HEADLINES

Economy

US: Latest inflation data could boost case for more big Fed rate cuts. Slowing inflation in Aug buttressed arguments Federal Reserve officials used in defense of their decision to lower interest rates by half of a percentage point last week and prompted traders to bet the US central bank will continue a fast pace of rate cuts as price pressures ease towards its 2% target. Over the past four months the personal consumption expenditures price index stripped of volatile food and energy elements has been increasing at less than a 1.8% annual rate, according to data for Aug released. (Reuters)

EU: Consumers trim inflation expectations to lowest in 3 years. Euro zone consumers have trimmed their inflation expectations for the next 12 months to the lowest level in three years, ECB poll showed, in a further sign the ECB is close to winning its battle to rein in prices. The Consumer Expectations Survey is a gauge of whether households have faith in the ECB's ability to bring inflation down to its 2% target, which in turns may influence their behaviour when spending, saving or asking for pay hikes. In the August edition of the survey, the median respondent saw prices growing by 2.7% in the following 12 months, the slowest pace since Sept 2021 and down from 2.8% in July. (Reuters)

UK: Retail sales grow at fastest pace since May, CBI says. British retailers reported the fastest growth in sales since May this month and see a further modest expansion for Oct, the Confederation of British Industry said, in a contrast to other more downbeat surveys of consumer sentiment. The CBI said its monthly retail sales balance rose to +4 in September from -27 in Aug, while retailers' expectations for the month ahead rose from -17 to +5, their strongest since April 2023. However, retailers judged that sales continued to remain below normal for the time of year. "While some firms within the retail sector are beginning to see tailwinds from rising household incomes, others report that consumer spending habits are still being affected by the increase in prices over the last few years," CBI Principal Economist Martin Sartorius said. (Reuters)

China: Factory activity seen extending declines in Sept. China's factory activity likely remained in contraction for the fifth consecutive month in Sept, as weak domestic demand and rising global trade barriers continue to dog the world's second-largest economy. A Reuters poll of 22 economists estimated the official purchasing managers' index (PMI) will come at 49.5, higher than August's reading of 49.1, but below the 50-point threshold that separates growth from contraction in activity. The mood in the manufacturing sector has been depressed for months by tumbling producer prices and dwindling orders. In the latest pain point, China's industrial profits plunged 17.8% in August YoY, the biggest decline this year and a sharp reversal from the 4.1% growth in July. (Reuters)

China: Shanghai, Shenzhen to lift key home purchase curbs to boost market. Top Chinese cities Shanghai and Shenzhen are planning to lift key remaining restrictions on home purchases to attract potential buyers and shore up their flagging real estate markets, four sources with knowledge of the matter said. Under the planned changes, potential buyers will no longer have to be vetted for eligibility and people from other places in China will be allowed to buy homes in the popular cities, which had been previously tightly controlled due to worries about excess speculation. Shanghai and Shenzhen will also seek to scrap limits on the number of homes that people can buy, said three of the sources. (Reuters)

Japan: Factory output seen down on weak overseas demand, typhoon disruptions. Japan's industrial output likely slipped in Aug, weighed down by weak demand from overseas and local factory suspensions due to a typhoon, factors that could dent momentum in an overall economic recovery, a Reuters poll showed Industrial output was expected to fall 0.9% in Aug from the previous month, the poll of 18 analysts showed, following a 3.1% jump in July. (Reuters)

Markets

HeiTech Padu: Buys 30% stake in Islamic payment gateway owner Souqa Fintech for RM16.2m. HeiTech Padu is acquiring a 30% stake in a privately held company, Souqa Fintech SB, for RM16.2m. In a bourse filing, the technology services provider said its wholly-owned subsidiary, Synergy Grid SB, has signed a share subscription agreement to acquire 10.8m new ordinary shares in Souqa Fintech SB at RM1.50 apiece. (The Edge)

Affin Bank: Sarawak becomes largest shareholder in Affin Bank with 31.25% stake. The Sarawak state government, through its wholly-owned subsidiary, SG Assetfin Holdings SB, has finalised the share purchase agreement (SPA) of Affin Bank shares from Lembaga Tabung Angkatan Tentera (LTAT) and Boustead Holdings. Consequently, Sarawak is now the largest shareholder in Affin Bank, raising its stake to 31.25% from 4.81% previously. (StarBiz)

Bintai Kinden: Proposes regularisation plan in bid to uplift PN17 status. Bintai Kinden Corp has announced its proposed regularisation plan, which will include a proposed diversification into the construction sector. The group, which plans to submit its proposed regularisation plan to Bursa Malaysia for approval within a month, said this was a key component of its strategic measures to uplift its PN17 status. (StarBiz)

PT Resources: Planned RM1bn supply chain intelligent park in Kuantan called off. PT Resources Holdings’ partnership with China’s Ocean Exchange (Fujian) Foreign Trade Services Co Ltd (Ocean Exchange) to develop the Malaysia East Coast International Supply Chain Intelligent Park in Kuantan, Pahang has fallen through. The project, which aimed to facilitate bilateral trade between Malaysia and China through Fuzhou, China, was estimated to be worth about RM1bn. (The Edge)

Propel Global: To raise up to RM8.3m via private placement, ups stake in EPCC subsidiary for RM6.2m. Propel Global has proposed a private placement to raise up to RM8.3m for business expansion and working capital for new projects. The fundraising exercise involves an issuance of up to 67.6m new ordinary shares, representing approximately 10% of its issued shares, at an issue price to be determined later. (The Edge)

Signature: To transfer two subsidiaries into new entity ahead of ACE Market IPO. Signature International plans to transfer its ownership in the two subsidiaries it wants to spin off for a listing into a newly formed entity, Signature Alliance Group (SAG), and then offer 26% of SAG's enlarged share base to the public via an initial public offering. The two subsidiaries are its 51%-owned renovation company Space Alliance Contracts SB (SAC) and 50.1%-owned interior fit out business that focuses on commercial projects, Zig Zag Builders (M) SB (ZZB). (The Edge)

Talam Transform: Plans five-to-one share consolidation, capital reduction and private placement. Talam Transform has proposed to consolidate every five existing shares held by its shareholders into one share, with the entitlement date to be determined later. Talam also wants to undertake a capital reduction by cancelling RM650m of its issued share capital to offset accumulated losses of RM624.4m at the group level, leaving it with retained earnings of RM24.4m that Talam said will be used in a manner deemed fit by the board. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks closed another record-setting week with a muted performance Friday, as hope built on Wall Street that the US economy can manage the rare feat of suppressing high inflation without causing a recession. The S&P 500 edged down by 0.1% from its all-time high set the day before, its 42nd of the year so far. The Dow Jones Industrial Average rose 137 points, or 0.3%, to set its own record, while the Nasdaq composite slipped 0.4%. Treasury yields eased in the bond market after a report showed inflation slowed in August by a bit more than economists expected. It echoed similar numbers from earlier in the month about inflation, but Friday’s report has resonance because it’s the measure that officials at the Federal Reserve prefer to use. For more than a year, the Fed had kept its main interest rate at a two-decade high in hopes of slowing the economy enough to drive inflation toward its 2% target. Now that inflation has eased substantially from its peak two summers ago, the Fed has begun cutting rates to ease conditions for the slowing job market and prevent a recession. MSCI's gauge of stocks across the globe rose 2.15 points, or 0.25%, to 852.84 and hit an intraday record high. Europe's benchmark STOXX 600 index closed at a record high, ending up 0.5% at 528.08. Markets in the region made bigger moves, as stocks in Shanghai rallied 2.9% to close their best week since 2008. Hong Kong’s Hang Seng jumped 3.6% to cap its best week since 1998. They soared following a barrage of announcements through the week from China’s central bank and government in hopes of propping up the world’s second-largest economy. Investors aren’t convinced all the stimulus will ultimately succeed, but they say they’re impressed by the size of it all following earlier piecemeal efforts. back home, the FBM KLCI lost 11.23 points or 0.67% to end at 1660.09.

Source: PublicInvest Research - 30 Sept 2024