HEADLINES

Economy

US: Strong retail sales boost first-quarter growth estimates. US retail sales increased more than expected in March amid a surge in receipts at online retailers, further evidence that the economy ended the first quarter on solid ground. Retail sales rose 0.7% last month, the Commerce Department's Census Bureau said. Data for Feb was revised higher to show sales rebounding 0.9%, which was the largest gain in just over a year, instead of the previously reported 0.6%. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, would rise 0.3%. Sales jumped 4.0% on a YoY basis in March. (Reuters)

EU: Germany's debt brake serves as inflation brake. A moderate restrictive fiscal policy required to conform with Germany's debt brake is taking inflation in the right direction, Finance Minister Christian Lindner said. "The debt brake is an inflation brake," Lindner said at an event to commemorate the 15th anniversary of the constitutional limit on public deficits, which is set at 0.35% of gross domestic product. Inflation in Europe's largest economy slackened to 2.3% helped by lower food and energy prices, final data showed on Friday. This is its lowest level since June 2021. Lindner said the current government would invest EUR 58bn (USD 61.84bn) this year, considerably more than the EUR 38bn spent in 2019, when interest rates and the economic environment were more favourable. (Reuters)

China: Q1 GDP growth likely to slow, more stimulus on the cards. China's economy is expected to have slowed in the first quarter as a protracted property downturn and weak private-sector confidence weigh on demand, maintaining pressures on policymakers to unveil more stimulus measures. Data forecast to show GDP grew 4.6% in Jan-March from a year earlier, slowing from 5.2% in the previous three months and hitting the weakest since the first quarter of 2023, according to a Reuters poll. The government has set a target of around 5% for this year, which has been described by most analysts as ambitious, partly because last year's growth rate of 5.2% was likely flattered by a comparison with a COVID-hit 2022. (Reuters)

China: China central bank keeps policy rate unchanged, drains cash from banking system. China's central bank left a key policy interest rate unchanged as widely expected when rolling over maturing medium-term loans, and drained some cash from the banking system through the bond instrument. Keeping the mediumterm lending facility (MLF) rate steady underscores the central bank's intention to maintain currency stability amid a shaky economic recovery and push back on market expectations around the timing of a first US Federal Reserve interest rate cut this year. Cooling inflation, slowing credit expansion and shrinking exports in March all pointed to the need for more stimulus to revive momentum, analysts said. But a weakening yuan on the back of a resurgent US dollar and yield differentials with other major economies constrained authorities' monetary-easing efforts. In addition, the MLF rate serves as a guide to loan prime rates (LPRs) and markets mostly use the MLF rate as a precursor to change in lending benchmarks. (Reuters)

Japan: BOJ's new policy approach takes shine off its inflation forecasts. The BOJ is shifting to a more discretionary approach in setting policy, with less emphasis on inflation, sources said, as the central bank maps its monetary path following the historic decision to end a radical stimulus programme in March. With monetary settings seen on hold, market players are focusing on the BOJ's fresh quarterly growth and price projections due at its April 25-26 policy meeting, for hints on how soon it may hike rates again. While the central bank is expected to project inflation to stay around its 2% target through early 2027, such forecasts alone won't serve as strong hints of a near-term rate hike, say three sources familiar with its thinking. (Reuters)

Japan: Machinery orders rise sharply, may ease concerns about domestic demand. Japan's key gauge of capital spending jumped the most in a year in Feb, rebounding sharply from the prior month's decline in a welcome sign for domestic demand even as authorities worry about a weakening yen and its impact on the cost of living. Core machinery orders rose 7.7% in February from the previous month, blowing past a 0.8% increase expected by economists in a Reuters poll, Cabinet Office data showed. It was the fastest growth in core orders since January 2023 and more than recouped a 1.7% fall in the previous month. (Reuters)

India: wholesale prices rise at fastest pace in three months. India's wholesale price-based inflation opens new tab in March rose 0.53%, its highest level in three months, mainly driven by food and primary articles, government data showed. That slightly outpaced the 0.51% rise expected by economists polled by Reuters and increased from a 0.20% YoY rise in Feb. Food prices rose 4.65% year on year compared with an increase of 4.09% in Feb, while prices of primary articles were up 4.51% against a 4.49% rise in the previous month. Manufactured product prices fell 0.85% against a 1.27% drop in the previous month. Fuel and power prices fell 0.77% compared with a 1.59% drop in Feb. For the fiscal year ended March 31 the wholesale inflation index fell 0.70% versus a 9.41% rise the previous year. (Reuters)

Markets

Capital A: No share placement plan, just its aviation division exploring a fundraising exercise. Capital A announced that its management "is in the midst of exploring a potential fundraising exercise by its aviation business", but has no intention to undertake a private placement of new Capital A shares. "Shareholders are advised not to speculate in the trading of shares in the company," the company told Bursa Malaysia in its response to The Edge's article entitled 'Capital A seeks private placement to raise up to USD400m, says source', in the latest edition of the Malaysian business weekly. (The Edge)

HeiTech Padu: Wins RM190m ICT job from JPJ. Heitech Padu has accepted a letter of award for a project worth RM190.0m from the Road Transport Department (JPJ). The company said the tender is for the maintenance and technical support services for the information and communications technology infrastructure and MySIKAP system in all JPJ offices. The contract is for a period of 36 months commencing from May 1, 2024 to April 30, 2027. (Bernama)

Master Tec: Expects higher revenue growth amid copper price rally. Master Tec Group expects higher revenue growth and a demand shift towards aluminium in conductors, amid the recent surge in copper prices. Its chief executive officer Tee Kok Hwa said production cost for copper conductors has increased by around 5% and the company is passing on the higher cost to its customers. Master Tec has also observed the rising trend among customers preferring aluminium conductors. With the renewed surge in copper prices, the use of aluminium may expand to other applications, such as power cables for infrastructure, he said. (The Edge)

EP Manufacturing: Inks deal with China's BAIC for vehicle assembly in Malaysia. EP Manufacturing Bhd (EPMB) has teamed up with China-based BAIC Motor Corporation Ltd to assemble and manufacture BAIC's authorised model vehicles in Malaysia. Under the 10-year agreement, PJVM's responsibilities include assembling and manufacturing the vehicles in Malaysia, ensuring that the assembly plant has a capacity of at least 5,000 vehicles per year by Sept 1, and at least 10,000 vehicles per year by March 1 next year. (The Edge)

G Capital: Partners with Hong Kong’s CCIAM Logistic to raise RM325m for hydropower projects. G Capital has partnered with Hong Kong-based CCIAM Logistic Company Limited to raise RM325m for its small hydropower projects in Pahang. It said a fullterm agreement is expected within 60 days from the effective date of the MOU, which will include the roles of the parties in the project and a success fee payable to CCIAM Logistic as capital-raising lead arranger. CCIAM Logistic is fully owned by CCIAM Future Energy Limited, a public-listed company on the Hong Kong Stock Exchange primarily involved in the provision of energy-saving solutions and loan financing business. (The Edge)

Kitacon: Bags RM135m contract. Kumpulan Kitacon has bagged a RM134.8m main building works contract in Bandar Puncak Alam, Selangor, from Tropicana Alam SB. The proposed construction consists of 399 units of double-storey terrace houses (20 ft x 70 ft), 32 units of double-storey terrace houses (22 ft x 70 ft) and three units of Tenaga Nasional Bhd (TNB) substations (double chamber). (Bernama)

MARKET UPDATE

The FBM KLCI might open weaker today as US stocks slumped Monday after higher yields in the bond market caused by a strong US economy cranked up the pressure on Wall Street. The S&P 500 tumbled 1.2%, following up on its 1.6% loss from last week, which was its worst since October. The Dow Jones Industrial Average dropped 248 points, or 0.7%, and the Nasdaq composite slumped 1.8%. Stocks had been solidly higher earlier in the day, as oil prices eased with hopes that international efforts to calm escalating tensions in the Middle East may help. But Treasury yields also spurted upward following the latest report on the US economy to blow past expectations. Europe's benchmark stock index closed on a subdued note on Monday, as energy shares dropped on weak oil prices and offset gains in industrials, while investors were on guard as they watched out for developments in the Middle East. The PanEuropean STOXX 600 ended 0.1% higher. Industrials and automobiles.

Back home, Bursa Malaysia ended trading at an intraday low due to weak investor sentiment amid escalating geopolitical tensions in the Middle East. At the closing bell, the FBM KLCI fell 8.51 points, or 0.55 per cent, to 1,542.53 from Friday’s close of 1,551.04. A sense of nervousness swept over markets in Asia on Monday amid the escalating geopolitical tensions, with Japan's Nikkei sliding 0.74%, while Australia's S&P/ASX 200 index lost nearly 0.5%. Hong Kong's Hang Seng Index was down 0.72%.

Source: PublicInvest Research - 16 Apr 2024