HEADLINES

Economy

US: Weekly jobless claims fall as labour market remains tight. The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting that job growth likely remained solid in Feb. Labour market resilience, which is underpinning the economy, reduces the urgency for the Federal Reserve to start cutting interest rates. Minutes of the US central bank's Jan. 30-31 meeting published showed the majority of policymakers were concerned about the risks of cutting rates too soon, with broad uncertainty about how long borrowing costs should remain at their current level. (Reuters)

US: Existing home sales show significant rebound in Jan. Existing home sales in the US saw a significant rebound in the month of Jan, according to a report released by the National Association of Realtors. NAR said existing home sales jumped by 3.1% to an annual rate of 4.00m in Jan after falling by 0.8% to a revised rate of 3.88m in Dec. Economists had expected existing home sales to surge by 5.0% to a rate of 3.97m from the 3.78m originally reported for the previous month. Despite the notable monthly increase, existing home sales in Jan were down by 1.7% compared to 4.07m in the same month a year ago. (RTT)

EU: Eurozone business activity inches towards growth in Feb, survey shows. The downturn in euro zone business activity eased in Feb, suggesting signs of recovery, as the dominant services sector broke a six-month streak of contraction and offset a deterioration in manufacturing, a survey showed. Last year, the bloc's economy stagnated, underperforming the rest of the world as former powerhouse Germany struggled with an industrial malaise that shows no sign of abating. HCOB's preliminary composite PMI, compiled by S&P Global, rose to 48.9 this month from Jan’s 47.9, ahead of expectations in a Reuters poll for 48.5 but marking its ninth month below the 50 level separating growth from contraction. (Reuters)

EU: Eurozone private sector contraction slows as services activity stabilize. Eurozone private sector shrank at the slowest pace in eight months in Feb as a stabilization of output in the service sector offset a further steep contraction in manufacturing, flash survey results from S&P Global showed. The flash HCOB composite output index posted 48.9 in Feb, up from 47.9 in the previous month. The expected score was 48.5. Although the below- 50 score still signals contraction in the private sector, Feb's fall was the smallest since last June. The services Purchasing Managers' Index, or PMI, rose to a seven-month high of 50.0 from 48.4 a month ago. The reading was seen at 48.8. (RTT)

EU: ECB minutes reveal consensus on risk of cutting policy rates too early. ECB policymakers agreed in their meeting late Jan that it was premature to discuss interest rate cuts now which could derail the return of inflation to the 2% target, minutes of the policy session held on Jan 24-25 showed. "The risk of cutting policy rates too early was still seen as outweighing that of cutting rates too late," the minutes, which the ECB calls "account" showed. "Having to reverse course, in the event that economic activity picked up more strongly than expected, wage growth accelerated or renewed inflationary pressures emerged, could entail high reputational costs." (RTT)

EU: French manufacturing confidence rebounds to 100. French manufacturers' confidence improved more-than expected and returned to its long-term average in Feb, largely on the back of improved past production and the overall order book, monthly data from the statistical office INSEE revealed. The manufacturing sentiment index rose to a 4-month high of 100 in Feb from 98 in the previous month. Economists had expected confidence to increase to 99. In addition, the index returned to its long-term average of 100.0. In Feb, the rebound was primarily attributed to improved opinions on production's evolution over the past three months. The corresponding index came out of the negative horizon and stood at 0 versus -8 in Jan. (RTT)

UK: Economy puts recession behind it but price pressures rise, PMI survey shows. Britain's economy kept up its early 2024 momentum with a survey showing strong growth for services firms and business optimism at a two-year high, but inflation pressures are likely to keep the BOE wary about cutting borrowing costs. Adding to signs that Britain's shallow recession of last year is likely to be short-lived, the preliminary Feb S&P Global/CIPS UK Composite Purchasing Managers' Index (PMI), which spans services and manufacturing firms, rose to 53.3, the highest in nine months, from Jan's 52.9. (Reuters)

Hong Kong: Inflation eases to 1.7%, lowest in 10 months. Hong Kong's consumer price inflation moderated for the third straight month in Jan to the lowest level in nearly a year, data released by the Census and Statistics Department showed. The CPI climbed 1.7% YoY in Jan, slower than the 2.4% rise in Dec. Economists had expected inflation to slow to 2.2%. Further, this was the weakest inflation since March 2023, when prices had risen the same 1.7%. Food costs rose 1.0% annually in Jan, though slower than the 2.3% rise in the prior month. The downward trend in inflation was also attributable to a 7.6% fall in utility costs. (RTT)

South Korea: Bank of Korea keeps rates on hold. The Bank of Korea left its benchmark rate unchanged for the ninth consecutive meeting and vowed to maintain a restrictive stance to stabilize inflation at 2%. The Monetary Policy Board, led by Governor Rhee Chang-yong, unanimously decided to maintain the key base rate at 3.50%. "It is premature to be confident that inflation will converge on the target level", the central bank said in the statement. "…the Board deems it warranted to stabilize inflation on 2% by maintaining a restrictive monetary policy stance for a sufficiently long period of time," the central bank said. Inflation is projected to be 2.6%, in line with the Nov outlook. (RTT)

Markets

E&O: In talks with banks to raise RM1.5bn for Andaman Island project. Eastern & Oriental (E&O) is in talks with banks to finalise the mechanism to raise between RM1bn to RM1.5bn for the development of its 760-acre Andaman Island project in Penang. The second phase of the project would require funds totaling RM2bn. They need RM2bn to complete the second half of the island, but don't need a RM2bn financing in place because the project is for a longer period. (The Edge)

DNeX: Bags RM11.2m contract from IRB. Dagang Nexchange’s (DNeX) subsidiary Innovation Associates Consulting SB has secured an RM11.2m contract from the Inland Revenue Board of Malaysia (IRB) in relation to software and maintenance of IRB’s Hasil Integrated Taxation Systems (HITS). The project would span two years starting15 Feb 2024. The HITS project is in the best interest of the company and is expected to contribute positively to the earnings and net assets per share of the company for the financial year ending 31 Dec 2024 onwards. (StarBiz)

Ekovest: Sells land for RM66.8m. Ekovest is disposing of 13 parcels of land in Kuala Lumpur to Airman SB in a related-party transaction for RM66.8m. The divestment is consistent with its principal business activity as a property investment and development firm, enabling the immediate realisation of the land value. This transaction is anticipated to have a beneficial financial effect to the group, reflecting positively on the overall revenue and cash flow. (StarBiz)

Pintaras: Wins RM170m piling contracts. Pintaras Jaya has secured eight bored piling contracts worth RM170m in Singapore. Its wholly owned subsidiary in Singapore, Pintary International Pte Ltd, through its wholly owned subsidiary, Pintary Foundations Pte Ltd won the eight new contracts. These projects have already commenced work or will commence by March 2024 with contract periods ranging from three to 15 months. The group expects the contracts to contribute positively to its FY2024 earnings. (StarBiz)

Pecca: Enters strategic partnership for enhanced aircraft MRO standards. Pecca Group’s wholly owned subsidiary, Pecca Aviation Services SB has entered into distribution and agency agreements with Global Component Asia SB (GCA), kicking off a strategic partnership to enhance aircraft interior maintenance, repair, and operations (MRO) standards in key global markets. The partnership will see Pecca Aviation delivering aircraft interior solutions to GCA's roster of prominent aviation customers which includes airlines and MRO players. Pecca Aviation and GCA will work together to serve key markets including Malaysia, France, the United States of America, the United Kingdom, and Indonesia. (StarBiz)

YTL: Further growth after supernormal profits. YTL Corp reported a super-normal net profit crossing RM1bn in its latest firsthalf financials, surpassing its bottom line in the entire previous financial year. The conglomerate’s three other listed subsidiaries also posted strong results for 1H24, fuelled by higher contributions from the utilities, cement and Australian hotels businesses. The subsidiaries were YTL Power International, Malayan Cement and YTL Hospitality Real Estate Investment Trust (REIT). (StarBiz)

MARKET UPDATE

The FBM KLCI might open higher after global stock markets rallied Thursday as investors cheered bumper profits from US chip giant Nvidia, seen as the bellwether for artificial intelligence, with records falling in Asia, Europe and North America. Shares of Nvidia surged 16.4%, lifting its market value to almost US$2trn, after reporting that quarterly profits soared to US$12.3bn — on record high revenue driven by demand for its technology to power artificial intelligence. The Nasdaq powered up 3%, while both the Dow and S&P 500 ended at fresh records. The blue-chip index lodged its first close above 39,000 points. Euphoria over Nvidia and AI touched off a broader rally in tech shares, sending Japan’s Nikkei 225 up 2.2% to end at an all-time high of 39,098.68 points, breaking a record high that had stood since 1989. Eurozone indices also advanced Thursday with investors awaiting European Central Bank minutes of its most recent meeting on interest rates, with both Frankfurt and Paris striking new records. Ahead of the release, a survey showed that Eurozone business activity fell for a ninth month running, but the rate of decline eased further. MSCI's gauge of stocks across the globe rallied 1.67% to set closing and intra-day record highs, while the STOXX 600 index in Europe closed up 0.82% after hitting an all-time high. Back home, the FBM KLCI lost ground for the second consecutive day on Thursday, trimming gains it made over the past few trading sessions. The benchmark index fell 6.91 points or 0.45% to close the day at 1,545.49, after trading between 1,542.72 and 1,551.97.

Source: PublicInvest Research - 23 Feb 2024