HEADLINES

Economy

US: Fed's Powell, in policy shift, says 'time has come' to cutrates. Federal Reserve (Fed) Chair Jerome Powell endorsed animminent start to interest rate cuts, saying further cooling in the jobmarket would be unwelcome and expressing confidence that inflation is within reach of the US central bank's 2% target. "The time has come for policy to adjust," Powell said in a highly anticipated speech to the Kansas City Fed's annual economic conference in Jackson Hole, Wyoming. (Reuters)

US: Fed’s preferred price gauge to reinforce rate cuts. US inflation figures in the coming week will reinforce that long-awaited interest-rate cuts are coming soon, while a reading on consumer spending is seen indicating that the central bank has been successful at keeping the expansion intact. Economists see the personal consumption expenditures price index excluding food and energy — the Fed’s preferred measure of underlying inflation —rising 0.2% in July for a second month. (Bloomberg)

US: New-home sales surge to highest level since May 2023.New-home sales in the US bounced back to the highest level since May 2023 as buyers took advantage of lower mortgage rates and more listings to choose from. Contract signings on new single family homes increased 10.6% last month to a 739,000 annual rate, government data showed. The pace beat all estimates in a Bloomberg survey of economists. The pickup in sales allowed builders to make a dent in inventory last month, which fell to the lowest level since the start of the year. (Bloomberg)

EU: ECB’s Lane says return to 2% inflation target not yet secure. The European Central Bank’s battle to return inflation to2% isn’t won and interest rates must stay as high as necessary toachieve that goal, without harming the economy unduly, according to chief economist Philip Lane. “The return to target is not yetsecure,” Lane said. “In particular, the monetary stance will have toremain in restrictive territory for as long as is needed to shepherdthe disinflation process towards a timely return to the target.(Bloomberg)

UK: 'Things will get worse' — PM Starmer says fixing UKproblems will take time. Prime Minister Keir Starmer will warn Britons that the changes needed to fix Britain's many problems willtake time, saying "things will get worse before we get better" in a speech he describes as a chance to level with the public. Afterbeing elected as prime minister at a July landslide election, Starmerhas repeatedly blamed the former Conservative government forleaving Britain in a parlous state, something he said allowed "thugs"to spark this month's anti-migrant riots. (Reuters)

Japan: IMF sees scope for Bank of Japan to keep raising rates.The Bank of Japan (BOJ) can raise interest rates gradually asheightening inflation expectations leave further scope to normaliseits ultra-loose monetary policy, the International Monetary Fund(IMF) said. The speed of further rate increases will be "very datadependent," as the BOJ will look at the pace at which inflation,wage growth and inflation expectations heighten in normalisingpolicy, said IMF chief economist Pierre-Olivier Gourinchas.Gourinchas said Japan's inflation is higher than 2% and inflationexpectations have started to move towards, or "maybe even a littlebit above" the BOJ's 2% target. (Reuters)

Markets

Hibiscus Petroleum (Outperform, TP: RM3.20): Indirect unitacquires 30% stake in Block PM327 production sharing contract. Hibiscus Petroleum’s indirect wholly owned subsidiary Straits Hibiscus SB has signed an agreement to acquire a 30%participation interest in the Block PM327 production sharing contract (PSC). The acquisition is being made through a farm-inarrangement with Petronas Carigali SB, said Hibiscus Petroleum ina statement. The transaction is currently pending regulatoryapprovals and fulfilment of conditions precedent. (The Edge)

Yong Tai: To defend itself in RM105m contract dispute, maycountersue Kerjaya Prospek. Property developer Yong Tai saidit will defend itself against a lawsuit filed by construction firm Kerjaya Prospek Group over an alleged unpaid contract dispute,and may also consider countersuing. In a bourse filing, Yong Taiconfirmed that its unit, Apple 99 Development SB, has been servedwith a writ of summons and statement of claim filed by Kerjaya Prospek (M) SB, a wholly-owned subsidiary of Kerjaya Prospek, forallegedly failing to pay an outstanding residual contract sum ofRM105.14m. (The Edge)

Pantech: Confirms plan to list two subsidiaries on Main Marketvia SPV. Pantech Group Holdings has confirmed that it will belisting two wholly-owned subsidiaries, Pantech Stainless & AlloyIndustries SB (PSA) and Pantech Steel Industries SB (PSI), on theMain Market of Bursa Malaysia via a special purpose vehicle (SPV)named Pantech Global. In a filing with Bursa Malaysia, Pantechsaid the proposed listing will enable the group to unlock andcrystallise the value of its investment, as well as provide an avenuefor its existing shareholders to participate in the equity of Pantech Global. (StarBiz)

Jati Tinggi: Wins RM39.9m contract for 33kV cable project. Jati Tinggi Group has secured a RM39.9m contract from YM Teras SBto lay 33kV aluminium XLPE underground cables and accessoriesfor asset development in Selangor. In a filing with Bursa Malaysia,Jati Tinggi said its wholly-owned subsidiary, Jati Tinggi Holding SBaccepted the letter of award (LOA) from YM Teras. The contractwill take effect from the acceptance date and must be completedwithin 660 days from that date. (StarBiz)

Keyfield: Secures RM48m contract from Vestigo Petroleum.Keyfield International has secured a contract worth RM48m to provide an accommodation workboat, including an extension option. In a filing with Bursa Malaysia, Keyfield said its whollyowned subsidiary, Keyfield Offshore SB (KOSB) secured the contract from Vestigo Petroleum SB to provide one unit of accommodation work boat (AWB) for Vestigo’s offshore activities. (StarBiz)

KIP REIT: Acquires land in Gerik for RM14.8m. KIP Real EstateInvestment Trust, which primarily invests in retail properties, is acquiring a 4,663-sqm metre (100,416 sqft) parcel of land in Gerik,Perak, for RM14.8m, cash. This marks the trust's third acquisition this year, after KIP Mall Kota Warisan in Sepang and D’Pulze Shopping Centre in Cyberjaya. In a bourse filing on Friday, KIPREIT said Pacific Trustees, acting as its trustee, has signed aconditional sale and purchase agreement with Bluebros Hypermarket SB for the acquisition. (The Edge)

MARKET UPDATE

US markets closed higher last Friday following comments by Federal Reserve Chair Jerome Powell who said interest rate cutswere on the horizon, though not disclosing when or by how much.Technology stocks and small-cap names led gainers on the day,on optimism that these groups would benefit most by the move. Onthe day, the Nasdaq Composite surged 1.5% as the S&P 500 andDow Jones Industrial Average gained 1.2% and 1.1% respectively.European markets also reacted positively to Powell’s commentswho, in addition to signalling cuts, also said that inflation in the UShad “declined significantly” and that the central bank can now equally focus on supporting a strong labour market. Germany’sDAX and France’s CAC 40 rose 0.8% and 0.7% while UK’s FTSE100 ended 0.5% higher. Asian markets were mostly mixed earlierin the day without the benefit of Powell’s comments, though likelyto open higher later today in positive reaction to Western counterparts’ moves. Data on the day showed Japanese inflation unchanged for the month. The Nikkei 225 rose 0.4%. The Hang Seng Index slipped 0.2% though the Shanghai Composite Index inched 0.2% higher. Closer to home, the Straits Times Index gained0.4% though the FBM KLCI lost 0.4%.

Source: PublicInvest Research - 26 Aug 2024