HEADLINES

Economy

Global: World Bank says global growth stabilizing but below pre-COVID levels. The World Bank said the US economy's stronger-than-expected performance has prompted it to lift its 2024 global growth outlook slightly but warned that overall output would remain well below pre-pandemic levels through 2026. The World Bank said in its latest Global Economic Prospects report that the global economy would avoid a third consecutive drop in real GDP growth since a major post-pandemic jump in 2021, with 2024 growth stabilizing at 2.6%, unchanged from 2023. (Reuters)

US: Small business sentiment up in May. US small-business confidence and hiring plans increased in May to their highest levels of the year, but the looming U.S. presidential election also drove uncertainty to nearly a four-year high, a survey showed. The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rose eight-tenths of a point to 90.5 last month, the second consecutive month it has risen after slumping in March to the lowest level since Dec 2012. Despite the gain, it was the 29th straight month the index was below the 50-year average of 98. (Reuters)

US: Fed rate cut expectations to keep US Treasury yields elevated. US Treasury yields will plateau over the coming three months and then only fall modestly by year-end amid receding expectations of Federal Reserve interest rate cuts, according to a Reuters poll of bond strategists. After peaking at 5.02% in Oct, the benchmark US 10-year Treasury note yield plummeted over 120 bps as traders priced in as much as 150 bps of Fed rate cuts this year. (Reuters)

EU: ECB says many euro zone banks dragging their feet on loan-loss provisions. Many euro zone banks are still far from meeting accounting rules on the provisions needed to protect against loan losses, despite some progress in factoring in climate risks, the ECB's top supervisor said. A decade-old accounting standard designed to avoid a new banking crisis requires lenders to make an upfront provision when they make a loan, and then a fuller one if there are signs of potential default, rather than waiting for it to go unpaid. But euro zone banks are dragging their feet in applying the IFRS 9, Claudia Buch said, repeating a concern shared by other European regulators. (Reuters)

UK: Sunak offers more tax cuts as election polls refuse to budge. Prime Minister Rishi Sunak pledged to cut GBP17 bn (USD21.7 bn) of taxes for working people if re-elected, in a final throw of the dice to overturn polls that put him on course for a heavy defeat in Britain's July 4 election. With his Conservative Party consistently about 20 points behind Keir Starmer's opposition Labour in the polls, Sunak made a new appeal to what one Conservative lawmaker described as Britain's carpenters, bricklayers and electricians, by promising further tax cuts if they give him their vote. (Reuters)

Japan: BOJ to keep ultra-low rates, debate fate of huge bond buying. The BOJ is expected to keep interest rates steady on this week and consider whether to offer clearer guidance on how it plans to reduce its huge balance sheet, in a slow but steady retreat from its massive monetary stimulus. Policymakers may also debate recent weak signs in consumption, as they scrutinise whether Japan is making progress toward durably hitting their 2% inflation goal - a prerequisite for lifting interest rates from current near-zero levels. (Reuters)

Taiwan: Set to hold rates steady amid persistent inflation worries. Taiwan's central bank is expected to keep its policy interest rate unchanged this week and to stay the course until late next year as it deals with persistent concerns over inflation, according to economists in a Reuters poll. The central bank, in a surprise move at its last board meeting in March, hiked the benchmark discount rate to 2% from 1.875%, wary of continued inflationary pressures and ahead of a rise in electricity prices. At its next quarterly meeting on Thursday it is expected to keep the rate steady, according to 29 of the 31 economists surveyed. (Reuters)

Markets

SP Setia (Neutral: TP: RM1.30): Syed Mokhtar's firm buys S P Setia's Tebrau land for RM564m cash. S P Setia, which previously failed to sell its 959.72-acre Tebrau land to Scientex due to Bumiputera requirement issues, has finally sold the plot to a company linked to tycoon Tan Sri Syed Mokhtar Albukhary for RM564m, cash. S P Setia first tried to sell the land to Scientex in 2021 for RM518.1m, but the deal fell through in March 2023 after Scientex failed to obtain a waiver of the Bumiputera equity condition imposed by the Economic Planning Unit (EPU). Four months later, both parties revisited the deal with an increased price of RM547.7m. (The Edge)

Gamuda (Outperform, TP: RM6.30): Gamuda Land’s redevelopment plans for 75 London Wall building in London approved. Gamuda Land, the property arm of Gamuda, announced that its redevelopment plans for the 75 London Wall building in London with UK-based real estate investors Castleforge Partners have been approved. The 75 London Wall, which was earlier referred to as Winchester House and was formerly the UK headquarters of Deutsche Bank, is expected to be turned into office spaces. (The Edge)

UEM Sunrise (Underperform, TP: RM0.70): To sell land parcels for data centres. UEM Sunrise joined the list of property developers selling their land for the development of data centres, a day after Eco World Development Group announced the RM402m sale of industrial land to Microsoft. UEM Sunrise, which is controlled by Khazanah Nasional, said it is selling its two land parcels in Iskandar Puteri, Johor, to a global data centre player for RM144.9m. (StarBiz)

Aurelius Technologies: Abrdn emerges as Aurelius Technologies' substantial shareholder with 7.06% stake. UKbased Abrdn plc has emerged as a substantial shareholder of Kedah-based electronic manufacturing services (EMS) provider Aurelius Technologies. Abrdn purchased 27.8m shares, representing a 7.062% stake in the company, on June 6. But, the transaction price was not disclosed. The group’s major shareholders are Main Stream Holdings SB with a 20.04% stake, and Main Stream Ltd with a 19.36% stake, according to its latest annual report. (The Edge)

Bintai Kinden: Bags RM22m housing jobs. Bintai Kinden Corp secured two sub-contract awards totalling RM22.3m for the construction of double-storey houses in Muar, Johor. Bintai Kinden said its wholly-owned subsidiary, Kejuruteraan Bintai Kindenko SB, has accepted the sub-contracts from Lu Chin Poh Construction SB. The building and infrastructure works will be undertaken for Fershing Property SB. The first contract, worth RM7.6m, is to construct eight units of double-storey semi-detached houses at Lot 3712 in Mukim Jalan Bakri. The second contract is to construct 21 units of double-storey terrace houses that will also be located at Lot 3713, Mukim Jalan Bakri. (StarBiz)

Oriental Holdings: Loh family transfers stake in Oriental Holdings to another vehicle, leaving out some members. Soaring Success SB, a company linked to the Loh family, has become the largest shareholder in Oriental Holdings. This follows the transfer of a 36.74% stake in Oriental Holdings from Pacific Carnival SB to Soaring Success, as part of an internal restructuring of the Loh family's private companies.. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today after stocks drifted to a mixed close overall on Wall Street Tuesday, but the S&P 500 and Nasdaq composite still managed to notch more record highs. The subdued trading came ahead of a key inflation report and the Federal Reserve’s latest interest rate policy decision on Wednesday. The S&P 500 rose 14.53 points, or 0.3%, to 5,375.32, driven largely by gains in tech stocks, even though more stocks fell than rose within the index. The tech-heavy Nasdaq composite rose 151.02 points, or 0.9%, to 17,343.55. Both indexes set record highs for the second straight day. The Dow Jones Industrial Average lagged the market. It slipped 120.62 points, or 0.3%, to 38,747.42. The key events for the market this week come on Wednesday, when the US releases its latest update on inflation at the consumer level and the Federal Reserve announces its latest update on interest rates. The US will also release its latest update on prices at the wholesale level on Thursday. Stocks in Europe fell and stocks in Asia were mixed. The continent-wide STOXX 600 finished down 0.9%, logging its biggest single-day drop in two weeks, while Italy’s and Spain’s bank-heavy benchmarks shed 1.9% and 1.6%, respectively. Substantial gains in Press Metal and Telekom Malaysia helped Bursa Malaysia’s barometer index to pare some of its earlier losses amid the selling pressure in heavyweight stocks. At the closing bell, the FBM KLCI fell by 2.88 points to 1,611.49 from Monday’s close of 1,614.37.

Source: PublicInvest Research - 12 Jun 2024