Economy

US: Homebuilder sentiment rebounds in Dec. Homebuilder sentiment in the US rebounded in Dec after falling for four consecutive months, according to a report released by the National Association of Home Builders. The report said the NAHB/Wells Fargo Housing Market Index climbed to 37 in Dec after falling to an eleven-month low of 34 in Nov. Economists had expected the index to rise to 36. "With mortgage rates down roughly 50 basis points over the past month, builders are reporting an uptick in traffic as some prospective buyers who previously felt priced out of the market are taking a second look," said NAHB Chairman Alicia Huey. (RTT)

US: Fed rate-cut pivot is welcome news for Biden, but carries pitfalls for Powell. Federal Reserve chair Jerome Powell’s pivot toward interest-rate cuts is spreading holiday cheer in the White House, where the improved prospects for an economic soft landing are a boon for President Joe Biden’s bid for another term. Biden has seen his poll numbers sag amid voter anxiety over a surge in the cost of living, and he would face a bigger headwind to winning another term in Nov if the US tumbled into a recession. As top aides continue to tout the strength of the economy — including low unemployment, easing price pressures and sturdy growth — falling rates would bolster his case to voters. But there are pitfalls for the US central bank. (Bloomberg)

EU: German business confidence unexpectedly deteriorates. Sentiment among German companies deteriorated at the end of the year, providing more evidence that the economy is mired in a recession, results of a key survey showed. The business climate index fell to 86.4 in Dec from a revised score of 87.2 in the previous month, survey results from the Munich-based ifo Institute revealed. The score was forecast to improve to 87.8. The ifo survey showed that companies were less satisfied with their current business and they were also more skeptical about the first half of 2024. At 88.5, the current situation index hit the lowest since Aug 2020. The reading was below Nov's 89.4 and also economists' forecast of 89.5. The expectations index declined to 84.3 from 85.1 a month ago, while it was forecast to rise to 85.8. (RTT)

EU: ECB’s Kazimir says premature easing riskier than staying tight for too long. Recent easing in inflation is not sufficient to declare victory and easing prematurely entails significantly more risks than keeping interest rates higher for too long, European Central Bank policymaker Peter Kazimir said. "The positive drop in inflation observed in the past few months, including Nov, isn't enough to declare victory and move to the next stage," Kazimir, who is the governor of the Slovak central bank, said in a comment published on his bank's website. "We are not out of the woods yet." The ECB expects inflation to reach its 2% target in 2025 and is confident that this can be achieved in a soft-landing scenario, Kazimir said. However, there are risks to this progress, the ratesetter warned. (RTT)

UK: Further evidence needed to conclude downward trend in wage growth. Further evidence is required to conclude that wage growth is cooling, and for the Bank of England to consider interest rate cuts, Deputy Governor Ben Broadbent said. There is a little more uncertainty than usual about the behavior of unemployment, Broadbent said in a speech at the London Business School. Official wage growth figures have been volatile and other indicators have exhibited slightly lower rates of growth through much of 2023, he noted. "It takes time to understand the forces driving the economy, particularly if one's having to rely on nominal variables like services inflation and wage growth, things that would normally be seen as late-cycle indicators," the banker said. (RTT)

China: Economic conditions to improve in 2024 — officials. China's economy is expected to see more favourable conditions, and more opportunities than challenges in 2024, state media said citing officials of the Chinese Communist Party's finance and economy office. Macroeconomic policies will continue to provide support for economic recovery, the official Xinhua said in a detailed readout of the annual Central Economic Work Conference held from Dec 11-12, during which top leaders set economic targets for the following year. "China's prices are low, central government debt levels are not high, and conditions are in place to strengthen implementation of monetary and fiscal policies," Xinhua said. (Reuters)

Singapore: Exports swing to growth for first time in 14 months. Singapore’s exports returned to growth for the first time in more than a year, although it was hardly a sign of recovery in external demand. Official data showed non-oil domestic exports grew 1% in Nov, slower than the median expectation for a 1.5% gain in a Bloomberg survey. The expansion was mainly because of a low base from year-ago period, according to Enterprise Singapore. Total trade increased in Nov, supported by growth in exports even as imports declined. Still, the data offered little reason for cheer about the prospect of durable trade recovery. Non-oil domestic exports to the top markets as a whole declined in Nov, dragged down by falling shipments to Taiwan, bulk of the EU and Indonesia. (Bloomberg)

Hong Kong: Luxury retailers adjusting to drop in highspending Chinese tourists. Hong Kong's luxury retailers are adapting to fewer wealthy Chinese shoppers visiting the city and a shift towards tourists flocking to Instagram-coveted spots in trendy districts rather than splashing out on pricey branded gear. Before the pandemic, the Chinese special administrative region had bucked global trends of declining demand for multi-brand department stores and ultra-luxury brands largely due to its attractiveness to high-spending mainland visitors. (Reuters)

Markets

APB Resources: Buys 10.4% stake in Globetronics for RM140m cash, to become its second-biggest shareholder. APB Resources is acquiring 70m shares in Globetronics Technology, representing a 10.4% stake in the Penang-based semiconductor manufacturer, for RM140m cash. The consideration of RM140m or RM2 per share is a 16% premium to Globetronics' closing share price of RM1.72. Upon the completion of the proposed acquisition, APB Resources will emerge as the secondlargest shareholder in Globetronics. (The Edge)

Apollo Food: Scoop Capital buys Apollo's controlling shareholder's stake with RM238m cash, triggers MGO. Keynote Capital SB, controlling shareholder of Apollo Food Holdings, is confirmed to be exiting the group after Scoop Capital SB the franchisee of Baskin-Robbins, proposed to acquire Keynote's entire 51.3% stake in the confectionery maker for RM238.1m in cash. Scoop Capital is purchasing the 41.1m Apollo shares from Keynote at RM5.80 per share, a 7.4% premium to the last closing price of RM5.40. (The Edge)

Majuperak: To sell land to state agriculture agency as part of business regularisation plan. Majuperak Holdings is disposing of 2.01 acres of land in Ipoh to a wholly-owned unit of the Perak State Agriculture Development Corporation (PPPNP) for RM18.4m as part of its business regularization plan. The disposal will enable the group to unlock the land's value, the group said in a bourse filing, adding that the proceeds will be used to settle debts and for day-to-day operations. (The Edge)

Sunway REIT: Acquires industrial property in Penang for RM66.8m. Sunway REIT’s trustee RHB Trustees has inked a conditional sale and purchase agreement with Best Corridor Venture SB to acquire an industrial property in Prai, Penang for RM66.8m. Sunway REIT said the property is located on land spanning 4.2 hectares with leasehold tenure expiring on Oct 22, 2052, and to be extended to 60 years after the completion of the proposed acquisition. It said the acquisition is projected to generate an initial net property income yield of approximately 7.6% based on the purchase consideration. (StarBiz)

Supermax: Announces new organisational structure, appoints new CEO Tan Chee Keong. Supermax Corporation, a leading global disposable glove producer, has appointed Tan Chee Keong or CK Tan as its senior executive director and CEO effective Jan 2, 2024. It said in a statement that a new organisational structure and appointments were made to further strengthen the management team to support the company’s expanded distribution and future manufacturing footprint in the US market as well as its commitment to delivering product excellence to global customers. Tan has been with Supermax Group since 2000. (The Malaysian Reserve)

UWC: 1Q net profit drops 85% on lower revenue. UWC’s net profit dropped 85.1% to RM4.4m in 1Q from RM29.3m a year earlier, due to lower revenue. Earnings per share fell to 0.4 sen from 2.66 sen. Quarterly revenue declined 51% to RM45.5mfrom RM92.1m, which the group blamed on the impact of macroeconomic headwinds especially the semiconductor market cyclical downturn. On a QoQ basis, the group’s net profit came in higher compared with RM1.94m in 4Q as revenue climbed 13.7% from RM40m. (The Edge)

MARKET UPDATE

US markets pushed higher overnight as the positive sentiment from last week spilled over into the final full trading week for the year. Communication services stocks were the biggest gainers on the day, helping the S&P 500 and Nasdaq Composite end 0.5% and 0.6% higher. The Dow Jones Industrial Average closed largely unchanged with a 0.86-pt gain. European markets ended mostly lower however as investors here took a breather to wait on further catalysts to drive gains. Two prominent European Central Bank voting members are due to deliver speeches this week. The Bank pushed back against market expectations of substantial rate cuts in 2024. Germany’s DAX and France’s CAC 40 fell 0.6% and 0.4%. UK’s FTSE 100 was 0.5% higher however. Asian markets were also mostly lower with the exception of South Korea (KOSPI: +0.1%) which bucked regional trends on gains in its defenserelated stocks. The Shanghai Composite and Hang Seng indices fell 0.4% and 1.0% as the Nikkei ended 0.6% lower.

Source: PublicInvest Research - 19 Dec 2023