HEADLINES

Economy

US: Annual consumer price increase moderated to below 3% as inflation ebbs. US consumer prices rose moderately in July and the annual increase in inflation slowed to below 3% for the first time in nearly 3.5 years, opening the door wider for the Fed to cut interest rates next month. The report from the Labor Department marked the third straight month of tame consumer price readings and added to a mild rise in producer prices last month in suggesting that inflation was firmly back on a downward trend. (Reuters)

US: Crude oil inventories unexpectedly increase. Crude oil inventories in the US unexpectedly increased according to a report released by the Energy Information Administration. The report said crude oil inventories rose by 1.4m barrels last week after falling by 3.7m barrels in the previous week. Economists had expected crude oil inventories to decrease by another 2m barrels. At 430.7m barrels, US crude oil inventories are about 5% below the five-year average for this time of year, the EIA said. Meanwhile, the EIA said gasoline inventories slumped 2.9m barrels last week, about 3% below the five-year average for this time of year. (RTT)

US: Mortgage refinancing surges by most since 2020 on lower rates. US mortgage refinancing surged last week by the most since the early days of the pandemic as borrowing costs continued to drift lower. The Mortgage Bankers Association’s refinancing index jumped 34.5% to a more than two-year high of 889.3. Mortgage applications to purchase a home climbed 2.8% in the week ended 9 Aug, the largest advance since the first week of June. The contract rate on a 30-year fixed mortgage eased 1bps to 6.5%, the MBA data showed. (Bloomberg)

EU: Employment growth weakens in sign of trouble ahead. Firms across the euro zone slowed hiring in 2Q amid mounting signs of economic weakness. Employment grew 0.2% in 2Q after 0.3% in the previous three months. Total output in the 20-nation economy increased 0.3% in the same period, despite a disappointing industry performance in June. The euro economy has sent distress signals recently, with consumers unwilling to spend despite outsized wage increases, private-sector activity grinding to a halt, and confidence in its largest member, Germany, tanking. (Bloomberg)

UK: Inflation picks up less than expected, boosting rate cut bets. British consumer price inflation increased for the first time this year in July, official figures showed, but the rise was smaller than expected as services prices rose less rapidly. The annual rate of consumer price inflation increased to 2.2% after two months at the BOE’s 2% target, the Office for National Statistics said, coming in slightly below the median 2.3% forecast in a Reuters poll of economists. (Reuters)

UK: House prices post first annual rise in more than a year. House prices in London rose for the first time in more than a year, a sign that its property market is beginning to shake off the impact of higher interest rates. Average prices in the UK capital climbed 0.6% in June compared to a year ago to GBP523,000 (USD672,130), the fastest growth since May 2023, the Office for National Statistics said. It showed London’s property market recovery gathering momentum after it suffered some of the sharpest declines in prices following the surge in mortgage rates. (Bloomberg)

China: Economy is plodding along in absence of consumption spark. China’s economy probably failed to turn the corner on its worst stretch in five quarters, with an uneven recovery in July held back by consumer spending still lagging industrial activity and investment. Data will show retail sales remained sluggish, according to the median forecasts compiled by Bloomberg, despite a slight improvement thanks to a more favourable base of comparison and the summer holiday season. Growth in the industrial sector and investment probably stagnated but continued to outpace consumption that accounts for nearly half of gross domestic product. (Bloomberg)

India: Wholesale price inflation eases to 2.04%, more than forecast. India's wholesale price inflation softened more-thanexpected in July from a 16-month high in June, provisional data from the Ministry of Commerce and Industry revealed. The wholesale price index, or WPI, rose 2 % YoY in June, slower than the 3.4% increase in June. Economists had expected inflation to ease to 2.4%. Prices for primary articles grew at a slower pace of 3.1% in July versus an 8.8% gain in the prior month. Similarly, the yearly price growth in the food index moderated to 3.6% from 8.7%. (RTT)

New Zealand: Cuts key rate for first time in 4 years. New Zealand's central bank lowered its key interest rate for the first time in four years as domestic activity showed a more pronounced slowdown amid continuous decline in inflation. The Monetary Policy Committee of the Reserve Bank of New Zealand, unexpectedly decided to cut the Official Cash Rate by 25Bbps to 5.25%. With inflation set to return to the target band in the Sept quarter and growing excess capacity expected, the committee concluded that there was scope to temper the extent of monetary policy restraint. (RTT)

Markets

Solarvest: NCT launch 270-factory Phase 1 of NCT Smart Industrial Park. Solarvest Holdings and NCT Group of Companies have announced the commencement of phase one of their project, comprising 270 solar-ready factories at the NCT Smart Industrial Park (NSIP). The NSIP will be the first solar-ready industrial park in the region, the joint developers said in a statement. In their combined efforts, Solarvest offers a streamlined approach to promote solar adoption with aims to make clean energy more feasible, affordable, and attractive to business owners, while NCT Group leverages bulk purchasing for the solar system, resulting in significant cost savings for factory owners. (The Star)

Paragon Globe: Secures Tropicana Danga land to develop its first serviced apartment in JB. Paragon Globe's subsidiary, PGB Desa Heights SB has entered into a development rights agreement with Tropicana Danga Bay SB to develop its first serviced apartment project in Johor Bahru. Paragon Globe said this landmark agreement marks the beginning of its first serviced apartment project in Johor Bahru which is set to achieve the GreenRE Gold certification. (Business Times)

Varia: Lands RM61m contract for UPSI project. Varia Bhd’s subsidiary, Pembinaan Teguh Maju SB, has been awarded a RM61.45m contract for the construction and completion of a significant project at Universiti Pendidikan Sultan Idris (UPSI) in Perak. The project involves the design, construction, and commissioning of student hostels, an international and mobility centre, a language skills centre, support spaces, external infrastructure, and related works at UPSI. The contract spans 31 months, starting from August 19, 2024, and is scheduled for completion by 31 March 2027. (The Malaysian Reserve)

Ranhill: 2Q net profit nearly halves on reversal of profit recognition. Ranhill Utilities posted a 45.8% decline in net profit to RM6.53m in the second quarter ended 30 June 2024 (2QFY2024), from RM12.06m a year ago, dragged down by an RM8m reversal of profits previously recognised by its 51% owned-subsidiary Ranhill Worley SB. The group said the profit reversal was related to the oil and gas (O&G) segment in the design engineering services for a floating production, storage and offloading vessel job for a Brazilian O&G producer. (The Edge)

Synergy House: Posts net loss on 32.07% higher revenue in 2Q. Synergy House registered a net loss of RM4.77m in the 2Q2024 from a net profit of RM6.20m a year ago. The loss was primarily driven by a one-off provision for doubtful debts amounting to RM13.4m. "This is related to a specific customer which is partially net off against expected trade credit insurance receivable of RM3.15m for a net impact of RM10.25m," it said in a statement. (Business Times)

Vstecs: posts 2Q net profit of RM15mil. Vstecs expects the increasing investment and demand for data centres to benefit Malaysia’s economy and its enterprise business. The information and communications technology distributor noted that over the past few weeks, there had been a notable rise in inquiries for infrastructure equipment with artificial intelligence for data centres. In the second quarter ended June 30, 2024, the company’s net profit was flat at RM15.3m compared with RM15.7m in the previous corresponding period. Revenue was higher at RM624.4m, compared with RM608.8m a year earlier. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks ticked higher in a quiet Wednesday after the latest update on inflation came in almost exactly as economists expected. The S&P 500 rose 0.4% to follow up on one of its best days of the year and climb within 3.7% of its all-time high set last month. The Dow Jones Industrial Average gained 242 points, or 0.6%, to finish a day above the 40,000 level for the first time in nearly two weeks. The Nasdaq composite edged up less than 0.1%. Treasury yields were also relatively steady in the bond market after the US government said consumers paid prices that were 2.9% higher last month for gasoline, food, shelter and other things than a year earlier. The data should keep the Federal Reserve on track to cut its main interest rate at its next meeting in September, a move that Wall Street has long been looking forward to. The Fed has been keeping rates at an economy-crunching level in hopes of stifling inflation that topped 9% two years ago, and lower interest rates would ease the pressure on both the economy and on prices for investments. In stock markets elsewhere, indices were modestly higher across much of Europe and mixed in Asia. Japan’s Nikkei 225 has been the center of financial markets’ wildest action in recent weeks, and it rose 0.6% following a day of ups and downs. Japan’s embattled Prime Minister Fumio Kishida surprised the country Wednesday by announcing he’ll step down when his party picks a new leader next month. Back home, Bursa Malaysia finished marginally higher, in line with the positive performance across the region. At the closing bell, the FBM KLCI rose by 0.17% or 2.83 points compared with Tuesday’s close of 1,609.52.

Source: PublicInvest Research - 15 Aug 2024