HEADLINES

Economy

US: Fed's not yet 'behind the curve'. The Federal Reserve may be a bit late cutting interest rates, but it's not yet behind the curve in forestalling a US recession. For all the wild financial swings and furious trading of the past week, markets have yet to price in a Fed monetary policy stance that would actively stimulate the economy at any point over the coming two-year cycle. While that could highlight investors' lingering concerns about sticky inflation, it more likely reflects their doubts that some deep recession is in fact brewing. (Reuters)

EU: German exports fall more than forecast in June. German exports fell more than expected in June due to weak demand from the US, the country's key trade partner, and from the rest of the EU, official data showed. MoM, Germany exported 3.4% fewer goods in June, the federal statistics office reported, more than double the 1.5% decline forecast by analysts in a Reuters poll. The foreign trade surplus narrowed to EUR20.4 bn (USD22.3 bn) from EUR24.9 bn in May, missing analysts' expectations for EUR23.5 bn. (Reuters)

UK: Revises up 2022 economic growth to +4.8%. The Office for National Statistics said it now believed that Britain's economy grew by 4.8% in 2022, up from a previous estimate of 4.3%. Revisions to GDP in the two years before that - when the economy slumped by 10.3% in 2020 during the pandemic before bouncing back by 8.6% in 2021 - were minimal, the ONS said as it published its annual revisions to past data. The ONS said it had updated the way it weights sectors of the economy within the overall GDP data, with mining and quarrying now larger relative to other sectors, reflecting the increase in oil and gas prices. The health sector was also given more weight as it was busier than usual after the pandemic. (Reuters)

China: Imports resume growth but tamer exports raise outlook concerns. China's exports grew at their slowest pace in three months in July, missing expectations and adding to concerns about the outlook for the vast manufacturing sector, while a rush to boost chip supplies before expected US tech curbs bumped up imports. Outbound shipments climbed 7.0% in July from the year earlier, customs data showed, a slower pace of growth than June's 8.6% rise and missing forecasts of a 9.7% increase. Imports rose at a robust 7.2% rate, reversing a 2.3% decline in June and marking the strongest performance in three months. (Reuters)

Japan: BoJ won't hike rates when markets are unstable, Uchida says. The BoJ will not hike its policy rate when financial and capital markets are unstable, Deputy Governor Uchida Shinichi said after hawkish comments from Governor Kazuo Ueda and fears of a US recession led to a global market rout in the past few trading days. "If the outlook, the upside and downside risks to the outlook, or the likelihood of realizing the outlook change as a result of these market developments, the path of the policy interest rate will certainly change," a dovish Uchida said. "In fact, in contrast to the process of policy interest rate hikes in Europe and the US, Japan's economy is not in a situation where the Bank may fall behind the curve if it does not raise the policy interest rate at a certain pace," the policymaker added. (RTT)

Japan: Top currency diplomat says monitoring markets with sense of urgency. The Japanese government is closely monitoring stock and currency markets and cooperating with the central bank and other countries, Japan's top currency diplomat Atsushi Mimura said. "We've been cooperating with other countries, as well as the Bank of Japan and other government agencies," Mimura said. He also stressed that there have been no major changes in Japan's economic fundamentals, saying that the Japanese economy is likely to recover modestly. When asked specifically about current foreign exchange rates, Mimura said he doesn't have specific levels in mind. (Reuters)

India: Cenbank to stand pat on rates again, markets hope for clues on cuts. India's central bank is widely expected to hold rates steady but with growing worries about the global economy investors are hoping for a more dovish tone from policymakers that could open the door for an Oct rate cut. All 59 economists in the Reuters poll conducted in late July predicted the Reserve Bank of India would hold the repo rate at 6.50% for a ninth straight meeting. Still, investors are hopeful the RBI will soften its stance on inflation following the recent souring of global market sentiment and nearcertainty of an interest rate cut by the US Federal Reserve in Sep. (Reuters)

Markets

Cape EMS: CEO sells 112.7m more shares, cuts stake by 12.45% in six trading days. Cape EMS MD and CEO Christina Tee Kim Chin continued her divestment of company shares, selling 112.7m shares for RM53.56m. The shares were sold in 30 transactions at an average price of 47.5 sen each. Following the latest sale, Tee's stake in Cape EMS decreased from 38.05% to 25.6%, a reduction of 12.45%. Over the past six trading days, she has sold nearly 130m shares. (The Edge)

Uzma: Wins PTTEP Sarawak job. Uzma has accepted a contract award from PTTEP Sarawak Oil Ltd for the provision of one hydraulic workover unit (HWU) and associated services for PTTEP, pursuant to the latter’s letter of award dated July 4, 2024 and subsequently approved on Aug 5, 2024. Uzma said the scope of works comprises the provision of HWU equipment and services for PTTEP’s workover campaign on two platforms offshore Sabah and Sarawak. Uzma said the contract is set to become effective on July 4, 2024 and will remain valid until the completion of six firm wells, unless extended or earlier terminated in accordance with the terms and conditions of the contract. (StarBiz)

MN Holdings: Partners with China's construction giant to explore power industry projects. MN Holdings has partnered with a unit of China’s largest construction and real estate conglomerate to explore collaborations in power industry projects, including data centre, solar and independent power plant sectors. The utilities infrastructure service provider said its wholly owned subsidiary, MN Power Transmission SB, has entered into a twoyear memorandum of understanding (MOU) with China State Construction Engineering (M) Sdn Bhd (CSCEM). CSCEM is a unit of Beijing-based China State Construction Engineering Corp, which is known for its urban planning and landmark projects globally. (The Edge)

HeveaBoard: To supply low formaldehyde emission particle boards to China furniture maker. HeveaBoard is supplying low formaldehyde emission particle boards to China’s Boloni Intelligent Technology (Beijing) Co Ltd. Boloni is an internationally renowned interior design company offering high-end total solution interior design services. HeveaBoard MD Yoong Hau Chun noted that the group is committed to sustainability and innovation. (The Edge)

Kawan Renergy: Unit bags RM58m contract from KAB Energy. Kawan Renergy’s subsidiary, Kawan Engineering SB (KESB), secured a RM58m contract from KAB Energy Holdings SB for mechanical, firefighting, and electrical works at a 52-megawatt power plant in Sipitang, Sabah. KESB is required to provide a performance bond and corporate guarantee within 20 days from the receipt of the letter of award dated April 8, 2024. (The Edge)

Willowglen: Awarded RM28m deal. Willowglen MSC has been awarded a contract valued at RM27.8m from Kadenko Co Ltd, Singapore, for the provision of supervisory control and data acquisition and condition monitoring system, monitoring and control network. Willowglen, which is engaged in the research, development and supply of computer-based control systems, said the commencement date of the contract is on Aug 7, 2024 and will be completed by May 30, 2028. “The contract is expected to contribute positively to the group’s earnings and net assets per share for the financial years ending Dec 31, 2024 to 2028. (StarBiz)

MARKET UPDATE

The FBM KLCI might open lower today as US stocks slumped Wednesday after a morning rally evaporated, but the losses on Wall Street weren’t as bad as the manic moves that wracked markets worldwide over the last week. The S&P 500 slipped 0.8% after an earlier jump of 1.7% petered out. The Dow Jones Industrial Average fell 234 points, or 0.6%, while the Nasdaq composite dropped 1%. Stocks swung lower as Nvidia, one of Wall Street’s most influential companies, went from a morning gain of 4.4% and pushing strongly upward on the S&P 500 to a loss of 5.1% that made it the index’s heaviest weight. Nvidia and other Big Tech stocks have been struggling the last month on worries their prices shot too high amid Wall Street’s frenzy around artificial-intelligence technology. In stock markets elsewhere, indices climbed across much of Europe and Asia. MSCI's gauge of stocks across the globe fell 0.35 points, or 0.05%, to 770.64 after earlier rising to a session high of 783.83. Europe's STOXX 600 index had closed up 1.5%.

Back home, Bursa Malaysia maintained its upward trajectory to end higher for the second consecutive day today, driven by a wave of investor optimism following the United States Federal Reserve's reassuring remarks to prevent an economic downturn. Add to that, the Bank of Japan also took to the stage to reinforce the central bank’s commitment to monetary easing, following the global stockmarket rout on Monday. At the closing bell, the FBM KLCI put on 17.48 points or 1.11% to 1,591.87 compared with Tuesday's close of 1,574.39.

Source: PublicInvest Research - 8 Aug 2024