Economy

US: Fed's Yellen sees stronger case for interest rate hike. The Federal Reserve is getting closer to raising interest rates again, the head of the US central bank and other policymakers said in comments that left the door open for a hike as early as next month. Fed Chair Janet Yellen said that the case for a rate increase had grown stronger, while Fed Vice Chair Stanley Fischer suggested a move could come at the central bank's Sept policy meeting if the economy was doing well. (Reuters)

US: As Fed nears rate hikes, policymakers plan for 'brave new world'. Federal Reserve policymakers are signaling they could raise US interest rates soon but they are already weighing new tools they may need to fight the next recession. Fed officials also said they need to consider new policy tools for use down the road, such as raising the inflation target or even Fed purchases of non-government-backed assets like corporate debt. (Reuters)

US: Declining inventories curb 2Q growth, consumption surges. US economic growth was a bit more sluggish than initially thought in the 2Q, as businesses aggressively ran down stocks of unsold goods, offsetting a spurt in consumer spending. GDP expanded at a 1.1% annual rate, the Commerce Department said. Business inventories fell USD12.4bn in the 2Q, the first drop since the 3Q of 201. Consumer spending was revised up to show it increased at a 4.4% rate, the fastest since the 4Q2014. (Financial Daily)

EU: Greece PM says EU sleepwalking toward cliff, wants debt relief by end 2016. Greece said the EU was "sleepwalking towards a cliff" by sticking to austerity rules that created huge inequalities among members, and it expected a debt relief deal for itself to be honored by end-2016 so that its economy could recover. (Reuters)

China: July industrial profits rise, buoyed by increased sales, falling costs. Profits earned by China's industrial firms grew at their fastest pace in four months in July, aided by a pick-up in sales and reduced costs, the statistics bureau said. Profits in July rose 11.0% to CNY523.0bn, the fastest growth rate since March. (Reuters)

Japan: Pledges USD30bn for Africa over next three years. Japanese Prime Minister Shinzo Abe said that his country will commit USD30bn in public and private support for infrastructure development, education and healthcare expansion in the African continent. Abe said the package would be spread over three years from this year and include USD10bn for infrastructure projects, to be executed through cooperation with the African Development Bank. (Reuters)

Markets

AirAsia (Neutral, TP: RM1.26): Monetisation plan. The board of AirAsia is expected to decide on the sale of a stake in its leasing unit this week. And if the board agrees to the proposed sale of the stake, it would mark the start of AirAsia’s quest to monetise its ancillary businesses related to its core airline business. (StarBiz)

Selangor Dredging: To launch property projects worth RM1bn in GDV. Selangor Dredging will launch three development projects with a total GDV of RM1bn within one year till Aug 2017. MD Teh Lip Kim said the projects were two serviced apartments, one each at its SQWHERE mixed development site in Sungai Buloh and in Jalan Peel, Kuala Lumpur, and an apartment project in Taman Melawati, Selangor. (StarBiz)

AWC: RM130m BTS maintenance contract deferred. AWC announced that the commencement date for the RM130m maintenance work contract for the Integrated Transport Terminal in Bandar Tasik Selatan has been deferred. It said the Federal Government had informed the company that the new commencement is now pending the resolution of certain operational and technical matters between the government and the existing TBS contractor. AWC said the letter did not state the new commencement date for the subcontract. (Financial Daily)

Ivory Properties: Reclamation works for WorldCity project delayed to next year. The commencement of land reclamation works for the RM10bn Penang WorldCity project in Bayan Mutiara is expected to begin only in the middle of next year. The project is undertaken by Tropicana Ivory SB, a 55:45 JV between Tropicana Corp and Ivory Properties Group. Tropicana Ivory, according to a news report last year, had hoped to begin the reclamation works in the 2Q of 2016. Ivory Properties CEO Goh Chin Heng, however, said there is a delay due to some technical issues, which have now been more or less settled. (Financial Daily)

Scomi Engineering: Succeeds in striking out winding-up petition over RM1m debt. Scomi Engineering said a winding-up petition served on its major subsidiary, Scomi Rail, over a RM1m claim, has been struck out. It said Scomi Rail succeeded in striking out the petition dated July 4, served by PSI Incontrol SB at the High Court. The petition was over a disputed sum of about RM1m, allegedly owed to PSI in respect of supply contracts entered between Scomi Rail and PSI in Sept 2012. (Financial Daily)

Titijaya Land: To raise RM101.48m via rights issue. Titijaya Land plans to raise up to RM101.5m to fund its existing property development projects via a three-for-two renounceable rights issue. Titijaya said it is proposing to undertake a renounceable rights issue of up to 615m new irredeemable convertible preference shares (ICPS) at an issue price to be determined later. (Financial Daily)

Pos Malaysia: Courier segment boosts 1Q earnings by 40%. Pos Malaysia saw its net profit for the 1QFY17 jump 40% to RM31.8m, from RM22.7m a year earlier, driven by income from its courier segment, boosted by e-commerce and online businesses. Quarterly revenue was up 6.5% to RM415.9m, from RM390.4m previously, also driven by its courier segment. No interim dividend was declared for the quarter. (Financial Daily)

MARKET UPDATE

The FBM KLCI might struggle for direction today as US and European markets had an extremely volatile time last Friday as investors attempted to get to digest the speech from Janet Yellen, chair of the Federal Reserve, while dealing with a backdrop of seasonally thin trading conditions. Fed Chair Yellen delivered a broadly upbeat assessment of the US economy and acknowledged that “the case for an increase in the federal funds rate has strengthened” — but offered little in the way of clarity on when such a move might occur. Any rate rise would remain data-dependent, she added but recent hawkish comments from Fed officials had fuelled expectations in some quarters that a rise in official interest rates could come as early as next month.

On Wall Street, the stocks fell after the Fed’s speech. The Dow Jones Industrial Average lost 53.01 points, or 0.3%, to 18,395.40 after earlier rising as much as 124 points. Meanwhile, the S&P 500 fell 3.43 points, or 0.2%, to 2,169.04 and the Nasdaq Composite added 6.71 points, or 0.1%, to 5,218.92. Across the Atlantic, most indices ended higher with Germany’s DAX 30 added 0.6% at 10,587.77, France’s CAC 40 rose 0.8% at 4,441.87 and London’s FTSE 100 closed up 0.3% at 6,838.05.

Back home, the FBM KLCI index gained 2.79 points or 0.17% to 1,683.09 on Friday with trading volume decreased to 1.49bn shares valued at RM1.40bn. Market breadth was positive with 441 gainers as compared to 360 losers. In the region, the Nikkei 225 fell 1.2%, for a five-day decline of 1.1%, as consumer price data showed Japan sinking further into deflationary territory. Elsewhere, the Shanghai Composite Index was up marginally by 0.06%, Hong Kong’s Hang Seng Index added 0.41%, South Korean Kospi lost 0.27% and Australia’s S&P/ASX 200 gave away 0.48%. 4

Source: PublicInvest Research - 29 Aug 2016