HEADLINES

Economy

US: Employment and growth to stay robust. Fed Bank of Atlanta president Raphael Bostic said he expects the US economy to slow this year but to remain robust, adding that the downward path for inflation could see some bumps. Bostic said he projects GDP growth to be about 2% in 2025 as households spend down their savings. Growth is on track for about 2.6% this year. The Atlanta Fed chief added that he expects the Fed’s benchmark rate to drop to about 3% to 3.5% in the long run, but the timing for reaching that level is uncertain. It is currently in a range of 4.75% to 5%. (Bloomberg)

US: Cheaper energy products depress US import prices in Sept. US import prices fell by the most in nine months in Sept amid a sharp decrease in the cost of energy products, pointing to a benign inflation outlook that keeps the Fed on course to continue cutting interest rates. The report from the Labour Department also showed import prices excluding fuel barely rising over the past three months. The report also showing slightly firmer consumer prices in Sept. (Reuters)

EU: ECB could have curbed inflation with earlier rate hikes, DIW says. The ECB has fueled inflation in the monetary union with policy that is too hesitant, according to a study by the German Institute for Economic Research DIW, seen exclusively by Reuters. With a gradual increase in key interest rates from mid-2021 inflation would have gone up to a maximum of 3% instead of more than 10% in Aug 2022, according to the study. (Reuters)

EU: Italy to raise 0.2% of GDP in 2025 from banks, insurers and gaming. Italy plans to raise revenues worth around 0.2% of GDP or roughly EUR4bn (USD4.35bn) in 2025 from changes in tax rules for banks, insurance products and business licenses for gaming, Rome's draft budgetary plan (DBP) showed. The document, sent to the European Commission for approval, estimates higher revenues amounting to 0.168% of GDP as a contribution to consolidating public finances. Italy said it would raise EUR3.5bn from domestic banks and insurers, after the cabinet approved budget plans for the next three years. The DBP said revenues from banks, insurance products and gaming would fall by 0.073% of GDP in 2026 and by 0.096% the following year. (Reuters)

UK: Plunging UK inflation spurs rate cut bets, offers budget relief for Reeves. British inflation dropped sharply and key price gauges watched by the BOE also fell, bolstering bets on an interest rate cut next month and helping finance minister Rachel Reeves before her first budget. The rate of annual consumer price inflation dropped to 1.7% in Sept from 2.2% in Aug, the lowest reading since April 2021 and driven down by lower airfares and petrol prices, the Office for National Statistics said. A Reuters poll of economists had pointed to a reading of 1.9%. GBP fell by four-fifths of a cent against the USD and fell sharply against the euro too after the figures were published. (Reuters)

Japan: BOJ's board member urges slow approach to interest rate hikes. BOJ board member Seiji Adachi emphasised the need for taking a gradual approach to raising the benchmark interest rate, in comments that will likely cement views in the market that authorities will stand pat when they gather to set policy this month. “What we need to be careful of, in a gradual rate hike process, is that we raise it extremely gradually while keeping financial conditions accommodative until the price trend gets to 2%,” Adachi said in a speech to local business leaders in Kagawa. Data Friday is expected to show consumer inflation slowed to 2.3% in Sept. That would be the slowest pace since April, while also stretching to streak of months at or above the BOJ’s 2% target to 30. (Bloomberg)

Indonesia: Keeps policy rate steady at 6.00%. Indonesia's central bank left its benchmark interest rate unchanged as the policy board assessed that the current stance is consistent with the direction of monetary policy to ensure controlled inflation within the target, and to support sustainable economic growth. The Board of Governors of BI, led by Governor Perry Warjiyo, decided to maintain the seven-day reverse repo rate for the second straight meeting at 6.00%. At its Aug meeting, the bank unexpectedly lifted the interest rate by a 25bps. "This decision is consistent with the direction of monetary policy to ensure controlled inflation within the target of 2.5±1% in 2024 and 2025, and to support sustainable economic growth, "the bank said in a statement. (RTT)

Thailand: Unexpectedly cuts rate for first time since 2020. Thailand’s central bank cut its benchmark interest rate for the first time in more than four years, a surprise move given it has long resisted the government’s calls to ease monetary policy. The BOT voted 5-2 to cut the one-day repurchase rate by a 0.25ppt to 2.25%, as predicted by only five out of the 28 economists surveyed by Bloomberg. The last time it cut rates was in May 2020. Two members of the Monetary Policy Committee (MPC) called for the rate to be kept unchanged. The Thai rate had been kept at 2.5% since the 4Q last year. The MPC said inflation expectations remain within target. It expects core inflation this year at 0.5%. (Bloomberg)

Markets

Fajarbaru: Secures deal worth RM246m from WCT. Fajarbaru Builder Group has received an LoA from WCT Holdings worth RM246.1m to undertake the second phase development of AdisonWest located in Larkinton, Johor Baru. Its wholly owned subsidiary, Fajarbaru Builder SB, secured the contract from WCT Construction SB, an indirect subsidiary of WCT Holdings. The contract involves the construction of four serviced apartment towers in Johor Baru, recreational facilities and amenities as well as a six-storey podium featuring car parks, commercial lots, and a lobby. (StarBiz)

Crescendo: To buy SGR Land, assume Johor land purchase agreements in RM169m deal. Crescendo Corporation is buying SGR Land Development SB and taking on its six land purchase obligations in Johor for RM168.9m. The company will be paying RM10.8m for 100% stake in SGR Land to sole owners Ong Soon Liong (Ong Soon Chong) and Lok Kok Lee. Apart from the balance purchase price of RM158.1m, it will not assume any liabilities from the acquisition. The six agreements are expected to be completed by 2Q25. (The Edge)

LFE: Lands RM39m data centre subcontract from Gamuda. Its JV, R&L Engineering SB, has accepted an LoA from Gamuda Engineering SB for a 12-month subcontract valued at RM38.8m. The contract involves the construction, completion, testing, and commissioning of electrical services for the Elmina Business Park Hyperscale Data Centre in Selangor. Work is scheduled to commence on 4 Oct 2024 and conclude by 18 Oct 2025. The project is expected to enhance the earnings and net assets per share of LFE Group for the FYE 31 Dec 2024. (The Malaysian Reserve)

Econpile: Bags RM35m construction job. Econpile Holdings has received an LoA from WCT OUG Development SB to undertake construction work to two service apartment blocks at Jalan Awan Besar, Kuala Lumpur, worth RM35.1m. The job will involve bored piling, earthworks, retaining wall and sub-structure works for two 57-storey service apartment blocks comprising 636 units each. The project shall be completed within 13 months from 28 Oct 2024. (StarBiz)

Radiant Globaltech: Secures RM25m contract for hardware technical refresh project. Retail technology solution provider Radiant Globaltech has bagged a RM25m contract from a utility company for the implementation of a hardware technical refresh project. However, it did not name the utility company it received the contract from. Its wholly owned subsidiaries Radiant Global ADC SB and Grand-Flo Spritvest SB have accepted an LAO for the contract. The contract deliverables are for three years commencing from 4 Oct 2024. (The Edge)

AIZO: Inks MoU with Netrunner for Tier 4 Data Centre in Sarawak. AIZO Group has signed a MoU with Netrunner SB to explore developing a Tier 4 data centre park in Sarawak. This marks AIZO’s entry into the data centre industry. The collaboration, supported by the Sarawak government, aims to align the project with Sarawak’s digital economy goals. Netrunner, which operates in energy production and IT services, will lead the technical development, while AIZO will provide infrastructure support, including clean energy and water treatment. (The Malaysian Reserve)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks rose Wednesday following better-than-expected profit reports from Morgan Stanley, United Airlines and other big companies. The S&P 500 gained 0.5% to recover much of the slide from its all-time high the day before because of tumbling energy and technology stocks. The Dow Jones Industrial Average rose 337 points, or 0.8%, to set its own record, and the Nasdaq composite added 0.3%. United Airlines flew 12.4% higher after reporting a milder drop in summer profit than expected and announcing plans to send up to $1.5 billion to its shareholders by buying back its stock. J.B. Hunt Transport Services motored up by 3.1% after the freight company delivered better-than-expected results. Still, Wednesday offered the first chance for Asian stock markets to feel the ripples of ASML’s warning, and chip companies there tumbled. Japan’s Nikkei 225 fell 1.8% as chip maker Tokyo Electron sank 9.2% and Lasertec Corp., which makes equipment to inspect chips, lost 13.4%. Stock indices were mixed across the rest of Asia and Europe. In London, the FTSE 100 rose 1% after the government reported UK inflation eased in September to its lowest level in more than three years. That reinforced expectations that the Bank of England will cut interest rates at its next policy meeting. Back home, the FBM KLCI closed down by 9.34 points or 0.57% to 1632.63 3 yesterday, following regional weakness and tracking the overnight decline liners outnumbered gainers 700 to 341. At this juncture, the FBM KLCI is 2 horizons in the near term. Notably, selling pressure could be intensified en. Support levels for the index are at 1622, 1600 and 1580, while resistance

Source: PublicInvest Research - 17 Oct 2024