HEADLINES

Economy

US: GDP jumps slightly less than previously estimated in Q4. The US economy grew by slightly less than previously estimated in 4Q2023. The jump by real gross domestic product in the fourth quarter was downwardly revised to 3.2% from the previously reported 3.3%. Economists had expected the surge in GDP to be unrevised. The slightly slower than previously estimated growth reflected downward revisions to private inventory investment and federal government spending as well as an upward revision to imports, which are a subtraction in the calculation of GDP. Meanwhile, the report also showed upward revisions to state and local government spending, consumer spending, residential fixed investment, non-residential fixed investment and exports. (RTT)

EU: Italy consumer confidence hits 8-month high, business morale weakens. Italy's consumer confidence improved in Feb to the highest level in eight months, while business morale worsened. Consumer sentiment rose to 97.0 in Feb from 96.4 in the previous month. Further, this was the highest reading since June 2023, when it was 97.5. Among components, the personal climate index climbed to 95.2 in Feb from 93.9 in Jan. The index measuring the current climate improved to 97.0 from 95.8, while the economic climate dropped to 102.0 from 103.1. The future climate remained almost unchanged from Jan. (RTT)

EU: Eurozone economic sentiment deteriorates to 3-month low. Euro area economic confidence weakened unexpectedly to a three-month low in Feb, suggesting that the currency bloc remains close to recession. The economic sentiment index fell to 95.4 from revised 96.1 in the previous month. The score was forecast to rise to 96.7. At -9.5, the industrial confidence indicator hit the lowest in six months. (RTT)

EU: Sweden economic confidence falls slightly in Feb. Sweden's economic confidence was almost unchanged in Feb. The economic tendency index stood at 90.5 in Feb versus 90.6 in the previous month. The morale of the manufacturing industry fell by 0.8 points to 98.4 in Feb. Manufacturing firms anticipate a slight decrease in employee numbers over the next three months, but this expectation is still above average. Meanwhile, the confidence indicator for the construction and retail sectors improved in Feb. Although service sector confidence rose somewhat in Feb, it remained the most pessimistic part of the business sector. (RTT)

Japan: Leading index rises more than estimated. Japan's leading index increased more than initially estimated in Dec. The leading index, which measures future economic activity, advanced to 110.2 from 108.1 in Nov. In the flash report, the score was 110.0. This was the highest reading since October 2022, when it was 10.6. The coincident index, which measures the current economic situation, improved to 115.9 in Dec from 114.6 in the previous month. The latest score was revised down from 116.2. At the same time, the lagging index rose moderately to 105.9 from 105.6 a month ago. The flash score was 106.0. (RTT)

Hong Kong: Scraps property curbs; lifts tax on high income earners. Hong Kong scrapped measures intended to cool the property market, and raised the tax on high income earners to plug the hole in the budget. The economy is projected to grow by an average of 3.2% a year in real terms from 2025 to 2028. The Hong Kong Monetary Authority eased conditions related to property mortgage loans. To help homebuyers, the central bank raised the maximum loan-to-value ratios. Income of up to HKD5m is proposed to be taxed at 15%. Net income exceeding HKD5m would be subject to a standard rate of 16%. With the new rate, the government revenue is expected rise by about HKD910m each year. (RTT)

Australia: Inflation steady at 3.4%. Australia's consumer price inflation remained stable in Jan. The monthly consumer price index posted an annual increase of 3.4% in Jan. The rate was forecast to rise to 3.6%. The current inflation was the lowest since Nov 2021. The most significant contributors to the annual inflation were housing, food and non-alcoholic beverages, alcohol and tobacco and insurance and financial services. Partially offsetting the annual gain was recreation and culture. Excluding volatile items, inflation softened to 4.1% from 4.2% in Dec. (RTT)

Markets

KPS (Neutral, TP: RM0.79): Aqua-Flo secured another job from Air Selangor. Kumpulan Perangsang Selangor (KPS) will be supplying and delivering mechanical water meters to Pengurusan Air Selangor SB with a contract sum of about RM18.9m. (Bursa Announcement)

Comments: KPS’ owned 51% subsidiary Aqua Flo SB, has secured a contract to supply and deliver of water meters for the period of 3 years commencing from Mar 2024 to Feb 2027 for RM18.4m. We note that this contract is precedent to the contract announced in 1QFY23 dated from Jan 2023 to Dec 2024 for RM12.9m. Nonetheless, we are neutral on this development as we deem this job to contribute marginally to KPS’ bottomline in FY24- 27.

Capital A: To list AirAsia brand manager on Nasdaq via USD1.15bn SPAC deal. Capital A Bhd is carving out the manager of its aviation brand AirAsia and injecting it into Nasdaq-listed special purpose acquisition company (SPAC) Aetherium Acquisition Corp for USD1.15bn (RM5.48bn), a move to pave way for its exit from PN17 status, besides selling its aviation business to AirAsia X. In return, Capital A will get an equity stake worth USD1bn in the US-listed entity, which will be called Capital A International (CAPI). On top of that, Capital A will also offload a USD150m loan to CAPI as part of sale consideration settlement. (The Edge)

Ranhill: Wins seven-year contract from Iskandar development authority worth RM7.5m. Water supply services provider Ranhill Utilities Bhd has secured a seven-year contract worth RM7.5m from Iskandar Regional Development Authority (IRDA) for the provision of delivery management office services for a highway improvement project. Ranhill’s associate Ranhill Consulting SB (RConsulting) had accepted the letter of award from IRDA to be appointed the project director representative to undertake general project management for the design and build, and project management. (The Edge)

Southern Score: Wins RM618m contract to build two apartment blocks. Southern Score Builders, formerly known as G Neptune, has won a contract amounting to RM618.2m to construct two blocks of apartment suites in Setapak, Kuala Lumpur. The contract was awarded by property developer Platinum Victory Development Sb, The two 47-storey blocks will comprise 946 units and 1,136 units of apartment suites respectively. (The Edge)

Awantec: Secures RM19.2m contract from ministry to supply Google Workspace for Education. AwanBiru Technology (Awantec) has been awarded a four-year contract worth RM19.2m from the Ministry of Higher Education (MOHE) for the supply of Google Workspace for Education to be utilised by public universities, polytechnics and community colleges throughout Malaysia. (The Edge)

MAHB: Passenger traffic grew 11.4% in Jan, international passenger movements hit new high. Malaysia Airports Holdings Bhd (MAHB), which operates in Malaysia and Turkey, said its passenger traffic went up 11.4% YoY, reaching 10.1m passengers in Jan, compared with 9.1m in the same month a year ago. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today after Wall Street’s main stock indices dipped Wednesday as investors locked in profits ahead of a key US inflation measurement while cryptocurrency bitcoin topped US$60,000. In New York, all the main indexes retreated, although losses on both the Dow and S&P 500 were modest. The Dow Jones Industrial Average fell 23.39 points, or 0.06%, to 38,949.02, the S&P 500 lost 8.42 points, or 0.17%, to 5,069.76 and the Nasdaq Composite lost 87.56 points, or 0.55%, to 15,947.74. Data on Wednesday confirmed the US economy grew at a solid clip in the fourth quarter on strong consumer spending but it appears to have lost some speed early in 2024. In Europe, London fell 0.8%, while Paris edged higher and Frankfurt added 0.3% to set a new closing record.

Back home, Bursa Malaysia ended trading at an intraday low on Wednesday due to profit-taking activities following Tuesday's strong gains, in tandem with the downbeat performance in the regional markets. At the closing bell, the FBM KLCI shed 13.21 points to close at 1,545.59 from the previous day’s close of 1,558.8. Elsewhere, Nikkei 225 ended down 0.1%, Hang Seng lost 1.5% and Shanghai Composite index gave away 1.9%.

Source: PublicInvest Research - 29 Feb 2024