest rate cuts by the Federal Reserve. A Labour Department report showed producer prices increased more than expected in January, feeding fears inflation was picking up after months of cooling. After five consecutive weeks of gains, all three indexes posted a weekly decline. The data could encourage the Fed to wait before cutting rates. Earlier this week, a hot consumer prices report sparked a selloff in equity markets although a slump in January retail sales on Thursday stoked hopes of rate cuts. The S&P 500 lost 24.18 points, or 0.5%, to end at 5,005.15 points, while the Nasdaq Composite lost 132.38 points, or 0.8%, to 15,775.65. The Dow Jones Industrial Average fell 149.48 points, or 0.4%, to 38,623.64. European shares ended a data-packed week on an upbeat note with stellar earnings updates and hopes of imminent rate cuts by the European Central Bank lifting investors' appetite for risky assets. The pan-European STOXX 600 index rose 0.6% to hit a fresh two-year high, led by miners, which jumped 2.5% this week and touched a two-week high.
  
  Back home, Bursa Malaysia closed higher on Friday, with the key index rising 0.34%, boosted by fresh foreign funds as well as late buying support from local funds. At the closing bell, the benchmark FBM KLCI gained 5.17 points to 1,533.55 from Thursday’s close of 1,528.38. MSCI's gauge of stocks across the globe rose 5.85 points, or 0.79%, to 750.80 with Japan's Nikkei rallied to its highest level in 34 years, and the stock index now sits just 800 points below its all-time high in 1989 that marked the peak of Japan's so called "bubble economy."

Source: PublicInvest Research - 19 Feb 2024