HEADLINES

Economy

US: Powell indicates Fed won’t wait until inflation is down to 2% before cutting rates. Fed Chair Jerome Powell said that the central bank will not wait until inflation hits 2% to cut interest rates. Speaking at the Economic Club of Washington DC, Powell referenced the idea that central bank policy works with long and variable lags to explain why the Fed wouldn’t wait for its target to be hit. (CNBC)

EU: Industrial output falls less than expected. Eurozone industrial production dropped for the first time in four months in May, though at a slower than expected pace, official data showed. Industrial output logged a monthly fall of 0.6% after remaining flat in April, the statistical office Eurostat said. Production was forecast to decline by 1.0%. Within major industrial groupings, durable consumer goods output decreased the most, down 1.8%, followed by capital goods falling 1.2%. (RTT)

UK: BOE’s Dhingra says rates should come down now. BOE interest rate-setter Swati Dhingra said inflation in Britain was unlikely to rise sharply again and the central bank should bring down borrowing costs. "Now is the time to start normalising (interest rates) so we can then finally stop squeezing living standards the way we have been to try and get inflation down," Dhingra said. Dhingra has voted since Feb to cut Bank Rate from its 16-year high of 5.25% and she has been joined more recently by Deputy Governor Dave Ramsden. (Reuters)

China: New home prices fall at fastest pace in 9 years, more support needed. China's new home prices in June fell at the fastest clip in nine years while property sales and investment slumped, increasing pressure on policymakers for more stimulus to prop up the battered sector as it struggles to find a bottom. New home prices slid 4.5% from a year earlier, hitting the lowest since June 2015, deeper than a 3.9% slide in May, according to calculations based on National Bureau of Statistics data. Prices were down 0.7% MoM in June after a 0.7% dip in May. (Reuters)

China: 2Q economic growth disappoints. China's economic growth missed expectations in 2Q on weaker consumption and property market downturn, suggesting that more policy measures are needed to achieve the official growth target this year. GDP expanded 4.7% on year in the 2Q, the National Bureau of Statistics said. That was weaker than economists' forecast of 5.1% expansion and also down from the 5.3% growth posted in the three months to March. On a quarterly basis, GDP rose 0.7%, missing forecasts for 1.1% growth. Growth softened markedly from 1.6% in 1Q. Despite the slowdown, economists said economic growth will regain some momentum in the coming months. (RTT)

India: June wholesale prices rise most in 16 months. India's wholesale prices rose at their fastest annual pace in 16 months in June on the back of costlier food, government data showed. The wholesale price index rose 3.4% in June from a year earlier, slightly lower than the 3.5% gain expected by economists but higher than a 2.6% YoY rise in May. Wholesale inflation had stood at 3.9% in Feb 2023. For June, food prices rose 8.7% on year compared with an increase of 7.4% in May. Vegetable prices were up 38.8% on year against a 32.4% rise in the previous month. (Reuters)

Thailand: To enrol recipients of USD14bn stimulus next month. Thailand will next month begin enrolling citizens eligible to receive cash from the government as part of an about USD14bn (RM65.4bn) programme to stimulate Southeast Asia’s secondlargest economy. An estimated 50m Thais 16 years and older are qualified to receive THB10,000 (USD276 or RM1,289) each under the so-called digital wallet scheme, the centrepiece of Prime Minister Srettha Thavisin’s strategy to reignite an economy stuck at an average growth rate of less than 2% for the past decade. Eligible citizens and participating merchants can register for the programme from 1 Aug. (Bloomberg)

Thailand: Economy faces upheaval due to factory closures and cheap Chinese imports. When Chinese electric vehicle maker BYD opened its first Southeast Asian factory in Thailand earlier this month, the nation of 66m people basked in the limelight and won praise for its industrial vision. What, however, received less attention was an announcement by another big automobile manufacturer, Suzuki Motor just a few weeks earlier that it will shutter a Thai factory that produced as many as 60,000 cars a year. (Reuters)

Markets

Citaglobal: Teams up with SUS Environment for green energy in Malaysia. Citaglobal Bhd has entered into a joint development framework agreement (JDFA) with SUS Holding Ltd, a whollyowned subsidiary of the ultimate holding company Shanghai SUS Environment (SUS Environment). SUS Environment is China's largest solid waste incinerator supplier and a leading developer of integrated environmental solutions. Citaglobal said the agreement aims to collaborate on converting municipal waste in Pahang into green energy and developing agricultural waste, like empty fruit bunches and palm oil sludge, into biomass energy in Malaysia. (The Star)

MAHB: Takeover offer expected to be finalised in third quarter of this year - MOF. The takeover offer for Malaysia Airports Holdings (MAHB) is expected to be finalised in the third quarter of this year and it needs to be approved by at least 90% of MAHB's existing shareholders, the MoF said. The ministry also emphasised that since the offer is a commercial transaction, it does not have any financial implications for the government. (Bernama)

Econframe: Scraps plans to acquire 70% stake in industrial property builder. Econframe said it is not proceeding with its plan to acquire a 70% stake in ETA World SB, a company involved in industrial property development and construction activities. This is because the conditions precedent in the agreement between Econframe and the seller of the stake, ETA Industries SB, had not been fulfilled within the specified timeframe. Econframe said it had mutually agreed with ETA Industries not to extend the period for fulfilling the conditions precedent, resulting in the termination of the deal. (The Edge)

PMB Technology: Sells Klang industrial land for RM79m. PMB Technology is selling industrial land in Klang, Selangor, to Knauf SB for RM79.3m. The land, originally purchased in 2008 for RM9.8m and covering approximately 113,312 sqm, is expected to generate an estimated net gain of RM51m for PMB Technology. The proposed disposal aims to enhance the group’s earnings per share for the financial year ending 31 Dec, 2024. Proceeds from the sale will primarily support the group’s working capital needs. The transaction is expected to be completed by the fourth quarter of 2024. (The Malaysian Reserve)

BTM Resources: CFO resigns amid uncertainty in group’s business direction. BTM Resources announced that its chief financial officer, Ooi Gin Hui, has resigned from the board with immediate effect, citing uncertainty in the business direction and orientation of the Terengganu-based wood processing firm. Ooi, 44, was appointed to the post in Sep 2023. She is currently an independent non-executive director at information technology services firm Systech and OB Holdings, a food and supplement company that is seeking a listing on Bursa Malaysia’s ACE Market, according to BTM’s 2023 annual report. (The Edge)

Bank Islam: Upsizes RM500m sukuk to RM1bn. Bank Islam Malaysia Bhd has issued RM1.0bn senior sukuk Murabahah under its RM10.0bn sukuk Murabahah programme. Bank Islam said the issuance received an overwhelming response from investors, with a bid-to-cover ratio of over 3.2 times the issuance size after the upsizing from RM500m. "The proceeds from the issuance will finance Bank Islam's banking activities, working capital requirements, and other corporate purposes. (New Straits TImes)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks ticked to the edge of records Monday as Wall Street’s momentum keeps driving it upward. The S&P 500 rose 15.87 points, or 0.3%, to 5,631.22 and finished just shy of its all-time high set last week. It’s coming off its 10th winning week in the last 12, lifted in large part by expectations that inflation is slowing enough to convince the Federal Reserve to ease interest rates soon. The Dow Jones Industrial Average climbed 210.82, or 0.5%, to 40,211.72 and set its own record, while the Nasdaq composite added 74.12, or 0.4%, to 18,472.57 and ended a bit short of its high. In remarks before the Economic Club of Washington, Federal Reserve Chair Jerome Powell said again on Monday he won’t send any signals about when the Fed may cut interest rates. But he also said Fed officials understand the risks of waiting both too long and not long enough. Too-late cuts could push the US economy into a recession, while too-aggressive cuts could allow inflation to reaccelerate. In stock markets elsewhere, Chinese indices were mixed after China reported its economy expanded at a slower-than-expected pace in the latest quarter and as its ruling Communist Party opened a oncea-decade policy-setting meeting. Hong Kong’s Hang Seng fell 1.5%, while stocks in Shanghai added 0.1%. Stock indices were mostly lower in Europe. The continent-wide STOXX 600 closed 1% lower, snapping a three-session winning streak. Back home, Bursa Malaysia ended higher on the first trading day of the week on continuous foreign buying support, amid a mixed regional market performance. At the closing bell, the FBM KLCI jumped 10.76 points, or 0.67%, to 1,629.82 from Friday’s close of 1,619.06.

Source: PublicInvest Research - 16 Jul 2024