HEADLINES

Economy

US: Downshifting inflation will help reassure the Fed. The runway towards a US Fed interest-rate cut will come more into focus in the coming week, amid fresh signs inflation is abating and economic activity is simmering down. Economists expect the personal consumption expenditures price index minus food and energy to have risen 0.1% in June for a second straight month. (Bloomberg)

EU: Inflation expectations remain unchanged. Eurozone inflation expectations for this year and next year remained unchanged, the Survey of Professional Forecasters from the ECB showed. Respondents' expectations for headline inflation were stable at 2.4% this year and 2.0% in 2025. Meanwhile, inflation expectation for 2026 was revised down to 1.9% from 2.0%. Longerterm inflation expectations came in at 2.0%. (RTT)

EU: ECB policymakers back more rate cuts as inflation heads back to goal. Two ECB policymakers backed further interest rate cuts, expressing greater confidence that inflation was heading to the ECB's goal next year. The ECB held rates steady and its president, Christine Lagarde, said its next decision on 12 Sept was "wide open", stopping well short of declaring victory over the bout of high inflation that followed the COVID-19 pandemic. (Reuters)

UK: Government borrowings overshoot estimate. The biggerthan-expected UK public sector net borrowing in June highlights the challenges faced by the new government. Public sector net borrowing decreased GBP3.2bn from the last year to GBP14.5bn in June, marking the lowest June borrowing since 2019, the Office for National Statistics said. However, the latest figure was GBP2.9bn higher than the GBP11.6bn forecast by the Office for Budget Responsibility and also above economists' forecast of GBP12.9bn. In June, central government receipts advanced GBP1.2bn, while expenditure decreased by GBP2.1bn from the last year. (RTT)

UK: Finance minister hints at above-inflation pay rises for public sector workers. Britain's new finance minister Rachel Reeves said she will consider giving inflation-busting pay increases for almost 2m government employees later this month to avoid crippling public sector strikes. Two pay review bodies who advise the government have recommended a 5.5% wage rise for 460,000 teachers and 1.4m staff in the state-run National Health Service. Asked if the government would approve those pay rises, Reeves said she valued public service workers and warned there is a "cost" to long battles with unions that undermined the last government's efforts to improve public services. (Reuters)

China: Long-awaited policy update presents no major shift. China released a policy document, outlining known ambitions, from developing advanced industries to improving the business environment, with analysts spotting no sign of imminent structural shifts in the world's second biggest economy. The 60-point document's publication follows the closed-doors meeting of the Communist Party's Central Committee, led by President Xi Jinping, which takes place roughly every five years, and is known as a plenum. (Reuters)

Japan: Core inflation perks up in June, keeps BOJ rate hike hopes alive. Japan's core inflation accelerated for a second straight month in June, data showed, extending a more than twoyear run above the central bank's 2% target and keeping alive market expectations of a near-term interest rate hike. But more than three-quarters of economists expect the BOJ to hold off on raising rates this month as soft consumption weighs on a fragile economy. The CPI, which strips away the effect of volatile fresh food prices, rose 2.6% in June from a year earlier, slightly below market forecasts for a 2.7% gain. (Reuters)

India: Neutral rate cannot determine monetary policy, says cenbank chief. The Indian central bank's target is to bring down inflation to 4% and though it looks at the real and neutral rates in the economy, those cannot be determinants of monetary policy, Governor Shaktikanta Das said. "Neutral rate and all are theoretical, abstract concepts that cannot determine policy in the real world," Das said. The Reserve Bank of India said the economy's neutral or natural rate of interest has increased since the pandemic and will rise further, driven by the growth of potential output. (Reuters)

Markets

Genting Plantations: Buys two Indonesian plots for RM593m for property development. Genting Plantations, in which Genting owns a 55.4% stake, is planning to buy two plots of land in Indonesia for RM593m, for property development. The plots, measuring 152ha, are located in Sentul City, in the Bogor Regency of the West Java Province in Jakarta, according to GENP's bourse filing. The plantation group said its indirect subsidiaries had inked separate sale and purchase agreements (SPAs) with three vendors, PT Sentul City Tbk, PT Aftanesia Raya and PT Primatama Cahaya Sentosa to buy the plots. (The Edge)

Press Metal: Signs R&D agreement with Chinese university for carbon capture, utilisation project. Press Metal Aluminium Holdings has inked a collaboration agreement with China’s Xi’an Jiaotong University (XJTU) to research and develop a carbon capture and utilisation model involving its manufacturing process. The agreement follows a memorandum of understanding signed between the two parties in Aug last year, Southeast Asia’s largest aluminium extrusion outfit said in a bourse filing. (The Edge)

SunCon: Unit awarded RM418m sub-contract in Selangor data centre project. Sunway Construction Group, which in March won a RM747.8m contract from a US-based multinational technology corporation for the construction of a data centre in Selangor, announced the award of a sub-contract relating to the project worth RM417.8m. The sub-contract for the construction of the project's mechanical and electrical system was awarded to Sunway Engie DC SB, a joint venture company between Sunway Engineering SB (70% stake) and Engie Services Malaysia SB (30% stake). (The Edge)

MCE: Secures RM19.6m contract from Perodua for EV components. MCE Holdings’ wholly-owned subsidiary, Multi-Code Electronics Industries (M), has secured a RM19.6m contract from Perusahaan Otomobil Kedua SB (Perodua). In a statement, the original equipment manufacturer (OEM) said the contract was to supply Perodua with various electronic and mechatronic components, including multimedia display unit, instrument panel cluster, advanced driver-assistance system, functional switches, interior lightings and more for Perodua’s new electric vehicle (EV). (StarBiz)

Fima Corp: Bags RM94m printing contract from Education Ministry. Fima Corp has secured a RM93.92m contract from the Ministry of Education to print and supply confidential documents to the ministry. The group, which is involved in manufacturing, plantation, and property management, said the two-year contract was awarded to its wholly owned subsidiary Percetakan Keselamatan Nasional SB (PKN). (The Edge)

EG Industries: Bags RM547m purchase order from key customer. EG Industries said its wholly-owned subsidiary SMT Technologies SB has secured a USD117m (RM547.17m) confirmed purchase order for 5G photonics related products from an existing key customer. In a filing with Bursa Malaysia, it said the customer is a global industry leader with expertise in industry leading research and development and cutting-edge manufacturing for, among others, optical modules, wireless access broadband, carrier ethernet and edge computing. (StarBiz)

MARKET UPDATE

The FBM KLCI might open lower today after US stocks slumped last Friday in another washout, as businesses around the world scrambled to contain the effects of a disruptive technology outage. The S&P 500 fell 0.7% to close its first losing week in the last three and its worst since April. The Dow Jones Industrial Average dropped 377 points, or 0.9%, while the Nasdaq composite sank 0.8%. Friday’s moves came as a major outage disrupted flights, banks and even doctors’ appointments around the world. Cybersecurity firm CrowdStrike said the issue believed to be behind the outage was not a security incident or cyberattack and that it had deployed a fix. The company said the problem lay in a faulty update sent to computers running Microsoft Windows. In markets elsewhere, indices were mostly lower in Europe and Asia. Stocks fell 2% in Hong Kong and rose 0.2% in Shanghai after Chinese officials briefed reporters in Beijing on the outcome of a top-level meeting of the ruling Communist Party. They provided some details of the sweeping blueprint it endorsed for making China a leader in technology, building its financial markets and raising living standards. Back home, the FBM KLCI closed up 2.74 points, or 0.17% at 1,636.55.

Source: PublicInvest Research - 22 Jul 2024