Economy
US: Consumer comfort hits 10-year high on economic outlook. Consumer comfort rose to an almost 10-year high in the final week of Feb on increased optimism about the US economy and more favorable views about personal finances and the buying climate, the weekly Bloomberg Consumer Comfort Index showed. Consumer comfort index climbed to 49.8, the highest since March 2007, from 48. Personal finances measure rose to 59, highest since July, from 56.4 Gauge of economic views increased to 46.8, strongest since March 2007, from 45.2. Buying-climate index improved to 43.7, highest since April 2015, from 42.5. (Bloomberg)
US: Initial jobless claims drop to lowest in almost 44 years. The fewest Americans in almost 44 years filed applications to collect unemployment benefits last week, indicating the job market continues to power forward. Jobless claims fell by 19,000 to 223,000 in the week ended Feb 25, the fewest since March 1973, a report from the Labor Department showed. The weekly decline, which was the largest this year, shows employers are keeping dismissals at a minimum as demand remains steady and the labor market stays tight. Federal Reserve policy makers will take persistent job growth and falling separations into consideration at their monetary policy meeting later this month. (Bloomberg)
US: Data-dependent Yellen running out of reasons to delay hike. By most real indicators, the US economy is not too hot or cold, yet financial markets are betting that a core group of Federal Reserve officials who set interest rates are suddenly raring to go. They could have those convictions confirmed or tempered when Fed Chair Janet Yellen gives an economic outlook speech in Chicago. If her remarks from Jan are a guide, Yellen will give investors an update on progress toward the Fed’s goals of full employment and stable prices. It wouldn’t be hard to make a case for higher rates, and doing so would put Yellen in line with many of her colleagues. But part of Yellen’s style is to also offer caveats on headline indicators. Depending on how Yellen balances her comments, she could set up a March increase or walk back market expectations, which currently place odds of an increase this month at about 88%. (Bloomberg)
EU: Banks can’t keep EU access with shells after Brexit. UK banks trying to keep access to EU markets after Brexit will have to set up full scale operations in the bloc, ECB Executive Board member Sabine Lautenschlaeger said. “I do not see the ECB issuing banking licenses to empty shell companies,” she said. “I would certainly not accept banks’ booking all exposures with the euro area entity while having their risk management and internal control systems outside the euro area.” (Bloomberg)
UK: Brexit means Britons hoping for budget relief may have to wait. UK Chancellor of the Exchequer Philip Hammond, overseeing an economy that has defied the doomsayers, may choose to keep his powder dry in his Budget on March 8 as he prepares for the possibility of turbulence after formal Brexit negotiations are triggered this month. With tax receipts running ahead of forecasts, the budget deficit this year is on course to come in well below the GBP68bn (USD83bn) predicted by the Office for Budget Responsibility in Nov. Any giveaways are likely to be limited and targeted. (Bloomberg)
Japan: Kuroda’s core price gauge rises for the first time in a year. The Bank of Japan’s preferred measure of consumer prices rose for the first time since Dec 2015, offering some hope that inflation will begin inching toward Governor Haruhiko Kuroda’s 2% target this year. Consumer prices excluding fresh food increased 0.1% in Jan from a year earlier (forecast 0%). Overall consumer prices rose 0.4% in Jan from a year ago (forecast +0.4%). (Bloomberg)
Malaysia: Sees slower investments. Malaysia is expecting a sluggish year in total investments as global businesses continue to navigate headwinds and uncertainty. International Trade and Industry Minister Datuk Seri Mustapa Mohamed is projecting that the country’s services and manufacturing sectors, which pulled through a stormy 2016 to chart modest growth in investments and projects, could see up to a RM2bn to RM3bn decrease in overall investments this year. Total approved investments in Malaysia rose 11% to RM207.9bn in 2016 from RM186.7bn the year before. (StarBiz)
Malaysia: Overnight policy rate key unchanged at 3%. The Monetary Policy Committee (MPC) of Bank Negara Malaysia (BNM) has maintained the Overnight Policy Rate (OPR) at 3% which was in line with economists' expectations. BNM said at the current level of the OPR, the stance of monetary policy is “accommodative and supportive of economic activity”. BNM said the MPC will continue to assess the balance of risks surrounding the outlook for domestic growth and inflation. The ringgit along with other emerging market currencies, has continued to stabilise. (StarBiz)
Markets
TNB (Outperform, TP: RM16.16): Inks two solar power agreements. Tenaga Nasional (TNB) inked large-scale solar (LSS) photovoltaic power purchase agreements (PPAs) with two special-purpose companies (SPCs). It said the SPCs - UITM Solar Power SB and its own unit TNB Sepang Solar SB - were set up by companies that won in the Energy Commission’s competitive bidding exercise last year to develop transmission-connected LSS projects. UITM Solar Power is set up by Consortium UITM Property Management SB, BJ Power Co Ltd and Perwira Al-Syura Consulting Engineers SB. Each of the SPCs will design, construct, own, operate and maintain a solar photovoltaic energy generating facility with the approved capacity (50 Mwac) at its proposed location. (StarBiz)
AirAsia (Neutral, TP: RM2.50): To focus on growth, push down cost. AirAsia will continue focusing on growth, while bringing down cost, Group CEO Tan Sri Tony Fernandes said. He said the low cost carrier would also emphasise higher utilisation of its fleet. “Growth, growth, growth. That’s what we are focusing on in the Airasia group, and it will be profitable growth, as investment done. On top of growth we are pushing down costs, especially with our peers. Higher utilisation. New aircraft. More seats. Data and technology,” added Fernandes. (StarBiz)
Econpile: Sells land for RM5m to subsidiary. Econpile Holdings has disposed of a piece of freehold land for RM5m to streamline its subsidiaries’ principal activities and unlock the value of the property through future development. Econpile said the land sale by its whollyowned unit to another of its subsidiaries, Tropical Broadway SB, would see its value unlocked through development by the latter. (The Edge)
Inari Amertron: Aborts plan for JV to tap China market. Inari Amertron has decided to abort its plan for a JV with Taiwan-listed optoelectronics company, PCL Technologies Inc, to expand the business in China. The electronics manufacturing services company said after numerous discussions between it and PCL during the past months, both parties were not able to form the JV entity with a configuration that could satisfy the business strategies of both parties. “Thus Inari and PCL have decided jointly and mutually to terminate the MoU and hence negotiations with respect to the formation of the JVE have ceased,” it added. (StarBiz)
MyEG: 5-year concession for foreign workers valued over RM553m. My EG Services has confirmed the five-year concession with the Government to provide online renewal of temporary employment pass for foreign workers at RM553.85m. It said it had signed a concession agreement with the Government to provide the service from May 23, 2015 to May 22, 2020. MyEG said the concession was renewable upon expiry subject to the Government's approval. It expected the concession to contribute positively to the earnings and net assets per share of the company for the FYE June 30, 2017 onwards until the expiry of the project. (StarBiz)
Scan Associates: Investigative committee has unfinished business. The investigative committee formed by Scan Associates in Sept last year is still probing the preparation of the subsidiaries’ audited financial statements for FY15. It said that once the investigation had been completed, it would make an immediate announcement on the outcome. When the committee was first set up, Scan announced that it would investigate “the possible serious breach of duties of a director and the preparation of the company’s subsidiaries’ audited financial statements.” (StarBiz)
Market Update
The FBM KLCI might open lower today after US stocks eased back overnight, following their strong advance to record highs this week, although the dollar and “core” government bond yields marched ever higher as expectations for a Federal Reserve interest rate rise this month continued to build. Snap’s market debut attracted plenty of attention on Wall Street as the social media group’s shares opened at USD24, compared with its initial public offering price of USD17, and were last trading at USD25.74. But the strong start for Snap failed to deter participants from taking profits after Wednesday’s impressive global equity market performances.
On Wall Street, the Dow Jones Industrial Average fell 112.58 points, or 0.5%, to close at 21,002.97, the S&P 500 slid 14.04 points, or 0.6%, to end at 2,381.92 and the Nasdaq Composite Index lost 42.81 points, or 0.7%, to finish at 5,861.22. In Europe, the main indices ended mixed with Germany’s DAX 30 closed down 0.1% at 12,059.57, France’s CAC 40 edged up 0.1% to 4,963.80 and the UK’s FTSE 100 ended down less than 1 point at 7,382.35 after closing at a record high on Wednesday.
Back home, the FBM KLCI gained 17.98 points or 1.06% to 1,715.67 points at the closing bell. Trading volume increased to 3.1bn worth RM3.1bn.
In the region, the stocks ended mostly higher with Japan’s Nikkei rose 0.9%, Korea’s Kospi added 0.5% and Australia’s S&P/ASX 200 finished up 1.2%.
Meanwhile, the Hang Seng Index in Hong Kong turned lower and slipped 0.2% and mainland China’s Shanghai Composite down 0.5%.
Source: PublicInvest Research - 3 Mar 2017
http://klse.i3investor.com/blogs/PublicInvest/117475.jsp
