Economy

US: New York Fed sees trouble in auto borrowing as overall debt level rises. Overall borrowing levels in the U.S. rose modestly during the final three months of last year as more types of borrowing ran into trouble, especially on the auto front. Total household debt climbed by USD212bn in the fourth quarter of 2023 to USD17.5tr, the New York Federal Reserve said in its latest quarterly Household Debt and Credit Report. Some of those issues manifested in delinquency transition rates for all types of debt except student loans, which increased at the close of 2023, with 8.5% of credit card loans and 7.7% of auto loans running into trouble. (Reuters)

EU: ECB's Vujcic urges rate cut patience, sees 'equilibrium' higher than in past. The ECB doesn't need to rush cutting interest rates, policymaker Boris Vujcic told Reuters, arguing it will be better for its credibility to be sure that inflation is decisively under control. He also said there could be pauses along the way and that the socalled "equilibrium" rate was probably higher now in Europe than it used to be. What we've seen in terms of the disinflation so far was good, but we still see also quite a lot of resilience in the services and what we call domestic inflation," he added, also highlighting the ongoing strength of Europe's jobs market. (Reuters)

EU: German industrial orders post surprise rise in Dec. German industrial orders unexpectedly jumped in Dec, posting their highest month-on-month increase in more than three years, driven by "an exceptionally" high number of aircraft orders, the federal statistics office said. Orders rose by 8.9% on the previous month on a seasonally and calendar adjusted basis, the largest increase since June 2020. A Reuters poll of analysts had expected industrial orders to remain flat. Plane orders boosted the "other vehicle construction" category, which includes aircraft, ships and trains and saw an increase in orders of 110.9% on the month. (Reuters)

UK: BoE's Dhingra sees little credibility risk from early rate cut. BoE policymaker Swati Dhingra said she thought there was little risk to the central bank's credibility if it were to cut interest rates too early and then need to raise them a short time later. "There might be some kind of financial market psychology, but I still think that if you do the right policy and if you even deviate for the right reasons, people understand. So I'm not that worried about it," she said. Dhingra, the sole member of the BoE's Monetary Policy Committee to vote for a rate cut this month, said she saw a greater risk from economic weakness ahead caused by unnecessarily high interest rates. (Reuters)

China: Regulator announces more curbs on short-selling. China's securities regulator said on Tuesday it would suspend brokerages from borrowing shares for lending and cap the size of the so-called securities re-lending business, as part of further efforts to curb short-selling. The watchdog will also ban securities lending to investors who sell stocks on the same day of purchase, and vowed to crack down on illegal arbitrage using short-selling. (Reuters)

Japan: Dec real wages, household spending fall again. Japan's real wages fell for a 21st straight month though at a slower pace, while household spending dropped for a tenth consecutive month, showing that inflation outpaced wage recovery and continued to weigh on consumer spending. Prime Minister Fumio Kishida has repeatedly called for business leaders to increase wages at spring labour negotiations to a level higher than last year's to beat inflation. Japan needs price increases to be propelled by demand and higher pay, instead of the cost-push inflation led by energy prices and a weak yen. (Reuters)

India: Expects USD1.8bn in dividends from state-run banks in 2024/25. Rising profits at India's state-run banks could produce nearly USD2bn in dividends for the government in the next fiscal year starting in April, a solid jump from this year, a top finance ministry official said. Since taking charge in 2014, Prime Minister Narendra Modi has taken steps to strengthen state banks including merging weaker banks with stronger ones and a bankruptcy law to recover money from defaulters, while channeling more than IDR3.3tr (USD39.7bn) to recapitalise stressed banks. (Reuters)

Australia: RBA holds rates as inflation cools, warns hike still an option. Australia's central bank held interest rates steady but cautioned that a further increase could not be ruled out given inflation was still too high, a strong signal that it isn't in a hurry to start easing policy anytime soon. The relatively hawkish tone of the central bank's statement boosted the AUD and saw futures push out the likely timing of a first easing to Sep from Aug. Wrapping up its first policy meeting of the year, the RBA kept rates at a 12-year high of 4.35%, but left the door open to another rise if needed. (Reuters)

Markets

Eco World International: Plans further RM500m capital repayment after RM1.5bn last year. Eco World International plans to reduce its share capital by a further RM500m to pay a targeted 21 sen per share in dividends or RM504m in total payout over the next two years, after setting aside funds for working capital and funding requirements. The group intends to declare a first tranche of dividends amounting to at least RM144m or six sen per share. The capital reduction is expected to be completed by the first half of 2024. (The Edge)

NPC Resources: To sell 7,505 acres of oil palm land in Sabah for RM165m. NPC Resources has proposed to divest 7,505 acres (3,037 ha) of oil palm land in the state, held through three subsidiaries, for RM165.1m. The group plans to sell the land located in the Labuk-Sugut district to Tamaco Plantation SB, a private company based in Lahad Datu. NPC did not disclose how it is going to utilise the proceeds, the rationale behind the divestment, or the shareholders of Tamaco. (The Edge)

REDtone: Bags MyGovUC 3.0 contract worth RM398.1m. Redtone Digital has been awarded a MyGovUC 3.0 contract valued at RM398.1m for the provision of communications to the Malaysian Administrative Modernisation and Management Planning Unit (Mampu). The contract commenced on Feb 1, 2024, for a period of 60 months. (StarBiz)

Cloudpoint: Eyes becoming data centre solutions provider via stake buy in two data centre specialists. Cloudpoint Technology is acquiring a 75% equity interest each in Unique Central SB (UCSB) and Uniqcen Sales & Services SB (USSSB) for a total of RM26.8m cash. UCSB is principally engaged in supplying, delivering and installation of data centres, data cabling, fibre optic works, as well as mechanical and electrical services, while USSSB is an electrical contractor. (The Edge)

Advancecon: Bags RM27m earthworks contract for Rawang project. Advancecon Holdings has bagged a RM27.3m contract from Mujur Minat SB to carry out site clearing and earthworks construction (stage 1) for the Gamuda Gardens Park mixed development project in Rawang, Selangor. The contract shall commence from Feb 7, 2024 to Dec 16, 2024. (The Edge)

Reneuco: Shares to be suspended if it fails to submit annual report by Feb 8. Bursa Malaysia has warned Reneuco that its shares will be suspended if it fails to submit its annual report for the financial year ended Sept 30, 2023, by Feb 8. It had already failed to submit the annual report by Jan 31, which was the last date of submission under the listing rules. Following that, the renewable energy specialist was given another five market days to submit the report or risk being suspended. (The Edge)

Excel Force: To acquire XR content publisher for RM18.15m. Excel Force MSC is acquiring the entire 100% equity interest in investment holding firm Orca Capital Holdings Limited (OCHL) from Honest Winner Limited for RM18.15m via a combination of shares and cash. The group said OCHL, which is incorporated in the British Virgin Islands, has a 20% stake in China-based Shahe Technology (Beijing) Co Ltd (Sandman Studios), which is involved in extended reality content production, proprietary technology development and XR content publishing. (StarBiz)

MARKET UPDATE

US markets ended marginally higher overnight as investors pored over the latest batch of corporate earnings while also contemplating on the timeline for rate cuts. Recent remarks from Federal Reserve Chair Jerome Powell dashed hopes for a March cut while also indicating that cuts may come much later than previously anticipated, contrary to market expectations. Oil prices inched higher as US domestic production is expected to plateau this year after setting a record in 2023. On the day, the Dow Jones Industrial Average and S&P 500 gained 0.4% and 0.2% as the Nasdaq Composite inched 0.1% higher. European markets were broadly higher as investor confidence remained high despite the lack of a clear timeline for interest rate cuts. UK’s FTSE 100 led gainers amongst major markets with a 0.9% rise. Germany’s DAX and France’s CAC 40 were a step behind with gains of 0.8% and 0.7% respectively. Shares of BP finished the session 5.7% higher after announcing plans to boost shareholder returns, even as it reported a sharp drop in full-year profits aligned with lower oil prices. Most Asian markets were higher, with shares in China and Hong Kong jumping noticeably as authorities there took measures to arrest a recent sell-off in its markets. China’s securities and regulatory commission is reported to have said in a statement that it would guide institutional investors to enter the market with greater efforts. The Hang Seng and Shanghai Composite indices surged 4.0% and 3.2%. Japan’s Nikkei 225 fell 0.5% however.

Source: PublicInvest Research - 7 Feb 2024