Economy

US: Producer prices unexpectedly fall; goods deflation seen persisting. US producer prices unexpectedly fell in Dec amid declining costs for goods such as diesel fuel and food, suggesting inflation would continue to subside and allow the Fed to start cutting interest rates this year. The report from the Labor Department, which also showed prices for services were unchanged for the third straight month, implied that a pick-up in consumer prices last month was likely a blip. (Reuters)

EU: France household consumption rebounds 0.7%. France's household spending rose unexpectedly in Nov amid more energy consumption and engineered goods purchases, data published by the statistical office INSEE showed. Household consumption grew 0.7% MoM in Nov, in contrast to a 0.9% decrease in Oct. Meanwhile, economists had expected a 0.1% slight fall. The increase was primarily due to the 1.4% strong rebound in energy consumption after a 3.0% decline in the prior month. (RTT)

EU: Rate cuts not a near-term topic. Recent inflation data broadly confirmed current thinking at the ECB, meaning interest rate cuts are not a near-term topic of debate. Euro zone inflation jumped as expected last month, rising to 2.9% from 2.4% in Nov and supporting the ECB's case to keep interest rates at record highs for the time being. The ECB sees inflation oscillating in the 2.5% to 3% range for much of this year and policymakers have said any talk of a rate cut before crucial first-quarter wage data due in May would be premature. (Reuters)

UK: Economy returns to growth on services and production. The UK economy recovered as expected in Nov supported by services and production, but the growth was not sufficient to soothe recession fears as even a slight downturn in Dec will result in two consecutive quarters of contraction. Real GDP expanded 0.3% in Nov, offsetting the 0.3% decrease in Oct. In Nov, services output was the largest contributor to the growth, expanding 0.4% after posting a revised 0.1% fall in Oct. (RTT)

China: Deflation persists; exports rise. Consumer prices in China fell for the third straight month in Dec highlighting the risk of deflation, while exports expanded more than expected despite the weak global trade. CPI dropped 0.3% annually after a 0.5% decline in Nov. This was the third consecutive fall. Separate data showed that producer prices continued to decline in Dec. Producer prices decreased 2.7% from the previous year, following a 3.0% decrease in Nov. (RTT)

India: Industrial production growth decelerates. India's industrial production growth weakened more than expected in Nov, data from the Ministry of Statistics and Programme Implementation revealed. Industrial output registered an annual increase of 2.4% after posting a double-digit revised expansion of 11.6% in Oct.. (RTT)

Markets

IJM Corporation (Outperform, TP: RM2.46): Takes 25% interest in Shah Alam International Logistics Hub (SALIH), buys 11- acre property site in England. The first phase of SALIH is set for completion in 2025, it will offer 2.8m sqft of space. Separately, IJM bought an 11-acre brownfield site, known as The Wheat Quarter (North Site for redevelopment. (BTimes)

Comments: The 25% stake acquisition in SALIH amounted to c. RM89m would channel <1% incremental earnings to the Group’s bottomline from FY26 onwards (upon Phase 1 completion) assuming a high single digit net margins, 100% utilisation and rental rate of RM2psf. On the Wheat Quarter site, IJM is still in the midst of submitting development approvals. From our channel checks, the site is worth c. GBP300m (RM1.8bn) in GDV. All told, we gathered that there is no immediate impact seen to the Group’s earnings from these acquisitions and pending more clarity from the Management hence, we maintain our forecasts and TP of RM2.46. Our Outperform call on IJM is affirmed.

Eonmetall: To dispose of industrial land. Eonmetall Group wholly-owned subsidiary, Eonmetall Land SB, has received a notice from the district and land office of Klang invoking compulsory acquisition of about 8,996sqm of land for RM30.41m. The affected land forms part of a larger 2.88m sqft tract of industrial land in Kapar, Klang which is currently vacant and held for development. (StarBiz)

Scomi: Announces PN17 exit plan with Dhaya Maju founder's entry as major shareholder, to undertake Klang Valley doubletrack project sub-contract. PN17 company Scomi Energy Services said it is not proceeding with a plan to acquire the assets of a marine vessel operator, and instead announced new proposals to regularise its financial condition which includes a diversification into the construction business and the entry of a new major shareholder. (The Edge)

Bintai Kinden: Hit with lawsuit by Dynamic Prestige over repayment of 'friendly loans'. Mechanical and electrical engineering services specialist Bintai Kinden Corp and its whollyowned subsidiary Kejuruteraan Bintai Kindenko SB (KBK) have been hit with a lawsuit by Dynamic Prestige Consultancy SB (DPCSB), which is seeking a refund of RM16.23m, plus 5% interest on the sum, from Bintai Kinden and KBK. (The Edge)

Tuju Setia: Bags RM209m contract to build apartments. Tuju Setia Bhd has bagged a RM209m contract from Avaland (previously known as MCT) for the construction of two blocks of service apartments in USJ 25, Subang Jaya. The construction group expects the contract to contribute positively to its earnings and net assets for the financial year ending Dec 31, 2024 until the completion of the contract. (The Edge)

Siab: Secures RM94m job to build food processing factory in Seremban. Building construction services provider Siab Holdings has secured a contract to build a food processing factory in Seremban, Negeri Sembilan, worth RM94.28m. The group’s wholly owned Siab (M) Sdn Bhd had accepted a letter of award awarded by Mahsuri Food SB to build a four-storey factory block, one fermentation area, and one soy silage building unit with utility facilities. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today after US stocks closed barely changed yesterday, after wavering between modest gains and losses, as mixed bank earnings offset cooler-than-expected inflation news that buoyed hopes for interest-rate cuts from the Federal Reserve. The Dow Jones Industrial Average fell 118.04 points, or 0.31%, to 37,592.98. The S&P 500 gained 3.59 points, or 0.08%, at 4,783.83 and the Nasdaq Composite rose 2.58 points, or 0.02%, to 14,972.76. For the week, the Dow gained 0.34%, the S&P 500 rose 1.84% and the Nasdaq climbed 3.09%. The gains for the S&P were the biggest weekly percentage rise since midDecember and for the Nasdaq, the largest since early November. European shares ended higher on Friday as bond yields fell after soft U.S. data spurred hopes of early interest rate cuts from the Federal Reserve and other major central banks, while Airbus shares shone after it reported record annual jet orders. The panEuropean STOXX 600 index ended 0.8% higher, snapping a threeday losing streak and logging its best single-day performance so far this year, though ending flat on the week.

Back home, Bursa Malaysia closed the week on a positive note, as the key index settled at its intraday high on Friday, despite a weaker performance in most regional markets, with buying mainly focused on utilities as well as financial services stocks. At the closing bell on Friday, the FBM KLCI had risen 4.34 points to 1,487.34, from Thursday's close at 1,483.00. Stocks in the Asia-Pacific region mostly climbed Friday with the Japanese market showing a fifth day of increases. The Hang Seng Index of Hong Kong companies declined 0.4% to 16,244.58, while the NIKKEI 225 Index of Japanese companies added 1.5% to 35,577.11.

Source: PublicInvest Research - 15 Jan 2024