Economy

US: Inflation gauge increased 0.4% in Feb, as expected and up 6% YoY. Inflation rose in Feb but was in line with expectations, likely keeping the Fed on track for another interest rate hike next week despite recent banking industry turmoil. The CPI increased 0.4% for the month, putting the annual inflation rate at 6%. Excluding volatile food and energy prices, core CPI rose 0.5% in Feb and 5.5% on a 12-month basis. The monthly reading was slightly ahead of the 0.4% estimate, but the annual level was in line. (CNBC)

US: Crackdown on mergers in transportation industry. US regulators are engaging in a real shift on how they view competition in transportation industries and will make vigorous use of their authority to ensure airlines, railroads and others serve consumers. On the same day the Justice Department sued to block the deal in federal court, it would deny the airlines’ request for an exemption to operate as a single carrier while awaiting final approval of the deal. It is also investigating the takeover request to determine if it violates rules governing unfair and deceptive practices, and unfair competition. (StarBiz)

EU: Italy industrial output contracts 0.7%. Italy's industrial production declined at the start of the year amid contractions in the capital and intermediate goods output. Industrial production fell 0.7% MoM in Jan, reversing a 1.2% recovery in Dec, which was the first increase in four months. Economists had forecast a slight fall of 0.1%. (RTT)

EU: Finland inflation rises to 8.8%. Finland's CPI rose in Feb after easing in the previous month amid higher electricity prices and the rise in the average interest rate on housing loans. The CPI climbed 8.8% YoY in Feb, faster than Jan's 8.4% rise. The upward trend in inflation was mainly attributed to the price increases of electricity and the average interest rate on housing loans and consumer credits from one year ago. Among the major components, prices of food and non-alcoholic beverages had the largest impact on inflation, surging by 16.3%, followed by miscellaneous goods and services with a 11.92% spike. (RTT)

EU: Spain inflation rises less than estimated in Feb. Spain's inflation rose slightly less than estimated in Feb. The CPI climbed 6.0% annually after the 5.9% rise in Jan. The rate was revised down from 6.1% estimated on 28 Feb. Likewise, underlying inflation advanced to revised 7.6% from 7.5% a month ago. The preliminary estimate showed an annual growth of 7.7% for Jan. EU harmonized inflation, based on the harmonized index of consumer prices, rose to 6.0% from 5.9% in the previous month. This was also below the initial estimate of 6.1%. (RTT)

UK: British jobless rate stays stable; wage growth slows. The UK unemployment rate remained stable in the three months to Jan and wages grew slowly, raising the possibility of an interest rate pause from the BoE after ten successive rate hikes. The unemployment rate remained unchanged at 3.7% in the three months to Jan. The rate was forecast to rise slightly to 3.8%. For the first time in more than a year, wage growth showed signs of slowing. Average earnings, excluding bonuses, increased 6.5% annually. That was weaker than the 6.7% in the previous three months and economists' forecast of 6.6%. (RTT)

UK: Poised to remove import tariffs on Malaysian palm oil. The UK government is planning to eliminate import tariffs on palm oil from Malaysia, a product blamed for widespread deforestation, as the price of joining an Asia-Pacific trade deal. Britain is finalising entry terms to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), an 11-member regional trade agreement, after two years of negotiations. Malaysia, one of the pact’s members, has successfully demanded Britain cut its palm oil tariffs, which currently range up to 12% to nil immediately on entering the pact. (Financial Times)

India: Inflation moderates in Feb. India CPI moderated in Feb but remained above the central bank's target band. The CPI advanced 6.44% on a yearly basis in Feb, slower than the 6.52% increase seen in Jan. The rate was slightly bigger than economists' forecast of 6.35%. Moreover, the rate stayed above the Reserve Bank of India's tolerance band of 2% to 6% for the second straight month. At the Feb meeting, the RBI had softened its pace of monetary policy tightening after inflation returned to the target band. The bank had raised the benchmark repo rate by 25 bps to 6.50%. (RTT)

Australia: Weak consumer confidence boosts case for rate pause. Australia’s consumer confidence held near a 30-year low as households fretted over mounting cost of living pressures and further policy tightening, bolstering the case for the RBA to hold interest rates next month. Consumer sentiment was unchanged at 78.5 in March, the second straight month of extremely weak readings. The sharp reaction of households reflects the high sensitivity of Australian borrowers to rising rates as most have variable-rate loans. (StarBiz)

Markets

F&N: Secured rights for Nestlé's Bear Brand sterilised milk in Cambodia. F&N has strengthened its foothold in the Indochina market by securing extended rights from Société Des Produits Nestlé S.A. and Nestec S.A. (Nestlé) as the exclusive manufacturer and distributor for Nestlé's Bear Brand sterilised milk in Cambodia. Under the new arrangements, F&N will now manufacture, distribute, and market Bear Brand sterilised milk products directly to end consumers in Cambodia, effective March 1, 2023, until 2037. This contract expansion was part of licence agreements originally granted by Nestlé in 2007 and subsequently renewed in 2015. (BTimes)

LYC Healthcare: Buys Cheras properties for RM4.5m. LYC Healthcare has proposed to acquire three units of 1½ storey light industrial factory in Cheras for RM4.5m cash. LYC had entered into a sale and purchase agreement (SPA) with Golden City Development SB (GCDSB) for the proposed acquisition. The three units measured a total of 622 sq m. The proposed acquisition may enable LYC to expand its business operations and ensure long term sustainability of operations and prevent any risk of any operations downtime. (StarBiz)

Volcano: Mulls fundraising exercise. Volcano, which has received an UMA query from Bursa Malaysia, is assessing an equity fundraising exercise to be announced in due course. Save for this, there is no corporate development relating to Volcano that has not been previously announced that may account for the trading activity including those in stage of negotiation/discussion. The manufacturer said it is unaware of any reason for the sharp rise in its share price and volume recently. (StarBiz)

Landmarks: Unit defaults on RM133m financing facility. Landmarks, a 21.7% associate of Genting, said its wholly owned subsidiary has defaulted in its repayment on financing facilities totalling RM133.4m. OCBC Bank (Malaysia) has issued its wholly owned unit Andaman Resort SB a notice of recall dated March 8, demanding the repayment of banking and credit facilities amounting to RM133.4m to be paid within 14 days — by March 22. (The Edge)

Steel Hawk: Bags system maintenance contracts from Petronas Carigali. Steel Hawk has secured two contracts from Petronas Carigali SB to provide pig trap system maintenance for a tenure of one year, with an additional one-year extension option. The contracts are on a call-out basis (which does not have a fixed contract value) and the company are engaged by Petronas Carigali to provide specified services for the duration of the said contracts, as and when such services are required. (The Edge)

Managepay Systems: Signs precious metals trading deal with StoneX APAC. StoneX APAC Pte Ltd, has agreed to extend various precious metals trading facilities to its wholly owned subsidiary ManagePay Innovation SB (MISB). This will enable MISB to provide end-to-end collateral service handling for the sale and purchase of precious metals such as gold bullion, including storage, to the QuicKredit lending platform. QuicKredit is an online lending service to be launched by ManagePay Resources SB, a money lending firm wholly owned by Managepay Systems, by 3Q this year. (The Edge)

Market Update

The FBM KLCI might open higher today as US stocks climbed and bonds retreated on Tuesday, with regional bank shares leading the gains after the collapse of Silicon Valley Bank drove sharp declines in the previous session. Wall Street’s benchmark S&P 500 index closed up 1.6%, while the tech-heavy Nasdaq Composite added 2.1% after fresh data showed that US consumer price inflation had slowed to an annual rate of 6% in February, in line with economists’ forecasts. Beleaguered bank stocks led the rally, with shares in First Republic Bank closing up by more than a quarter after earlier gaining as much as 63%. The bank had tumbled 62% on Monday. The broad KBW Nasdaq Bank index was up 3.2%. On Monday, it had fallen 12%, with US regional banks plummeting most sharply despite President Joe Biden’s assurance that regulators would do “whatever is needed” to protect depositors in the wake of SVB’s failure. Banks in Europe also steadied on Tuesday. The European Stoxx banking index closed up 2.5% after dropping 6.7% on Monday, amid concerns over contagion from SVB’s failure and that measures to shore up the US financial system would not extend to Europe. The return to relative calm in markets came after shares of Japan’s biggest banks dropped sharply earlier on Tuesday as investors reacted to the previous day’s sell-off on Wall Street.

Back home, Bursa Malaysia ended lower for the fifth consecutive day on Tuesday following mixed cues on Wall Street overnight as investors dealt with the fallout from failed banks in the US, including Silicon Valley Bank. At the closing bell, the benchmark FBM KLCI fell 28 points or 1.97% to 1,393.83 — an intraday low and a near five-month low. In the region, the Hang Seng lost 2.27% while Japan's Nikkei 225 slumped 2.19% and China's Shanghai Composite gave away 0.72%.

Source: PublicInvest Research - 15 Mar 2023