HEADLINES

Economy

US: Fed-favored inflation gauge seen rising most in a year. Underlying US inflation probably rose in Jan by the most in a year, as tracked by the Fed’s preferred metric, highlighting the long and bumpy path to taming price pressures. The core personal consumption expenditures price index, which excludes food and energy costs, is seen rising 0.4% from a month earlier. That would mark the second straight monthly acceleration in a gauge that’s largely been receding over the past two years. And when annualizing the data on a three or six-month basis, both would rebound above 2% after dipping below the Fed’s target in Dec. Fed officials have stressed, they’re in no rush to lower borrowing costs and will only do so once they’re confident that inflation is retreating on a sustained basis. (CNBC)

US: Widespread tech layoffs keep happening despite a strong US economy. The tech sector is having a big 2024. Nvidia just crushed earnings expectations. The artificial intelligence boom remains in full swing. The tech-heavy Nasdaq index is up more than 8% YTD. The US economy is also doing surprisingly well, adding 353,000 jobs in Jan, well ahead of economists’ forecasts. Hotterthan-expected inflation data may also keep the Fed from cutting rates as soon as the market expects, a sign that the economy remains strong enough to support tighter monetary policy for longer. The number of tech sector layoffs in 2024 has been outpacing the number of terminations in 2023. So far, about 42,324 tech employees were let go in 2024. (CNBC)

EU: Poland jobless rate rises to 5.4%, highest in 10 months. The unemployment rate in Poland increased further in Jan to the highest level in nearly a year. The unemployment rate rose to 5.4% in Jan from 5.1% in Dec. That was in line with expectations. Further, this was the highest jobless rate since March 2023, when it was the same 5.4%. In the same month last year, the unemployment rate was 5.5%. The number of registered unemployed people increased to 837,100 in Jan from 788,200 in the previous month. The number of unemployed young people under the age of 24 rose to 109,500 in Jan from 100,800 in the prior month. (RTT)

EU: German economy shrinks on weak investment. The German economy contracted at the end of the year on weaker investment, revised data from Destatis showed. GDP slid 0.3% sequentially in the three months to Dec after stagnating in the third quarter. The statistical office confirmed the preliminary estimate published on Jan 30. Data showed that household spending gained 0.2% and government consumption moved up 0.3%. Meanwhile, gross fixed capital formation slid 1.9%. Capital formation in construction posted a 1.7% decline, which come on the heels of the declines already registered in the two previous quarters. The fall in gross fixed capital formation in machinery and equipment eased 3.5%. Exports decreased 1.6%. At the same time, the decline in imports was somewhat larger, at -1.7%. (RTT)

UK: Wages are rising. The tight UK labor market is driving wages higher just as many employees ponder whether or not they’ll get a pay raise in 2024. UK wages excluding bonuses increased 6.2% in the fourth quarter, according to the Office for National Statistics, while annual inflation hovered around 4% in Jan. That means real wages are increasing, providing some relief to workers grappling with the worst cost-of-living crisis in a generation. Salaries for secretarial and personal assistant jobs increased 7% last year, for example, while work in transport and logistics saw an 8% bump. (Bloomberg)

China: New home prices extend declines despite policy support. China's new home prices slowed their MoM declines in Jan with the biggest cities seeing some stabilisation, but the nationwide downward trend persisted despite Beijing's efforts to revive demand. New home prices fell 0.3% MoM in Jan after dipping 0.4% in Dec, according to Reuters calculations based on National Bureau of Statistics (NBS) data. China has been ramping up measures to arrest a property downturn, including ordering state banks to boost lending to residential projects under a "whitelist" mechanism. More big cities including Shanghai have also eased purchase curbs to lure homebuyers. Last month, home prices in tier-one cities fell 0.3% on month, smaller than their 0.4% decline in Dec, partly due to additional support measures including a reduction in down-payments. (Reuters)

Singapore: Inflation eases unexpectedly to 2.9%, lowest in 28 months. Singapore's CPI softened unexpectedly in Jan to the lowest level in more than two years amid a slowdown in accommodation and private transport charges, data published by the Monetary Authority of Singapore and the Ministry of Trade and Industry showed. The CPI climbed 2.9% YoY in Jan, slower than the 3.7% increase in the previous month. In contrast, economists had expected inflation to rise slightly to 3.8%. Further, this was the weakest inflation rate since Sept 2021, when prices had risen 2.5%. MAS core inflation also moderated to 3.1% from 3.3%. (RTT)

Markets

Phamaniaga: Submits regularisation plan to Bursa. Pharmaniaga has submitted its regularisation plan to Bursa Malaysia, marking a critical milestone in its efforts to recover, enhance its financial standing and exit PN17 status. The pharmaceutical group, in a statement, said the regularisation plan outlines a holistic approach to increase the equity of the group and minimise the group’s accumulated losses. The Group's major shareholders, Lembaga Tabung Angkatan Tentera (LTAT) and Boustead Holdings (BHB) have committed to ensure their combined entitlement to the rights issue, totalling RM190m to be fully taken up. (StarBiz)

Dnex: Secures software and maintenance contract from IRB. Dagang Nexchange(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 technology and energy group said the project would span two years starting Feb 15, 2024. It is expected to contribute positively to the earnings and net assets per share of the company for the financial year ending Dec 31, 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. Ekovest said 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)

Capital A: AirAsia renegotiates plane orders with Airbus. AirAsia, the aviation arm of Capital A, has renegotiated its plane orders with Europe’s Airbus as the airline starts to kick off its dreams of flying around the world with Asean as a central hub. CEO Tan Sri Tony Fernandes said both parties have agreed to modify about 10% or 36 planes of the over 400-plane order book, opting for A321lr instead of the initial A321neo. Speaking about the significance of this deal, Fernandes said this amendment will unlock the group’s dreams of flying longer distances and establishing AirAsia as a key player in connecting diverse destinations across Asia and the world. (StarBiz)

Swift Haulage: JWD emerges as substantial shareholder after completing 20.4% stake buy. Thailand-listed SCGJWD Logistics PCL (SJWD) has emerged as a substantial shareholder of Swift Haulage with a 20.44% stake after the completion of its share acquisition in Malaysia's largest container haulage company. SJWD’s wholly-owned unit, Singapore-based logistics firm JWD Asia Holding Pte Ltd, acquired the stake in Swift Haulage comprising 180m shares at 63 sen apiece or a total of RM113.4m. (The Edge)

Landmarks: Units receiver and manger finds buyer for Langkawi luxury resort. Landmarks said a buyer has been found for its wholly-owned unit Andaman Resorts SB's (ARSB) luxury resort, The Andaman, in Langkawi. The group said ARSB's receiver and manager (R&M) Deloitte Restructuring Services PLT had entered into a binding agreement with Mutiara Hotels & Resorts SB for the sale of the charged asset. ARSB fell into receivership in July 2023 after it defaulted on financial facilities totalling RM133.37m from OCBC Bank (M) Bhd. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher after the S&P 500 and Dow Jones Industrial Average eked out another closing record high yesterday, with all three Wall Street benchmarks scoring weekly gains, as artificial intelligence stocks had enough steam to keep the rally chugging along. AI poster child Nvidia advanced again, rising 0.4%, and briefly traded above US$2trn (RM9.55trn) in market valuation for the first time. Nvidia's gains on Thursday, the session after its blowout earnings, had propelled the chipmaker to add US$277 billion in stock market value, Wall Street's largest ever daily gain. Despite a smaller advance on the final trading day of the week, its performance still dominated the market's attention. The S&P 500 gained 1.77 points, or 0.03%, to end at 5,088.8 points, while the Nasdaq Composite lost 44.80 points, or 0.28%, to 15,996.82. The Dow Jones Industrial Average rose 62.42 points, or 0.16 %, to 39,131.53. European shares closed at a record peak for a second day on Friday after gains in Standard Chartered following a strong earnings report, while comments from European Central Bank President Christine Lagarde kept investors' mood in check. The pan-European STOXX 600 was up 0.4% to record its fifth straight week of gains, with French and German shares also closing at record highs.

Back home, the FBM KLCI recovered on Friday, albeit marginally, on bargain hunting after two days of decline. The bellwether index gained 3.62 points or 0.23% to 1,549.11, after moving between 1,544.18 and 1,551.15. Japan's stock market was closed for a public holiday on Friday, but Nikkei futures rose nearly 1%, suggesting Japanese stocks will extend their record run next week. Chinese shares wobbled between gains and losses. The Shanghai Composite index rose above the psychologically key 3,000-point mark. It is up 4.6% for the week and has bounced about 10% from five-year lows set more than two weeks ago. Hong Kong's Hang Seng index slipped 0.1%. Data showed on Friday that China's new home prices fell for the seventh month in January, leaving sentiment fragile as policymakers' efforts to restore confidence in the debt-ridden sector struggled for traction.

Source: PublicInvest Research - 26 Feb 2024