Economy

US: NY Fed finds record wage expectations in July consumer survey. American workers’ expectations for pay surged in July, even as those same workers foresee a modestly less robust job market, said a survey released Monday by the Federal Reserve Bank of New York. Respondents told the bank that they’d expect an annual salary offer of USD67,416 upon being offered a job, a record reading in a survey that started in 2014, up from the USD60,310 reported a year ago. "The increase was broad-based across age, education, and income groups, but was most pronounced for respondents above age 45 and for college graduates," the report said. Meanwhile, respondents to the bank’s Survey of Consumer Expectations said that the lowest wage they’d accept to take a job also jumped, hitting a record USD78,645, from USD72,873 a year ago. (Reuters)

EU: Downturn in German housing construction worsens in July. The downturn in Germany's residential construction sector intensified in July, which showed a record number of companies complaining about dwindling orders in the sector. In July, the percentage age of companies suffering from a lack of orders grew to 40.3%, up from 34.5% in June and just 10.8% in July 2022. "A storm is brewing. Following many years of expansion, now higher interest rates and the drastic rise in construction costs are choking off new business," said Klaus Wohlrabe, Ifo's head of surveys. While the percentage age of construction companies complaining about cancelled orders eased somewhat in July to 18.9%, that was still well above the long-term average of 3.1%. (Reuters)

China: Sino-U.S. relations, trade cooperation face difficulties – Premier Li. Bilateral relations and economic and trade cooperation between China and the United States are facing difficulties, Chinese Premier Li Qiang told the chair of the U.S.-China Business Council heading a USCBC delegation on a visit to Beijing. Li's remarks came at a time of frosty ties between the world's two largest economies, and ahead of U.S. Commerce Secretary Gina Raimondo's expected visit to China in late August, which Bloomberg News reported on July 31. "At present, China-U.S. relations and economic and trade cooperation are facing some difficulties, which require both sides to show sincerity, move towards each other and make joint efforts," Li told USCBC chair Marc Casper. (Reuters)

China: Surprises with modest rate cut amid growing yuan risks. China cut its one-year benchmark lending rate on Monday as authorities seek to ramp up efforts to stimulate credit demand, but surprised markets by keeping the five-year rate unchanged amid broader concerns about a rapidly weakening currency.The recovery in the world's second-largest economy has lost steam due to a worsening property slump, weak consumer spending and tumbling credit growth, adding to the case for authorities to release more policy stimulus. The one-year loan prime rate (LPR) was lowered by 10 basis points to 3.45% from 3.55% previously, while the five-year LPR was left at 4.20%. In a Reuters poll of 35 market watchers, all participants predicted cuts to both rates. The 10 bp cut in the one year rate was smaller than the 15 bp cut expected by most poll respondents. (Reuters)

India: Cenbank nudges banks to settle UAE trades in rupee, dirham -sources. India’s central bank is nudging local banks to ask their clients to settle trade between the United Arab Emirates and India using the dirham (AED) or Indian rupee (INR) to reduce U.S.- dollar-based transactions, five sources told Reuters. The move is part of the Reserve Bank of India’s broader aim of promoting settlement in local currencies with countries with which India has a trade deficit, with the knock-on effect of boosting the rupee’s global reach, three banking sources said. India’s trade deficit with the UAE was USD21.62bn in 2022/23, or 8.2% of its total deficit, government data shows. In July, the two countries agreed to facilitate trade in rupees instead of dollars. The idea, a government source said, was to reduce the outflow of dollars on account of this trade deficit. (Reuters)

Australia: Slower growth ahead as population ages. Australia's economy is projected to grow more slowly over the next 40 years as an aging population and slower population growth shrink the workforce, according to long-range economic forecasts set to be published by the government on Thursday. Real gross domestic product (GDP) is forecast to grow 2.2% annually over the 40 years to fiscal 2063, a full 0.9%age point slower than the previous four decades, according to excerpts of the "Intergenerational Report 2023" seen by Reuters before its release on Thursday. The economy is expected to be around 2.5 times larger in real terms 40 years hence. (Reuters)

Thai: GDP growth decelerates in Q2. Thailand's economic growth weakened unexpectedly on subdued investment and foreign demand, official data showed on Monday. Gross domestic product grew 1.8% annually after rising 2.6% in the first quarter. The pace of growth was forecast to improve to 3.1%. On a quarterly basis, economic growth eased sharply to 0.2% from 1.7% a quarter ago. Consequently, the government downgraded its full year growth outlook to 2.5-3.0% from 2.7-3.7%. On the expenditure-side, household spending growth accelerated to 7.8% from 5.8% a quarter ago. The annual expansion was driven by tourism activities. The rise in tourist arrivals and low level of unemployment boosted household income. Meanwhile, as a result of high level of healthcare spending in 2022, government expenditure slid 4.3% after a 6.3% decline. Further, gross fixed capital formation rose at a slower pace of 0.4%, following a 3.1% rise a quarter ago. Total export growth decelerated as the result of a 5.7% fall in merchandised exports. Service receipts increased notably due to growing number of foreign tourists. At the same time, imports of goods and services slid 2.4%. (RTT)

Markets

YTL Power: Confirms it is jointly developing waste-to-energy plant in Rawang . YTL Power International has confirmed a report in The Edge Malaysia weekly that the company is partnering with KDEB Waste Management SB to set up a RM4.5bn waste-to energy (WTE) plant in Rawang, Selangor. Based on preliminary documents sighted by the weekly, The Edge Malaysia reported in its latest issue that the plant — the Sultan Idris Shah Green Energy Plant — is slated to be built on a 245-acre site in Rawang, and will utilise municipal waste from Petaling Jaya, Hulu Selangor, Shah Alam, Subang Jaya, Ampang Jaya and Selayang, and generate 58 megawatts of electricity. (The Edge)

Fajarbaru: Inks JV for development of Sungai Gadut project . Fajarbaru Builder Group has entered into a JV with Care Dynamic SB to undertake the development of an industrial city park for 672 units of centralised labour quarters in Sungai Gadut, Seremban. The JV company, named Fajarbaru Dynamic Development SB, will be 60% owned by Fajarbaru Land with the remaining 40% stake held by Care Dynamic. According to Fajarbaru the project on the plot of land measuring 10.9 acres, has an estimated gross development value of RM172.4m. The construction of the project is expected to take 36 months (StarBiz)

Boustead Heavy Industries Corporation: Unit disposes of 20.77% stake in Boustead Naval Shipyard for RM1 . Boustead Heavy Industries Corporation (BHIC) is selling the group’s entire 20.8% stake in loss-making Boustead Naval Shipyard SB (BNS) to Ocean Sunshine, an indirect unit of Minister of Finance (Inc), for RM1.The disposal of the 27m shares, held by BHIC’s indirect wholly-owned subsidiary Perstim Industries SBh is to facilitate the government’s decision to acquire 100% of BNS shares in order to ensure the completion of the littoral combat ship (LCS) project, the defence contractor said in a filing with Bursa Malaysia today. (StarBiz)

DXN: Business to sustain via robust markets, new product launches . DXN Holdings will continue to be sustainable, supported by its robust existing and new overseas markets, new product launches, namely ready-to-eat meals, as well as the expansion of its range of cosmetic products. Executive chairman and founder Datuk Lim Siow Jin said as a multi-level marketing company, sales of its products through direct selling had been encouraging, including in new markets such as Brazil, North Africa, Central Asia and China. (StarBiz)

Aneka Jaringan: Wins RM35m contract. Aneka Jaringan Holdings has secured a RM35m contract from Sena Letrik (M) SB. Aneka said the contract is for piling, earthworks and substructure works for a proposed 31-storey medical centre at Desa Sri Hartamas in Kuala Lumpur. The commencement date of the contract is Sept 1, 2023 and shall be completed on Jan 31, 2025. (StarBiz)

Joe Holding: Plans 10-to-1 share consolidation . Joe Holding is planning to consolidate every 10 existing shares held by its shareholders into one share on an entitlement date to be determined later. The group, formerly known as GPA Holdings, said the proposed share consolidation would lead to a reduction in the number of its shares available in the market and may reduce the magnitude of fluctuation of the share price. (The Edge)

Market Update

The FBM KLCI might open higher today after the benchmark S&P 500 closed 0.7 % higher following a sharp sell-off last week. The tech-heavy Nasdaq Composite gained 1.5 %. Shares in Nvidia, the high-flying chipmaker that is up more than 200 % year-to-date, rose 8.5 % ahead of its earnings report later this week. The sell-off in US government debt continued to hit the world’s largest bond market on Monday, with yields on benchmark Treasuries hitting new 16-year highs as investors come to grips with an economy that refuses to slow. The yield on the 10-year note rose as much as 0.1 percentage points to 4.35 %, surpassing a previous high in October and sending it to the highest level since November 2007. European equities made cautious gains on Monday, with the region-wide Stoxx 600 rising less than 0.1%. France’s Cac 40 gained 0.5% and Germany’s Dax advanced 0.2%. Energy stocks led gainers in Europe, after crude oil prices strengthened as Opec+ data signalled that global supply was beginning to tighten since Saudi Arabia and Russia lowered exports.

Back home, the FBM KLCI ended slightly higher on Monday with buying mainly in commodity- and energy-related stocks. At the closing, the key index rose 4.48 points to 1,450.57 from 1,446.09 at Friday's close, after opening 0.6 of a point better at 1,446.69. The outlook for the Chinese economy was dealt another blow on Monday after the latest policy decision by the country’s central bank undershot market expectations. The People’s Bank of China lowered its one-year loan prime rate, a reference for bank lending, by 10 basis points to 3.45 % but opted to keep the equivalent five year rate steady at 4.2 %. The move was the latest in a number of policy decisions that have fallen short of expectations, as economists polled by Bloomberg had unanimously projected 0.15 percentage cuts to the one-year and five-year rates. China’s benchmark CSI 300 dropped 1.4%, reaching its lowest level since November, while Hong Kong’s Hang Seng was down 1.8%.

Source: PublicInvest Research - 22 Aug 2023