HEADLINES

Economy

US: Consumer medium-term inflation expectations drop. US consumers' medium-term inflation expectations eased substantially in July even as their near-and longer term outlooks for price pressures held steady, although households are increasingly worried about staying current on their debt, a New York Fed report showed. The median three-year inflation expectation dropped to 2.3% from 2.9% in June to register its lowest reading since the New York Fed launched the monthly Survey of Consumer Expectations in 2013. The one-year and five-year outlooks held steady at 3.0% and 2.8%, respectively. (Reuters)

EU: ECB to cut key rate six times by end of 2025. The ECB is now likely to cut its deposit rate once a quarter through the end of next year, a timetable that will see its easing cycle end sooner than previously anticipated, according to economists. A Bloomberg survey of forecasters shows that benchmark hitting 2.6% in Dec 2025 following six consecutive quarter-point reductions. Previously, respondents predicted that such a level would be reached only in 2Q of 2026. (Bloomberg)

EU: German wholesale prices fall marginally in July. Germany's wholesale prices continued to fall in July but the pace of decrease was marginal. Wholesale prices posted an annual drop of 0.1% after easing 0.6% in June. Wholesale prices have been falling since May 2023 and the latest decline was the slowest in the current sequence of decrease. The latest YoY decline was largely driven by the 8.4% fall in chemical product prices and 7.7% decrease in prices of iron, steel and semi-finished products. MoM, wholesale prices gained 0.3%, offsetting June's 0.3% fall. Economists had forecast a monthly growth of 0.2%. (RTT)

UK: BOE to get more cause for caution with inflation to pick up. UK inflation is expected to pick up for the first time this year in new data that’s likely to keep BOE policymakers wary about pushing ahead with further interest rate reductions next month. Forecasters expect official data to show that inflation accelerated to 2.3% in July from 2% in May and June as a favourable tailwind from energy bills fades out of the figures, a survey of economists by Bloomberg showed. (Bloomberg)

China: Foreign investors pull record amount of money from China. Foreign investors pulled a record amount of money from China last quarter, likely reflecting deep pessimism about the world’s second-largest economy. China’s direct investment liabilities in its balance of payments dropped almost USD15bn in the April-June period, marking only the second time this figure has turned negative, according to data from the State Administration of Foreign Exchange released. It was down about USD5bn for the first six months. (Bloomberg)

India: July retail inflation eases to five-year-low of 3.5% YoY. India's retail inflation fell in July to a near five-year low, as food inflation eased from previous highs due to a base effect, government data showed. Annual retail inflation was 3.5% in July, down from 5.1% in June. The latest print is the lowest since Aug 2019. Economists had forecast inflation at 3.7%, based on a higher print in July last year when inflation hit a 15-month peak of 7.4%. Retail inflation fell below the RBI target of 4% largely due to the high-base effect, suggesting the slower pace of price rises was temporary. (Reuters)

India: Industrial production growth eases to 4.2%. India's industrial production expanded at a weaker pace in June amid slowdowns in the growth of the electricity and manufacturing sectors, data from the Ministry of Statistics and Programme Implementation revealed. Industrial output advanced 4.2% YoY in June, slower than the revised 6.2% rise in May. Economists had expected the growth to ease to 5.5%. Among the major three sectors, the overall growth was mainly driven by an 8.6% surge in electricity output. However, the rate of growth eased notably from 13.7% in May. (RTT)

Australia: RBA warns against ‘overconfidence’ in forecasting. Australian central bank Deputy Governor Andrew Hauser warned against “overconfidence” in forecasting the economy and monetary policy, saying a more mature approach is to learn from errors and acknowledge how little is known about the future. “Such learning can be difficult for those who treat forecast ‘misses’ as failures,” the Reserve Bank No. 2 said in a speech. The RBA’s recent forecasting errors on inflation showed price pressures had been somewhat stickier than expected, Hauser said. (Bloomberg)

Hong Kong: Collapsing land sales threaten city’s funding model. Hong Kong’s real estate slump is choking off one of the financial hub’s most important sources of government revenue. For decades, the city’s government generated massive income from auctioning off land to cash-rich developers as prices soared. That helped enable Hong Kong’s low-tax system, which has been crucial to its business hub status. The arrangement largely worked — until recently. A protracted property downturn is now undermining the model. Falling home prices and rising office vacancies over the past few years have caused developers to either stop bidding for sites, or offer exceptionally low prices for plots in public tenders. (Bloomberg)

Markets

Icon Offshore: Investigation into icon amara incident currently underway. Icon Offshore said an investigation on the cause of the incident involving its vessel, Icon Amara, is currently underway, adding that it is fully cooperating with relevant authorities. According to news reports, the explosion which occurred in the vessel’s engine room on Aug 2 had claimed the lives of two of its crew, while another crew member was seriously injured. The company said that its emergency response team was immediately mobilised to provide the necessary support to the affected crew members and their next of kin. (Bernama)

BTM Resources: Gets more time for biomass power plant. BTM Resources Bhd said its wholly-owned subsidiary BTM Biomass Products Sdn Bhd has received another extension from the Sustainable Energy Development Authority (Seda) to complete its 10MW biomass power plant in Chukai, Terengganu. The group said it has received its third extension from Seda for the renewable energy power plant to start its operations on 23 Dec 2025. Initially, the project was slated to kickstart its operations on 23 Jan 2022. (The Edge)

Pekat Group: Bags RM21.8m lightning protection systems job in Selangor. Pekat Group has bagged a RM21.79m contract from Gamuda Engineering SB for the construction of earthing and lightning protection systems in Rawang, Selangor. The company said the contract was awarded to its wholly owned subsidiary Pekat E & LP SB (PELP). "The job involves performing subcontract works in connection to construction and completion, including testing and commissioning of earthing and lightning protection systems. (Business Times)

Straits Energy: Plans to list unit on NYSE American by 4Q 2024. Straits Energy Resources has proposed to list its 76.68%- owned subsidiary, TMD Energy Ltd (TMDEL), on the NYSE American by the fourth quarter (4Q) of 2024. The company had initially planned to list its oil bunkering and shipping-related services segment on the NASDAQ. Straits Energy said that instead of pursuing a listing on the NASDAQ stock exchange, it will seek to list its subsidiary on the NYSE American. (The Edge)

Encorp: Suspends GCEO pending MACC investigations. Encorp has suspended its GCEO, Hazurin Harun, with immediate effect, to facilitate internal investigations relating to allegations made involving the Malaysian Anti-Corruption Commission (MACC). Encorp said the suspension will result in the powers, authorities and functions vested in Hazurin as GCEO to be suspended with effect from 12 Aug 2024, until further announcement by the board. “The board wishes to announce further that the company will continue its business as usual and during the period of suspension. (The Star)

Mikro MSC: To expand into signage and advertising with RM30m acquisition. Mikro MSC plans to acquire Singaporebased TES Productions & Projects Pte Ltd (TES) for RM30m in shares, aiming to diversify into the business of design, manufacture, and installation of signs and advertising displays. Mikro entered into a heads of agreement with Calida Group Pte Ltd for the acquisition, which will be fulfilled through the issuance of 134.83 million new shares at 22.25 sen each. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today after US stocks drifted through a quiet Monday to finish mixed, as markets around the world stabilized following a wild week of extreme swings. The S&P 500 finished little changed, edging up by less than 0.01%, after flipping between small gains and losses through the day. The Dow Jones Industrial Average slipped 140 points, or 0.4%, and the Nasdaq composite rose 0.2%. Many European and Asian stock markets were also relatively quiet. The STOXX 600 index closed on a flat note, after last week's muted performance as the continent-wide index rebounded from last Monday's sharp selloff in risk assets on US recession fears. That’s a notable turn after last week kicked off with the worst day for Japanese stocks since the Black Monday crash of 1987, only to give way to the best day since 2022 for US stocks. Back home, Bursa Malaysia's benchmark index continued its uptrend momentum today, breaching the psychological 1,600 level in the process, amid the improving global market sentiment. At the closing bell, the FBM KLCI increased by 0.66% or 10.61 points to 1,606.66 from last Friday’s close of 1,596.05.

Source: PublicInvest Research - 13 Aug 2024