HEADLINES

Economy

• US: Business equipment borrowings rise 13% in July. UScompanies increased borrowing to finance equipment investments by 13% in July compared with the previous year, the EquipmentLeasing and Finance Association said. New loans, leases and linesof credit signed up by companies in July were up 11% fromUSD10bn a month earlier. The Washington-based company, whichreports economic activity for the over USD1trn equipment financesector, also said that credit approvals for US companies in Julywere 75.8%, up from 75% in June. ELFA's non-profit affiliate, theEquipment Leasing & Finance Foundation, said its confidenceindex for Aug stood at 58.4, up from 50.7 for July, its highest levelin more than two years. A reading above 50 indicates a positivebusiness outlook. (Reuters)
• US: Top Fed official warns against self-fulfilling pessimism onUS economy. A top US central banker has said she was focusedon preserving the health of the jobs market, as she warned of thepotential for self-fulfilling negativity on the economy raising the riskof a downturn. Susan Collins, president of the Boston FederalReserve, told the Financial Times the world’s largest economy wasin a good place now that inflation had receded and the labourmarket had cooled without any red flags. (FTimes)
• US: Economy could be hit hard by lockouts at Canada's 2major freight railroads. Both of Canada's major freight railroadshave come to a full stop because of a contract dispute with theirworkers, an impasse that could bring significant economic harm tobusinesses and consumers in Canada and the US if the trains don'tresume running soon. Canadian National and CPKC railroads bothlocked out their employees after the deadline of 12:01 a.m. (CBSNews)
• EU: ECB policymakers focused on Sept meet to discuss ratecut. Policymakers at the ECB were keen to explore the option of reducing interest rates in the monetary policy meeting in Sept asthey turned wary of the mixed bag of recent economic data, minutesof the July 17-18 rate-setting session showed. The GoverningCouncil, led by ECB President Christine Lagarde, left the keyinterest rates for the euro area unchanged in July after loweringthem for the first time in five years in the previous session. (RTT)
• EU: Poland retail sales growth steady at 4.4%. Poland's retailsales expanded at a stable rate in July, though at a slower-thanexpected pace, figures from Statistics Poland showed. At constantprices, retail sales climbed 4.4% YoY in July, the same as in June.The expected increase was 5.6%. In July, sales of motor vehicles,motorcycles, and parts grew the most by 30.1% annually, and thoseof solid, liquid, and gaseous fuels by 9.9%. On the other hand, salesof textiles, clothing, and footwear declined markedly by 10.4%.(RTT)
• UK: Consumer confidence matches almost 3-year high in Aug.British consumer confidence held at an almost three-year high in Aug, bolstered by improving sentiment around personal finances and major purchases, according to a survey that added to positive signals in the wider economy. The GfK Consumer Confidence Index, Britain's longest-running gauge of economic morale among members of the public, was steady in Aug at -13, matching July's 34-month high. (Reuters)
• Taiwan: Jobless rate steady at 3.34%. The unemployment ratein Taiwan held steady in July, the Directorate General of Budget Accounting and Statistics reported. The seasonally adjusted unemployment rate came in at 3.34% in July, unchanged from amonth ago. In the same period last year, the rate was 3.44%. Onan unadjusted basis, the jobless rate rose to an 11-month high of3.45% in July from 3.39% in the previous month. Unemploymentincreased by 9,000 to 415,000. (RTT)
• Korea: Bank of Korea keeps interest rate at 15-year high. TheBank of Korea left its benchmark interest rate unchanged but it signaled a reduction in the near term as inflation continued itsdownward trend and the recovery in domestic economy remainsweak. The Monetary Policy Board headed by Rhee Chang Yong unanimously decided to hold the Base Rate at a 15-year high of3.50%. This was the thirteenth consecutive hold and the outcomeof the meeting came in line with expectations. (RTT)

Markets

• Capital A: To issue revenue bonds worth up to USD443m.Capital A announced that its unit AirAsia RB 1 Ltd (AARB1) had entered into definitive agreements with aircraft lessors and private credit funds for the issuance of Regulation S secured notes (revenue bonds) worth up to USD443m, due in Sept 2026 and Aug 2028. AARB1 is the wholly owned special purpose vehicle of AirAsia (AAB), which in turn is the wholly owned subsidiary of Capital A. (StarBiz)
• AEON Credit: Issues RM350m sukuk to fund financingdisbursements. AEON Credit Service (M) has issued the sixthsenior sukuk issuance under its RM2bn sukuk wakalahprogramme. The issuance, with a nominal amount of RM350m,was issued in two tranches, comprising RM130m for a five-yeartenure and RM220m for six years, it said. Proceeds from the seniorsukuk will be utilised to fund financing, and to refinance existingloans/financing or any sukuk issued by the company. All utilisationof the sukuk programme proceeds will be shariah-compliant, thecompany added. (The Edge)
• Eupe Corp: Estimates bangsar project to generate RM300mGDV. Eupe Corporation has estimated a RM300m grossdevelopment value from its Bangsar project, said group MD DatukBeh Huck Lee. He said looking at today’s market condition, heforesees that the project should be quite feasible for the group. Torecap, in a May 2024, Eupe Corp said its unit Eupe Bangsar SBhad entered into a SPA with MCL Land (Pantai View) SB to acquirea 2.5-acre freehold parcel at Mukim Kuala Lumpur for RM69.2m.(StarBiz)
• Pan Malaysia: Proposes diversification and name change,secures RM47m fit-out contract. Pan Malaysia Holdings, a hoteland financial services entity, has proposed diversifying into interiordesign and fit-out activities and changing its name to ExsimHospitality. This move follows the acquisition of a 65.9% stake inPMHB by Exsim Hospitality Holdings SB for RM36.7m fromcompanies linked to tycoon Tan Sri Khoo Kay Peng in April. Thisexpansion aims to enhance control over quality and costs in itshospitality operations. (The Edge)
• TSH Resources: Eyes expansion into renewable energy. TSHResources, supported by strong cash flows and a solid financialposition with zero net gearing, is set to expand into renewableenergy while growing its plantation business organically. TSH's netcash from operations saw a 40.4% jump to RM109.2m in 1H24against RM77.8m in 1H23. This came about after its core PBT for1H24 surged by 39% to RM90.7m despite a marginal dip in revenueto RM494.9m due to persistent inclement weather, lowerproduction costs and finance costs. (StarBiz)
• MSM: Sees strong financial rebound with RM9.3m profit in1H24. MSM Malaysia Holdings (MSM) delivered a strongperformance in 1H24, achieving a net profit of RM9.3m comparedto a net loss of RM56.7m in the same period last year. Thisturnaround was driven by improved margins from higher averageselling prices and better capacity utilization. Revenue increased by30.4% to RM1.7bn from RM1.3bn, boosted by higher averageselling prices, increased sales volume, and incentives for certainpacked sugars sold domestically. (The Malaysian Reserve)

MARKET UPDATE

• The FBM KLCI might open lower today after US stocks weakened Thursday in the run-up to Wall Street’s main event for the week, a speech by Federal Reserve Chair Jerome Powell coming on Friday. The S&P 500 fell 0.9% for its worst day following a two week rally. The Dow Jones Industrial Average dropped 177 points,or 0.4%, and the Nasdaq composite sank 1.7%. Stocks fell asTreasury yields cranked up the pressure in the bond market following some mixed data on the US economy, which has beenslowing under the weight of high interest rates meant to get inflation under control. One report showed slightly more US workers applied for unemployment benefits last week than expected. The numberis still low relative to history, but the uptick could signal a job marketthat continues to cool. A second report, meanwhile, suggested US business activity remains deeply split. Growth for services businesses is accelerating, according to preliminary data from S&PGlobal Market Intelligence. But the country’s manufacturing sector appears to be contracting at a more severe rate. In stock markets else where, indices made mostly modest moves across Asia andEurope. South Korea’s Kospi rose 0.2% after the Bank of Koreadecided at its monetary policy meeting to keep rates unchanged.Hong Kong’s Hang Seng was an outlier and jumped 1.4%. Backhome, Bursa Malaysia bounced back today after two consecutivedays of losses on bargain hunting as investors are upbeat over theongoing corporate earnings season and positive performance onWall Street overnight. At the close, the FBM KLCI rose 6.34 pointsor 0.39% to 1,641.66 from yesterday’s close of 1,635.32.

Source: PublicInvest Research - 23 Aug 2024