HEADLINES

Economy

US: Fed officials wary of cutting rates 'too quickly,' minutes reveal. With risks to the outlook for inflation still seen as tilted slightly to the upside, the minutes of the Federal Reserve's latest monetary policy meeting revealed most officials remain wary of cutting interest rates "too quickly." The minutes of the late-Jan meeting said participants acknowledged risks to achieving the Fed's employment and inflation goals were moving into better balance, but they remained highly attentive to inflation risks. (RTT)

US: US inflation data for Jan made Fed's job 'harder,' Barkin says. Inflation data in January, with consumer and wholesale prices rising faster than anticipated, complicate upcoming US central bank interest rate decisions, Richmond Federal Reserve President Thomas Barkin said. The reports released last week "underline the challenge we have had in the recent data," with a slowdown of inflation dependent on falling goods prices, while shelter and services inflation has remained sticky, Barkin said in an interview with Sirius XM. (Reuters)

EU: Eurozone consumer confidence improves more than expected. Euro area consumer confidence improved more than expected in Feb after deteriorating in the previous month, but the reading remained negative, suggesting lessening pessimism, preliminary data from the European Commission showed. The flash consumer confidence index climbed to 15.5 from -16.1 in Jan. Economists had forecast a score of -16. In Dec, the reading was - 15.1. The corresponding index for the EU rose to -15.8 from -16.2 in Jan. (RTT)

EU: EU exports to Russia down to more than a third since Ukraine war. EU exports to Russia have shrunk to 37% of their level since the war in Ukraine began in spring 2022, mainly due to sanctions, a study by the ifo Institute and EconPol Europe showed. "One reason for the still high volume of exports to Russia is that only 32% of all products from the EU are subject to sanctions," Feodora Teti, deputy director of the ifo Center for International Economics, said. (RTT)

UK: Sees record monthly budget surplus, but tough picture ahead of budget. Britain chalked up its highest ever monthly budget surplus in Jan due to record seasonal tax inflows, official figures showed, although the broader picture remains tough as finance minister Jeremy Hunt prepares his annual budget. The Office for National Statistics said Britain ran a budget surplus of GBP16.7bn (USD21.1bn) in Jan, up from GBP7.5bn a year earlier although below economists' GBP18.7bn forecast in a Reuters poll. Britain's public finances typically run a surplus in Jan, unlike other months, as annual income tax payments are due that month. (Reuters)

UK: British manufacturers expect output to recover, CBI. UK manufacturers forecast production to rise in the three months to May and their selling price expectations hit the strongest since mid 2023, data from the Confederation of British Industry showed. The net balance of respondents reporting a fall in output declined to - 19% in three months to Feb from -10% in the preceding period, the Industrial Trends Survey data revealed. However, a net 4% expects output to rise slightly in the three months to May. (RTT)

Japan: Downgrades view of economy on sluggish consumer spending. Japan's government downgraded its view on the economy in Feb for the first time in three months on sluggish consumer spending, suggesting a bumpy path out of a recession in the face of slow wage recovery and lackluster industrial output. The government also slashed its assessment on consumer spending for the first time in two years, saying a pickup seems to be "stalling", underlining the challenge for the Bank of Japan as it looks to exit its ultra-easy policy this year. (Reuters)

Japan: Exports perk up but souring factory mood darkens outlook. Japan's exports rose more than expected in Jan, driven by US-bound shipments of autos and car parts and Chinese demand for chip-making equipment, although the worsening factory sector mood added to concerns about broader economic weakness. Ministry of Finance data out showed Japan's exports rose 11.9% in Jan from the same month a year ago, faster than a 9.5% gain expected by economists in a Reuters poll and 9.7% growth in the previous month. (Reuters)

Australia: Manufacturing sector slips into contraction, Judo Bank. The manufacturing sector in New Zealand fell into contraction in Feb, the latest survey from Judo Bank revealed with a manufacturing PMI score of 47.7. That's down from 50.1 in Jan, and it slips beneath the boom-or-bust line of 50 that separates expansion from contraction. A sharper decline in new orders underpinned the latest downturn in goods production. High interest rates and soft manufacturing sector conditions dampened demand, leading to the sharpest fall in output since May 2020. Consequently, employment levels and purchasing activity declined. (RTT)

Indonesia: Central bank keeps rate unchanged. Indonesia's central bank left its benchmark rate unchanged for the fourth straight session. The Board of Governors of Bank Indonesia, led by Governor Perry Warjiyo, decided to hold the seven-day reverse repo rate at 6.00%. The deposit facility rate was maintained at 5.25% and the lending facility rate at 6.75%. The bank is set to cut its rate in May but the risks are tilted towards the central bank cutting rates later than this, economists at Capital Economics said. (RTT)

Markets

KLK (Neutral, TP: RM21.33): Redesignates CEO Lee Oi Hian as executive chairman as Raja Muhammad Alias retires. Kuala Lumpur Kepong has redesignated its CEO Tan Sri Lee Oi Hian as its executive chairman, following the retirement of Tun Raja Muhammad Alias Raja Muhammad Ali as the group's nonexecutive chairman. Lee is also the chairman of KLK's controlling company, Batu Kawan. The Lee family owns over 55% of Batu Kawan, which in turn has a 47.2% stake in KLK. (The Edge)

Petronas Chemicals: Inks MOU with Sarawak Petchem for lowcarbon ammonia plant in Sarawak. Petronas Chemicals Group (PCG) said it has signed a MOU with Sarawak state-owned Sarawak Petchem SB to conduct a joint feasibility study to develop a low-carbon ammonia and urea plant in Bintulu, Sarawak. Petronas and Sarawak are considering a JV for a large-scale blue ammonia plant in the state, estimated to be worth about USD1bn (RM4.8bn). (The Edge)

Avaland: Plans to launch projects with RM1.4bn in GDV. Avaland aims to launch three new projects namely Amika Residences, Aetas Seputeh, and Anja Bangi with a total GDV of RM1.4bn in the current financial year. They are confident that the new projects will be well accepted by the market considering its strategic location, unique concepts and design for post-pandemic lifestyles. Moving forward, they remain optimistic of the prospects with the property industry rebounding from the lows during the pandemic as the number of overhang residential properties continues to improve while the interest rate remains stable. (StarBiz)

Citaglobal: Consortium bags 30-year RE contract. A consortium led by Citaglobal, Citaglobal Reneuco Energy Solution SB (CREES), has accepted a CLOA from Malaysia Rail Link SB (MRL) for a 30-year concession to exclusively provide electricity and renewable energy for the ECRL network. The concession also included the development and construction of transmission and interconnection facilities valued at RM600m. These facilities, were expected to be completed and commissioned in stages from early to mid-2026. CREES is a consortium of two companies comprising Citaglobal with a 60% shareholding and Reneuco holding the remaining 40%. (StarBiz)

SunCon: Clinches RM721m shopping mall project in Perak. Sunway Construction Group (SunCon) said it has secured a RM721m shopping mall project in the Kinta district in Perak. Its wholly-owned unit, Sunway Construction SB, received the contract from Sunway’s indirect subsidiary, Sunway Lost World Water Park SB for earthworks and main building works of a commercial development containing a six-floor shopping complex, cinema and shops. The project will begin on 1 March and is expected to be completed by 31 Jan 2027. (The Edge)

Berjaya Food: Impacted by boycott. Berjaya Food (BFood) is optimistic about its operating performance, expecting improvement and regained momentum in the remaining quarters of the financial year ending 30 June 2024. The board of directors believes that the operating performance results will rebound and regain momentum, considering the current situation as short-term and things are anticipated to progress positively moving forward. BFood posted a net loss of RM42.6m, or loss per share of 2.42 sen in 2Q24 against a net profit of RM35.5m, or 2.02 sen posted last year. (StarBiz)

MARKET UPDATE

The FBM KLCI might open flat today after the S&P 500 and Dow Jones industrials eked out small gains yesterday, while the Nasdaq closed lower for a third straight session as investors awaited the release of Nvidia's earnings that could determine near-term momentum for equities. After the closing bell, Nvidia shares surged 6% after it forecast fiscal first-quarter revenue above estimates on robust demand for its chips that dominate the market for artificial intelligence. The S&P 500 climbed 0.13 % to end the session at 4,981.80 points. The Nasdaq declined 0.32 % to 15,580.87 points, while the Dow Jones Industrial Average rose 0.13 % to 38,612.24 points. Minutes from the Federal Reserve's January meeting showed most policymakers were concerned about risks of cutting interest rates too soon, with broad uncertainty about how long borrowing costs should remain at their current level. Stocks fell in Europe as shares in HSBC tumbled 8.4% in its biggest single-day decline since April 2020, after a shock $3bn charge on its stake in a Chinese bank took the shine off record annual profit at the region's largest bank. The pan-European STOXX 600 index closed down 0.17%.

Back home, the FBM KLCI retreated on Wednesday, paring gains from a 20-month high achieved a day earlier, dragged by declines of telco-linked constituents. The bellwether index declined 3.19 points or 0.21% to close at the 1,552.4 level on Wednesday after trading between 1,547.49 and 1,554.95. In the region, the Stock Exchange of Thailand Index gained 0.83%, followed by the Philippines Stock Exchange Index (0.62%), while the Jakarta Composite was down 0.05% as was the Straits Times Index by 0.84%.

Source: PublicInvest Research - 22 Feb 2024