HEADLINES

Economy

US: Fed in holding pattern as inflation delays approach to soft landing. Inflation showing no recent sign of slowing or narrowing in scope leaves US Federal Reserve policymakers challenged this week over how to characterize their next steps even as the countdown to a contentious US presidential election continues. The Fed is seen holding its benchmark interest rate steady at 5.25% to 5.5% at its April 30-May 1 meeting, and a key judgment in the current policy statement, that inflation remains elevated, may have to remain in place after the pace of price increases accelerated over the first three months of the year after steadily slowing through 2023. Details of the most recent price reports, moreover, showed high inflation lodged across a wide array of goods and services, something current voters on interest rate policy including Atlanta Fed President Raphael Bostic and Richmond Fed President Thomas Barkin have focused on as a reason to be wary of cutting interest rates. (Reuters)

EU: German inflation creeps up to 2.4% in April. German inflation rose slightly in April due to higher food prices and a smaller drop in energy prices than in previous months, preliminary data from the federal statistics office showed. German consumer prices, harmonised to compare with other European Union countries, rose 2.4% in April, compared with 2.3% YoY in March. The German data was released ahead of the publication of pan-euro zone figures, with inflation in the bloc expected to have remained at 2.4% in April. The European Central Bank has clearly signaled it will start lowering borrowing costs in June. (Reuters)

EU: Eurozone economic confidence weakens in April. Euro area economic sentiment deteriorated further in April largely reflecting the difficulties in the industrial sector. The economic confidence index dropped to 95.6 in April from 96.2 in the previous month. The expected reading was 96.9. The economic sentiment index deteriorated notably in industry, and services, retail trade and construction experienced moderate falls. Only consumer confidence improved from March. Reflecting the deterioration in the assessment of the current order book, the industrial confidence index fell to -10.5 from -8.9 in the previous month. The services confidence indicator posted 6.0 in April, down from 6.4 a month ago. At the same time, the retail trade confidence indicator dropped to -6.8 from -6.0 in the previous month. Likewise, the construction sentiment index eased to -6.0 from -5.6. (RTT)

EU: Belgium GDP growth stable at 0.3%. Belgium's economy expanded at a steady rate in the first quarter of 2024, preliminary estimates from the National Bank of Belgium showed. GDP grew seasonally and calendar-adjusted 0.3% in the first quarter, the same as in the previous three quarters. Compared to the same quarter last year, GDP growth held steady for the third straight quarter at 1.3% in the three months ended March. On a QoQ basis, the value-added rose 0.3% in both industry and services, while that in the building industry dropped by 0.2%. Separate official data showed that the country's consumer price inflation rose to 3.37% in April from 3.18% in March. The overall increase in inflation was mainly driven by higher costs for fuel, hotel rooms, and restaurants and cafes. Meanwhile, food inflation eased further to 0.25% from 3.21%. (RTT)

China: April factory activity likely expanded at slower speed. China's manufacturing activity in April likely expanded at a slower pace, indicating the country's sprawling factory sector may have lost some momentum at the start of the second quarter. The official PMI likely slipped to 50.3 in April from 50.8 in March. The 50-point mark separates growth from contraction. The world's secondbiggest economy grew faster than expected in the first quarter, offering some relief to officials, but March indicators showed domestic demand remains frail. The property downturn continues to hurt local governments' finance and household confidence. The private Caixin factory survey, is expected to show the manufacturing PMI in April slowed to 51.0 from 51.1 in March. (Reuters)

South Korea: Chip-led export growth to quicken in April. South Korea's exports are expected to have risen at a faster pace in April, extending gains for a seventh straight month on strong chip sales, a Reuters poll showed. Exports out of Asia's fourth-largest economy are forecast to have increased 13.7% in April from a year earlier. That is sharply up from a 3.1% rise in March, which was the slowest in the current sequence of annual gains that started in Oct. South Korea is the first major exporting economy to report monthly trade figures each month, providing an early glimpse into the state of global demand. (Reuters)

Thailand: Central bank will act independently and not cave to political pressure. Political pressure won’t force the hand of Thailand’s central bank in making its interest rate decisions independently. The BOT kept the key interest rate steady at 2.50% in its latest policy meeting in April. But the central bank has been facing intense pressure from the government to lower rates, including from the country’s Prime Minister Srettha Thavisin. Lower borrowing costs tend to stimulate economic growth as it encourages businesses to invest and consumers to spend. The BOT chief said the current rate was supportive of the recovery, and is consistent with trying to get an orderly deleveraging, getting that balancing act between not raising the debt burdens for households too much, but at the same time, not encouraging people to take on too much new debt. (RTT)

Markets

ViTrox: To continue to ramp up R&D investment on anticipated semiconductor recovery in 2H2024. Automated test equipment maker ViTrox Corp is expecting a gradual recovery in the semiconductor sector towards 2H2024 and is continuing to ramp up its R&D investments in anticipation of that. The group's net profit for the quarter ended 31 March this year fell to RM17.2m from RM33m which marked its fifth consecutive quarter of YoY decline with revenue falling 10.3% to RM119.6m from RM133.3m. (The Edge)

Oppstar: Partners with Samsung Electronics for industrial integrated circuit production. Oppstar, via wholly owned subsidiary Oppstar Technology SB and Samsung Electronics Co Ltd, have proposed to cooperate and collaborate for the production of industrial integrated circuits (IC) manufactured using Samsung 14 nanometre FinFET technology foundry process. In addition to this, both parties are also desirous to explore cooperating on any other future projects that may arise, which align with their mutual business interests and capabilities. (StarBiz)

HHRG: Faces RM58m suit over alleged default of loan by exchairman. HHRG was slapped with a RM58.2m suit by Ooi Chieng Sim, in relation to a loan given out by the former executive chairman to the company. The suit, filed by Ooi and his private vehicle Skylitech Resources SB, named HHRG as defendant alongside managing director H’ng Choon Seng and deputy MD Kee Swee, as well as three of HHRG’s units. Pursuant to the claims, Ooi said alleged HHRG’s three units defaulted payment for RM10m worth of loan he provided. (The Edge)

Sapura Energy: Bags underwater service contract from Thaiowned PTTEP group. Sapura Energy has landed a five-year contract from PTTEP Sabah Oil Ltd and PTTEP Sarawak Oil Ltd to provide underwater services. The value of the contract was not disclosed, as the job is on a call-out basis. Expiring on 20 Feb 2029, the scope of work includes the provision of a diving support vessel, air and saturation diving systems, remotely operated vehicles, and other related underwater services. (The Edge)

Tex Cycle: In JV with Evolusi Bersatu to invest RM100m in Sabah’s water facility. Tex Cycle Technology (M) has partnered with Evolusi Bersatu SB to invest RM100m in Sabah’s first integrated scheduled waste management facility. Expected to be operational by 4Q 2025, the facility aims to reduce costs and emissions by locally processing waste instead of sending it to Peninsular Malaysia. The project aligns with Sabah’s job creation and environmental conservation goals. Tex Evolusi Waste Management, the JV company, will offer comprehensive waste management solutions, especially for the oil and gas sector. (The Malaysian Reserve)

YTL REIT: To develop hotel in Japan for RM199m. YTL Hospitality Real Estate Investment Trust (YTL REIT) is proposing to develop a hotel in Aza-Soga, Niseko-cho, Abuta-gun, Hokkaido, Japan for an estimated total development cost of RM199m. It is developing a five-storey hotel with a two-storey basement under the Moxy brand name, which is a segment of Marriott’s millennialfocused brand (Moxy Niseko). Upon completion of the proposed development, Moxy Niseko will be leased to YTL Corp under a variable rental arrangement. (StarBiz)

MARKET UPDATE

The FBM KLCI might open with a positive bias today after US stocks ended higher yesterday, with sharp gains for Tesla and Apple leading the way, as investors looked toward what the Federal Reserve would say about the interest rate outlook after its policy meeting this week. The Dow Jones Industrial Average rose 146.43 points, or 0.38 %, to 38,386.09, the S&P 500 gained 16.21 points, or 0.32 %, to 5,116.17 and the Nasdaq Composite gained 55.18 points, or 0.35 %, to 15,983.08. European shares eked out a nominal gain, backing down from a two-week high after Germany reported higher-than-expected inflation. Investors now eye the Fed's rate decision on Wednesday. The pan-European STOXX 600 index rose 0.07% and MSCI's gauge of stocks across the globe gained 0.46%.

Back home, Bursa Malaysia started the week strong, with the FBM KLCI finishing 0.48% higher buoyed by continued buying momentum. The market bellwether rose 7.5 points, or 0.48% to 1,582.66 after hitting its intraday high of 1,583.34. In the region, Japan’s Nikkei 225 rose 0.81% to 37,934.76 while South Korea’s Kospi closed up 1.17% at 2,687.44. China’s CSI300 index gained 1.11% to 3,623.91 while the Shanghai Composite Index added 0.79% to 3,113.04. Hong Kong’s Hang Seng index was up 0.54% at 17,746.91.

Source: PublicInvest Research - 30 Apr 2024