HEADLINES

Economy

US: Inflation expectations stabilize but delinquency concerns grow. Consumer inflation expectations have stabilized both at the short- and longer-term horizons in recent months, but Americans continue to grow more concerned about their ability to keep up with debt payments. Median one- and five-year inflation expectations were unchanged last month at 3.0% and 2.8%, respectively, according to a Federal Reserve Bank of New York survey. Delinquency expectations, however, rose for a third straight month to the highest level since April 2020. (Bloomberg)

US: Wholesale inventories rise slightly less than expected in July. Wholesale inventories in the US increased slightly less than expected in the month of July, according to a report released by the Commerce Department. The Commerce Department said wholesale inventories crept up by 0.2% in July, while revised data showed inventories were unchanged in June. Economists had expected wholesale inventories to rise by 0.3% compared to the 0.2% uptick originally reported for the previous month. The modest increase by wholesale inventories came as inventories of nondurable goods climbed by 0.5% and inventories of durable goods inched up by 0.1%. (RTT)

EU: ECB’s economic hopes at risk as consumers put spending on ice. Euro-zone consumers aren’t rushing to open their wallets, prompting some to ask whether the economic recovery they were supposed to spearhead will ever arrive. Growth in the 20-nation bloc, having outperformed in the first half of the year, is stumbling. Manufacturing remains in the doldrums, households are failing to take up the slack and sentiment is languishing below pre-pandemic levels. (Bloomberg)

UK: Labor market conditions soften in Aug: KPMG/REC report. The UK labor market conditions softened in Aug as permanent job placements declined sharply amid reduced demand for new staff and falling pay growth, a report compiled by S&P Global showed. Permanent staff placements declined for the 23rd straight month in Aug, the KPMG and REC, UK Report on Jobs showed. Moreover, the rate of fall was the sharpest since March amid reports of lower demand from clients and a lack of workplace vacancies. Temp billings also declined in Aug. (RTT)

China: Deflationary spiral is now entering dangerous new stage. Deflation stalking China since last year is now showing signs of spiraling, threatening to worsen the outlook for the world’s second-largest economy and raising calls for immediate policy action. Data released confirmed that apart from food costs, consumer price growth barely registered in large swathes of the economy at a time when incomes are sagging. A broader measure of economy-wide prices known as the GDP deflator will likely extend its current five-quarter drop into 2025, according to Bloomberg Economics and analysts at banks including BNP Paribas SA. (Bloomberg)

China: Exports likely slowed further in Aug as trade tensions mount: Reuters poll. China's exports likely grew at the slowest pace in four months in Aug, as cooling global demand and mounting trade barriers threaten to dim a bright spot in the world's second-largest economy. Trade data is expected to show outbound shipments grew 6.5% YoY by value, according to the median forecast of 34 economists in a Reuters poll, down from a 7.0% pace recorded in July. (Reuters)

Japan: Softer economic rebound still keeps BOJ hike in play. Japan’s economy expanded in the second quarter at a pace slightly slower than the government’s initial estimate, while still advancing enough to keep the BOJ on track to raise interest rates later this year. Japan’s GDP grew at an annualised pace of 2.9% in the three months through June compared to the previous quarter, the Cabinet Office said. The result compared with a preliminary estimate of 3.1%. Private consumption and capital investment were both revised a tad lower. (Bloomberg)

Markets

Eversendai: Order book hits record high of RM6.7bn with latest contract wins. Eversendai Corporation has secured contracts worth RM1.1bn for projects in Chennai, Mumbai, Singapore and Saudi Arabia. This brings the group’s current outstanding order book to a record RM6.7bn, executive chairman and group managing director Tan Sri AK Nathan said. Eversendai India secured the composite structural steel and civil works project for the DLF Downtown Taramani Blocks 4 & 5, Chennai -- its single largest contract win to date. (Bernama)

Binastra: Bags RM574.4m contract for construction of Bukit Jalil data centre. Binastra Corporation Bhd has secured a RM574.4m contract from Exsim Jalil Link SB to design, construct, test and commission the main building works for Phase 2 of a proposed data centre development in Bukit Jalil, Kuala Lumpur. Commencing on Oct 1, 2024, the contract duration is 16 months. The building works include a five-storey data centre block, office spaces and electrical substation, among other facilities. (The Star)

Radiant Globaltech: To acquire 80% stake in Rymnet for RM52.5m. Radiant Globaltech (RGTech) has inked a deal to acquire 80,000 shares, representing an 80% equity interest, in Rymnet Solutions SB from its founder and CEO, Un Sze Hau, for RM52.5m. The group said the purchase consideration shall be satisfied via a combination of RM42.5m cash and the allotment of 30.3m new RGTech shares at an issue price of 33 sen each. According to RGTech, the purchase consideration represents a price-to-earnings multiple of 12.59 times, based on the latest audited profit after tax of Rymnet of about RM4.17mil in the financial year ended 31 Dec 2023. (The Star)

Kelington: Adds RM413m of jobs since July. Kelington Group has bagged contracts worth a total of RM413m since July 2024, mostly in Malaysia and China. This increased Kelington's total contract value for the year to RM977m. The company said its consistent success in securing contracts underscores its leadership in ultra-high purity (UHP), process engineering, and general contracting services. Kelington chief executive officer Ir. Raymond Gan said China remains a significant growth driver, particularly with the launch of the third phase of the China Integrated Circuit Industry Investment Fund, also known as the "Big Fund". (Business Times)

Jati Tinggi: Secures two contracts worth RM36.36m. Jati Tinggi Group's wholly-owned subsidiary, Jati Tinggi Holding SB, has accepted two letters of award (LOAs) from YM Teras SB and Worktime Engineering SB totalling RM36.36m. The construction outfit said the LOA with YM Teras involved the installation of 33 kilovolts (kV) of aluminium cross-linked polyethylene (XLPE) underground cables and accessories for asset development in Malacca, Negeri Sembilan, and Johor. (Business Times)

JAKS Resources: To dispose of oil palm land in Penang for RM77.7 mil. JAKS Resources (KL:JAKS) said it is disposing of 178.48 acres of oil palm land in mainland Penang for RM77.74m. The construction and power utilities group said it is selling four plots of the land to Summersonic SB for RM35.9m, and the remaining 13 plots to Pacific Arena Sdn Bhd for RM41.8m. JAKS Resources said the land located in Seberang Perai Selatan had a net book value of RM15.97m as of the end of December 2023. The group expects a net pro forma gain of RM50.38m from the disposal. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher after US stocks climbed to claw back some of the losses from their worst week in nearly a year and a half. The S&P 500 rallied 1.2%, though it didn’t recoup all of its drop from Friday, let alone from the rest of the four-day losing streak that it broke. The Dow Jones Industrial Average rose 484 points, or 1.2%, and the Nasdaq composite gained 1.2%. The Federal Reserve has been intentionally pressing the brakes on the economy through high interest rates in order to stifle high inflation. It’s about to start lowering rates later this month, which would ease the pressure on the economy, as it turns its focus toward protecting the job market and avoiding a recession. The question on Wall Street is if the Fed’s shift in focus will prove to be too late. Cuts to interest rates give stock prices a boost, but if an economic downturn does hit, it could more than offset such a benefit by dragging down profits for companies. That’s what happened in 2007, for example, when the Great Recession wrecked the global economy and financial markets. In stock markets elsewhere, indices rose in much of Europe after falling in Asia. Japan’s Nikkei 225 slipped 0.5% after the country’s economic growth for the second quarter was revised below expectations. Chinese stocks racked up losses after worsethan-expected inflation data disappointed investors. Indexes fell 1.4% in Hong Kong and 1.1% in Shanghai. Back home, the FBM KLCI slipped 0.10% to 1,651.49 at the close.

Source: PublicInvest Research - 10 Sept 2024