HEADLINES

Economy

US: Household debt levels edge up in Q2, NY Fed survey shows. Total US household debt levels edged up in the second quarter but overall delinquency rates stabilized, indicating that borrowers are still in decent enough shape to support the economy, a report from the Federal Reserve Bank of New York said. The bank report, part of its survey of household debt and credit conditions, showed that overall debt levels rose by USD109bn, or 0.6%, in the second quarter to USD17.80tr. Overall borrowing levels are now USD3.7tr above where they were at the end of 2019, before the onset of the coronavirus pandemic, the report said. (Reuters)

EU: German industrial orders swell in ray of hope for weak economy. German industrial orders rose by more than forecast in June, providing a glimmer of hope for Europe's largest economy, where recession is back on the cards following a contraction in the second quarter. Industrial orders increased by 3.9% in June on the previous month on a seasonally and calendar adjusted basis, the federal statistics office reported. Analysts polled by Reuters had forecast a rise of 0.5%. Germany was the worst performing major economy last year. (Reuters)

UK: Weather rains on consumer spending in July. British shoppers kept a tight grip on their purse strings last month as rainy weather again dampened their appetite for spending, according to two surveys published. Barclays said spending on its credit and debit cards fell by 0.3% in annual terms in July, the second drop since February 2021 albeit a less sharp one than June's 0.6% decrease. The England men's soccer team run to the final of the Euro 2024 tournament boosted spending in pubs and people stocked up for barbecues on July's sunny days, Barclays said. (Reuters)

UK: Bank of England updates its lifetime loss estimate for QE programme. The Bank of England on Tuesday updated its estimates for the overall losses likely to be made by its quantitative easing bond purchase programme. The estimates assume the BoE will unwind its government bond portfolio at the current pace of GBP100bn (USD127 bn) per year. Based on the market path for interest rates as of late June, the QE programme looks set to generate a net loss of GBP 95bn by 2034, compared with an estimate in April of GBP85bn. (Reuters)

Japan: Seeks to calm market's nerves after stock price fluctuations. Japanese leaders rushed to assuage concerns about the sharp swings in the country's financial markets, with the prime minister urging calm and senior finance officials convening an emergency meeting to discuss the global stock market sell-off. The executives from Japan's Ministry of Finance, the Financial Services Agency and the BOJ held the trilateral meeting on afternoon, said Atsushi Mimura, the country's top currency diplomat, emphasising close coordination between the government and the central bank. (Reuters)

India: Inflation target evades cenbank's rate panel as rejig looms. The Indian central bank's rate setting panel faces another food-driven spike in inflation as it meets a final time ahead of the exit of the committee's external members in the first of several scheduled key policymaker changes over coming months. The sixmember monetary policy committee (MPC), which includes three central bank officials and three external members, is recast every four years when the government appoints a new set of external members. (Reuters)

Australia: Central bank rules out near-term rate cut on inflation risks. Australia's central bank ruled out the possibility of an interest rate cut this year, saying core inflation is expected to come down only slowly, after it held interest rates steady for a sixth straight meeting. The Australian dollar firmed 0.3% to AUDUSD0.6517 and three-year bond futures extended declines to be off 29 ticks to 96.4, as markets pared back the chance of a Nov rate cut to 55% from 88% before the policy decision on the unexpectedly hawkish messaging, although they are still fully priced for a cut by Dec. (Reuters)

Markets

KPJ Healthcare (Outperform, TP: RM2.21): Significantly expanding capacity. While KPJ Healthcare remains on the lookout for new assets, the private healthcare provider is focusing on optimising its current resources to increase its bed utilisation rate. President and managing director Chin Keat Chyuan said that as of the end of 1Q24, the group was registering over 60% bed occupancy, which is similar to the full-year figure from the previous year. “We remain very optimistic with the very encouraging numbers in terms of our bed occupancy while we continue to expand our capacity to house more patients,” he said during a press conference in conjunction with the launch of the group’s rebranding yesterday, 43 years since its inception. (StarBiz)

AWC: Wins RM10m apartment job. AWC Bhd has accepted a letter of award from CBTech (M) SB worth RM10.2m for subcontract works for a multi-block serviced apartment development in Kuala Lumpur for UEM Land Bhd. AWC said the contract will entail the supply, delivery, installation, testing, commissioning, service and maintenance of cold water and sanitary plumbing system, rainwater down pipe services and installation of sanitary fittings and accessories. (StarBiz)

Chin Hin: Buys engineering, project management firms for RM51m in cash and share deal. Chin Hin Group is acquiring a 65% stake each in two companies — an engineering and construction firm and a facilities and project management outfit — for RM51.5m in a cash and share deal. Chin Hin is acquiring the stakes in CSS Engineering & Construction SB (CEC) and Critical System Specialist SB (CSS) from two individuals, with total cash of RM26.5m and 7.9m shares at RM3.16 apiece of RM25m. (The Edge)

Keyfield: To buy another AHTS vessel, secures USD10m charter contract. Keyfield International said it has secured a contract worth USD10m (RM44.3m) to supply a maritime vessel for two years. The contract, which commences this September, is for subsidiary Keyfield Offshore Sdn Bhd (KOSB) to provide one unit of an 80MT bollard pull anchor handling tug supply (AHTS) vessel for Carigali-PTTEPI Operating Company SB, it said. The contract comes with a one-year extension option for another USD5m (RM22.2m). (The Edge)

I-Bhd: Breaks ground for SkyCity in i-City, Shah Alam. I-Bhd broke ground for SkyCity in I-City, Shah Alam. It is a 60-metre tower featuring a 600-metre glass slide that is poised to be a new tourist attraction. The property developer said that with the addition of SkyWalk in i-City, the accelerated growth of bleisure — business and leisure — activities in Shah Alam, such as the opening of DoubleTree by Hilton last year and existing attractions in i-City, will continue to draw local and international travellers. (The Edge)

IPO: Elridge to raise RM101.5m from IPO. Elridge Energy Holdings (EEHB), on route to a listing on Bursa Malaysia’s ACE Market on Aug 22, aims to raise RM101.5m through its IPO. EEHB is an investment holding company, with wholly owned subsidiary Bio Eneco SB specialising in manufacturing and trading of biomass fuel products, with a focus on palm kernel shells and wood pellets. “Based on an issue price of 0.29 sen per share and an enlarged share capital of two million shares, EEHB will have a market capitalisation of RM580m upon listing,” the company said. (Bernama)

MARKET UPDATE

US markets bounced back overnight to snap a 3-day losing streak though investors remain on edge over heightened recessionary fears in the US and unwinding of the Yen carry trade. The S&P 500 and Nasdaq Composite gained 1.0% each as the Dow Jones Industrial Average rose 0.8%. In after-hours trading, shares of Super Micro Computer fell more than 8% after the server company’s fiscal fourth-quarter earnings missed estimates while Airbnb slipped more than 16% after disappointing second-quarter results, possibly setting the tone for market trading in the days to come. Major stock index futures are currently lower between 0.1% and 0.4%. European markets also bounced back, albeit more moderately than its counterparts west of the Atlantic. Most sectors were higher on the day, with technology stocks amongst the most volatile, up 1.8%. UK’s FTSE 100 and Germany’s DAX inched 0.2% and 0.1% higher respectively though France’s CAC 40 fell 0.3%. The global rout and rebound cannot be any more obvious than in Japanese equities, with the benchmark Nikkei 225 jumping 10.2% higher (strongest daily gain since October 2008) following the previous day’s 12.4% slump. Not all saw green however, with the Hang Seng Index falling 0.3%, the SENSEX (India) falling 0.2% and the Straits Times Index tumbling 1.4%. Back home, the FBM KLCI staged a strong rebound with a 2.5% gain however, joining the KOPSI (+3.3%) and Shanghai Composite Index (+0.2%) as gainers on the day.

Source: PublicInvest Research - 7 Aug 2024