HEADLINES

Economy

US: Consumers on lower incomes face loan stress while banks pull back. US borrowers on lower incomes are increasingly struggling to keep up with their loan payments, prompting banks to become more cautious about dishing out credit cards and car loans. A growing number of Americans have seen their savings dwindle as rising prices squeeze budgets while interest rates stay high. The deterioration in household finances for those earning less than USD45,000 contrasts with financial resilience among those on higher incomes. Consumer delinquencies were one of the most concerning economic data points at the moment. (Reuters)

EU: German industrial production to fall again in 2024. German industrial production is set to fall again this year and exports will stagnate, flanked by other industry groups that also painted an uncertain outlook for Europe's biggest economy. Industry in Germany has not yet recovered from the cost and demand shocks, from moments of extremely high energy prices and from inflation. The industry association forecast a 1.5% fall in production in 2024, the same decline as last year, while exports were expected to be flat following a drop of around 1.5% in 2023. (Reuters)

EU: Government deficit to GDP falls slightly. The government deficit to GDP ratio in the euro area dropped slightly in 2023. The government deficit to GDP came in at 3.6% in 2023, which was down from 3.7% in 2022. However, it remained above the 3.0% threshold. On the other hand, the ratio in the EU rose to 3.5% from 3.4%. Further, government debt to GDP dropped to 88.6% at the end of 2023 from 90.8% in 2022. In the EU, debt to GDP slid to 81.7% from 83.4%. In 2023, all member states, except Cyprus, Denmark, Ireland and Portugal reported a deficit. (RTT)

Japan: BOJ to project inflation will stay around target, signal chance for rate hike. The BOJ is expected to project inflation will stay around its 2% target for the next three years, signalling its readiness to raise interest rates again this year from current nearzero levels. But governor Kazuo Ueda will probably stress the BOJ's resolve to tread carefully and take a data-dependent approach in deciding the next rate hike given uncertainties on whether wage hikes will broaden and drive up prices in the services sector. Having made a landmark exit from its radical stimulus just last month, the BOJ is widely expected to keep its short-term interest target unchanged in a range of 0-0.1%. (Reuters)

India: Consumer goods makers to see more delays in recovery. Most Indian consumer goods makers are unlikely to see a recovery in volumes in 4Q, indicating that an improvement can only be expected by the Dec-quarter. Firms have already flagged subdued demand for Jan-March, prolonging a rural-led slowdown that started two years ago. Consumer companies may be stuck in a limbo, volume growth could pick up pace after the onset of the monsoon, which typically boosts rural consumer confidence. Analysts expect volume growth in the low- to mid-single digit percentage range for 4Q. (Reuters)

Australia: Treasurer says MidEast tensions compound worries about global economy. Australia's treasurer warned that events in the Middle East are fuelling concerns for the global economy and will shape the government's budget in May, with near-term outlook downgrades for its major trading partners. Events in the Middle East are casting a shadow over the global economy, compounding the concerns about lingering inflation and weaker growth. Given the global challenges, the May Budget will put a premium on responsibility and an emphasis on security. The treasury will also downgrade its growth forecasts for economies like China, Japan and Britain. (Reuters)

Taiwan: March export orders trails forecasts. Taiwan's export orders rose less than expected in March, but the government said it expected surging demand for artificial intelligence (AI) applications to fuel future demand for the island's high-tech products. Export orders last month climbed 1.2% from a year earlier to USD47.2bn, missing the forecasted 3.6% gain. Orders were down 10.4% in Feb. Orders for goods from Taiwan, home to tech giants opens new tab, are a bellwether of global technology demand. (Reuters)

Markets

Sapura Energy: To divest 50% stake in SapuraOMV for RM3.37bn. Sapura Energy’s wholly-owned subsidiary, Sapura Upstream Assets SB, has entered into a conditional agreement to divest its entire 50% interest in SapuraOMV Upstream Sdn Bhd to France-based TotalEnergies Holdings SAS for USD530.3m (RM2.53bn) in cash. Sapura Energy said it will also be relieved by TotalEnergies of a USD175m obligation in respect of a financing facility extended by OMV Exploration & Production GmbH (OMV E&P) to SapuraOMV, in connection with the share subscription and restructuring exercise among Sapura Energy, OMV E&P, SapuraOMV, and Sapura Upstream on 31 Jan 2019. (Bernama)

ITMAX: To collaborate with Johor Corp to develop smart city solutions. ITMAX System plans to work with a unit of Johor Corp (JCorp) to explore potential partnerships in developing and deploying smart city and integrated facilities management solutions for township and park developments. ITMAX, through its 65%- owned subsidiary Southmax SB, has signed a memorandum of understanding with JLand Group SB (JLG) to establish the principles and framework for the intended collaboration. (The Edge)

Sunview: Forges JV for renewable energy expansion in the Middle East. Sunview Group’s subsidiary, Fabulous Sunview SB, has signed a preliminary joint venture agreement with Vision Ambassadors Company for International Trade Consultancy, LLC. The agreement outlines their collaboration to establish Sunview (Middle East) LLC, an SPV focusing on renewable energy opportunities in the Middle East, Gulf Cooperation Council, and Central Asia. Sunview disclosed in a statement today that Fabulous Sunview will own a 40% stake in the SPV, with Vision Ambassadors holding the remaining 60%. (The Malaysian Reserve)

Powerwell: Secures RM22.05m supply deal. Powerwell Holdings’ wholly-owned subsidiary Kejuruteraan Powerwell SB has accepted a job from One Ocean Environment SB for the supply of low voltage switchboards for the Proposed Development of Sg. Rasau Water Supply Scheme (Stage 1) Selangor for RM22.05m. The group said the contract was for Package 1 – design and build of proposed Rasau intake, raw water pumping mains, water treatment plant and associated works. It said the sub-contract is accepted to be completed by end-June 2025. (The Star)

Unitrade: Partners with Huawei, JJ-LAPP to offer smart solar systemsm. Unitrade Industries Bhd’s wholly-owned subsidiary Syarikat Logam Unitrade Sdn Bhd has entered into a collaboration agreement with Huawei Technologies (Malaysia) SB and JJ-LAPP (M) SB. Unitrade said the agreement aims to advance solar adoption by pooling the collective expertise, resources and technology to facilitate the purchase and sale of Huawei Digital Power-Smart Photovoltaic (PV) solutions. (The Edge)

Econframe: Expects favourable outlook for Malaysia’s industrial property market. Econframe expects the 70% stake acquisition of ETA World SB in Jan 2024 to bode well for the group. The acquisition represents an opportunity for the group to venture into construction services, specifically into industrial property in view of the favourable outlook and prospects of the industrial property market in Malaysia. For the second quarter ended 29 Feb, 2024, Econframe registered a higher revenue of RM26.98m and a profit of RM3.37m, as its recently acquired 65%-owned subsidiary, Lee & Yong Aluminium SB was a significant contributor to its earnings. (The Star)

MARKET UPDATE

The FBM KLCI might open stronger today after Wall Street stocks ended higher yesterday following a market sell-off in previous sessions as investors eyed a busy week for quarterly results from key companies that would provide a glimpse of the US economy's health. The benchmark S&P 500 and the Nasdaq rebounded from a decline over the past six sessions which had been caused by investors re-evaluating their expectations on interest rate cuts in the wake of strong economic data, geopolitical tensions, persistent inflation and commentary from Federal Reserve officials. The S&P 500 gained 43.37 points, or 0.87%, to 5,010.60 and the Nasdaq Composite gained 169.30 points, or 1.11%, to 15,451.31. The Dow Jones Industrial Average rose 253.58 points, or 0.67%, to 38,239.98. The STOXX 600 index rose 0.6%.

Back home, Bursa Malaysia ended higher for the fourth consecutive day on Monday with the key index rising 0.78%, tracking the mostly higher performance in regional markets. At the closing bell, the FBM KLCI rose 12.02 points to 1,559.59 from last Friday's close of 1,547.57. MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.08%.

Source: PublicInvest Research - 23 Apr 2024