HEADLINES

Economy

US: Weekly jobless claims drop calms market fears. The number of Americans filing new applications for unemployment benefits fell more than expected last week, calming fears the labor market was unraveling and reinforcing that a gradual softening remains intact. Initial claims for state unemployment benefits fell 17,000 to a seasonally adjusted 233,000 for the week ended Aug. (Reuters)

US: Fed policymakers signal rate cuts ahead, but not because of market rout. Federal Reserve policymakers are increasingly confident that inflation is cooling enough to allow interest-rate cuts ahead, and they will take their cues on the size and timing of those rate cuts not from stock-market turmoil but from the economic data. That was the shared message of three US central bankers speaking who otherwise had slightly different takes on exactly where the economy stands a week and a day after they decided to hold the policy rate steady but signaled a reduction as soon as next month. (Reuters)

EU: US tops China as Germany's biggest trading partner. The US overtook China as Germany's biggest trading partner in the first half of 2024, according to preliminary German statistics office data, as Berlin's drive to reduce dependency on Beijing takes shape amid a resilient US economy. German imports and exports to US totalled around EUR127bn (USD139bn) from Jan to June, while for China the figure was EUR122bn, according to Reuters' calculations based on the data. (Reuters)

UK: Jobs market stays in slow gear, recruiters say. Britain's jobs market showed further signs of cooling last month and employers increased pay more slowly, according to a survey which will form part of the Bank of England's discussions about when to cut interest rates again. The Recruitment and Employment Confederation said permanent hiring extended a nearly two-year downturn although the drop was less marked than a month earlier, and pay increases were weaker than in June. (Reuters)

India: Central bank holds rates again despite global market volatility. The Reserve Bank of India (RBI) kept its key interest rate unchanged on Thursday, as widely expected, retaining its focus on bringing inflation down even as global market volatility left other major central banks poised to ease policy. The Monetary Policy Committee (MPC), which consists of three RBI and three external members, kept the repo rate unchanged at 6.50% for a ninth straight policy meeting. (Reuters)

South Korea: State-run think tank argues for early rate cuts. South Korea's state-run think tank on Thursday said there was a need for early cuts in interest rates, as it flagged weaker economic growth and inflation amid sluggish domestic demand. In its revised economic forecasts, the Korea Development Institute (KDI) said the economy was expected to grow 2.5% in 2024, down from 2.6% seen three months earlier, while keeping its projection for 2025 at 2.1%. (Reuters)

Taiwan: July exports misses forecasts on weak China demand, but U.S. soars. Taiwan's exports rose less than expected in July as weak demand from China offset record orders from the United States which underscored the island's essential role as a supply hub for the booming artificial intelligence (AI) industry. (Reuters)

Markets

Sunway-REIT (Neutral, TP: RM1.55): To acquire Kluang Mall for RM158m. Sunway Real Estate Investment Trust (SunwayREIT) has entered into a conditional sale and purchase agreement (SPA) with Tenaga Nusantara SB to acquire Kluang Mall in Kluang, Johor for RM158m. (StarBiz)

Comments: We understand that the asset is a free-standing fourstorey shopping complex with a gross floor area of approximately 808,000 sq. ft. and a net lettable area of approximately 360,000 sq. ft. It has approximately 920 car park bays. It is almost fully occupied (at 99%), with over 130 tenants. The new asset is estimated to generate an indicative net property income yield of approximately 6.8% based on the purchase consideration, in comparison to SREIT’s portfolio NPI yield of 5.7% for FY23. Upon completion of the proposed acquisition, SREIT’s assets under management will increase to RM9.8bn. Pending completion of the deal (expected by 4QCY24), we keep our earnings unchanged for now. Given the limited share price upside, we maintain our Neutral call with TP unchanged at RM1.55

TSH Resources: Kalimantan land disposal downsized to RM447m. TSH Resources land sales, which would have fetched roughly IDR2.43trn (RM731.1m), in North Kalimantan have been downsized to RM447.2m. The plantation group announced to the stock exchange that its plan to sell the remainder of three land plots in North Kalimantan did not materialise, due to the non-fulfilment of a condition precedent. (The Edge)

ATA IMS: Partners Chinese firm to venture into household and electrical appliances sector. ATA IMS said it has teamed up with Shanghai-listed Jinhua Chunguang Technology Co Ltd (Chunguang) to venture into the household and electrical appliances sector. The electronics manufacturing service provider said its wholly owned subsidiary, Integrated Manufacturing Solutions SB (IMS), and Chunguang have agreed to form a JV company known as Suntone (Malaysia) Technology SB. IMS will hold a 49% stake in the JV company via an investment of RM4.9m, while Chunguang, which specialises in cleaning electrical hoses and accessories, will hold the remaining 51% stake worth RM5.1m, said ATA IMS. (The Edge)

Taliworks: Unit in UiTM tie-up. Taliworks Corp Bhd’s subsidiary, Sungai Harmoni SB, has partnered with Universiti Teknologi MARA (UiTM) to jointly drive research in water treatment plant (WTP) operations. The collaboration will also look into the sustainable management of the residuals generated. In a statement, Taliworks said the partnership will focus on integrating artificial intelligence and Internet of Things technologies to develop sustainable methods for the operation and maintenance of WTP and managing the residuals. (StarBiz)

JF Technology: JF Technology and Ironwood Electronics seal cross-distribution deal. JF Technology and Ironwood Electronics Inc have signed a cross-distribution agreement, where JF Technology will use Ironwood’s contact assembly cartridges, and Ironwood will use JF Technology’s contact pins. Under this agreement, JF Technology will use Ironwood Electronics’ contact assembly cartridges, which include cantilever, rigid, and Ironwood’s new ATE-P contact assemblies for high-performance BGA/LGA testing. (StarBiz)

MARKET UPDATE

The FBM KLCI might open higher today as US stocks rallied Thursday in Wall Street’s latest sharp swerve after a better-thanexpected report on unemployment eased worries about the slowing economy. The S&P 500 jumped 2.3% for its best day since 2022 and shaved off all but 0.5% of its loss from what was a brutal start to the week. The Dow Jones Industrial Average rose 683 points, or 1.8%, and the Nasdaq composite climbed 2.9% as Nvidia and other Big Tech stocks helped lead the way. In stock markets elsewhere, indices were mixed across Asia and Europe. In Japan, which has been home to some of the wildest moves in global markets, the Nikkei 225 ticked down by 0.7%. That looked like a ripple following its tidal swings of down 12.4% and up 10.2% to start the week. Back home, Bursa Malaysia snapped two consecutive days of gains to end marginally lower today as investors grapple with policy uncertainties over the interest rate cuts by the US Federal Reserve (Fed) and the Bank of Japan (BoJ). At the closing bell, the FBM KLCI eased 1.49 points or 0.09 per cent to 1,590.38 from Wednesday’s close of 1,591.87.

Source: PublicInvest Research - 9 Aug 2024