HEADLINES

Economy

EU: Case for quick ECB rate cuts mounts as growth weakens and inflation is tamed. Eurozone inflation could ease more quickly than previously thought and economic growth is also likely to remain weak, reinforcing the case for a rapid pace of interest rate cuts in the months ahead. The ECB lowered interest rates for the third time this year on moderating price pressures. Investors now see rate cuts at each of the central bank's next four or five meetings as inflation is within striking distance of its 2% target and the bloc flirts with recession. (Reuters)

EU: ECB’s Villeroy seeks flexibility on speed and size of rate cuts. The ECB should remain flexible as it cuts interest rates in response to cooling inflation and a weakening economy, according to Governing Council member Francois Villeroy de Galhau. The BOF head cited the current unpredictable nature of geopolitics, as well as now equal risks of over and under-shooting the 2% inflation goal. “The direction is clear in my eyes we should continue to reduce the restrictive character of our monetary policy in an appropriate manner,” he told. (Bloomberg)

China: 3Q GDP hits weakest pace since early 2023, backs calls for more stimulus. China's economy grew at the slowest pace since early 2023 in the 3Q, and though consumption and industrial output figures for last month beat forecasts a tumbling property sector remains a big challenge for Beijing as it tries to boost growth. The world's second-largest economy grew 4.6% in July-Sept, official data showed, a touch above the 4.5% forecast in a Reuters poll but below the 4.7% pace in the 2Q. (Reuters)

India: Central bank governor says rate cut now is very risky. While inflation is expected to moderate, there are “significant risks” to the outlook, Das told Bloomberg News Deputy Editor-in-Chief Reto Gregori at the India Credit Forum in Mumbai. Inflation and growth dynamics are well balanced, he said, but policymakers need to remain vigilant about price pressures. The RBI has kept its key interest rate unchanged for almost two years, although signalled it may be preparing to ease after changing its policy stance to neutral. (Bloomberg)

Japan: Core inflation slows on fuel subsidies, demand-driven pressure intact. Japan's core inflation slowed in Sept due to the rollout of energy subsidies but an index excluding the effect of fuel held steady, a sign that broadening price pressure will keep the central bank on track to raise interest rates further. The core CPI, which includes oil products but excludes fresh food prices, rose 2.4% in Sept from a year earlier, data showed, compared with a median market forecast for a 2.3% gain. (Reuters)

Indonesia: 2024 GDP growth seen at 5.1%, finance minister says. Indonesia's economic growth this year seen at 5.1%, with annual growth in the July-Sept quarter expected to come in above 5%, finance minister Sri Mulyani Indrawati said. She said household consumption and investment activity were supportive of growth in the 3Q, while regional elections in Nov and year-end spending is expected to support growth in the 4Q. Speaking after the quarterly financial sector stability committee meeting, she said the government was monitoring global markets conditions, which were now affected by the conflict in the Middle East. (Reuters)

Markets

HeiTech: Wins bid for RM892.2m NIISe project. HeiTech Padu, whose share price hit a record high of RM4.40, announced that it has won an RM892.2m National Integrated Immigration System (NIISe) project. HeiTech has to submit to the government a performance bond amounting to RM8.92m not exceeding 30 days from the date of receipt of the letter of award. Notably, HeiTech is the incumbent operator of the NIISe through the Malaysian Immigration System (MyIMMs), which has been in operation since 1993. (The Edge)

Exsim Hospitality: Wins RM60m fit-out works contract. Exsim Hospitality has accepted a letter of award from Totalbuildz SB in respect of the development of 294 rooms @ Empire City at Damansara Perdana, Selangor, worth RM60m. The contract is for the purpose of designing and building of architecture, interior design and fit-out works to guest rooms. The contract win follows on from the company’s recent contract award earlier in the week amounting to RM47.37m. (StarBiz)

SCIB: Secures RM48m Islamic banking facilities from Affin Islamic Bank. Sarawak Consolidated Industries’ (SCIB) wholly- owned subsidiary, SCIB Concrete Manufacturing SB, has accepted Islamic banking facilities totaling RM48m from Affin Islamic Bank. The first facility is a Tawarruq Term Financing-i of RM27m, intended to redeem a two-storey office building with a spun piles factory and another two-storey office with a concrete roofing tiles factory in the Muara Tebas Land District, Sarawak, from RHB Bank. The remaining amount would be used as working capital, with a tenure of 180 months. The second facility is an RM8m Tawarruq Cash Line-i for working capital requirements, with a tenure of 120 months and subject to annual review. (BTimes)

IPO: Azam Jaya aims to raise RM61.5m from IPO. Sabah-based major road infrastructure construction player, Azam Jaya aims to raise RM61.5m from its IPO, pursuant to its listing on the Main Market of Bursa Malaysia on Nov 11, 2024. In a statement today, the company said of the proceeds, RM8.0m has been allocated to boost construction capabilities and operational efficiencies by acquiring new machinery and equipment as well as technological upgrades. (BTimes)

IPO: OB Holdings’ 19.58m IPO shares for public oversubscribed by 109 times. OB Holdings slated for listing on the Ace Market of Bursa Malaysia on Oct 29, announced that the 19.58m new shares it offered to the Malaysian public under its IPO have been oversubscribed by 109.47 times. The food and supplement maker’s IPO offered a total of 120m new shares, with a large portion of 92.59m done through private placements. The company received a total of 22,753 applications for 2.163bn shares worth RM519.16m from the Malaysian public. (The Edge)

IPO: Sorento Capital’s 43m IPO shares oversubscribed by 39 times. Sorento Capital announced that its IPO saw strong demand, with the 43m shares available to the public being oversubscribed by 39 times at an offer price of 37 sen per share. The ACE Market- bound bathroom and kitchenware distributor’s IPO involved a total of 229m shares, comprising 155m new shares and an offer for sale of 74m shares. A significant portion, 96m IPO shares was allocated to Bumiputera investors, as approved by the Miti, according to the company’s prospectus. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks closed their latest winning week with more records on Friday. The S&P 500 rose 0.4% to squeak past the all-time high it had set early this week. The Dow Jones Industrial Average added 36 points, or 0.1%, to its own record set the day before, and the Nasdaq composite gained 0.6%. Netflix helped drive the market with a leap of 11.1% after the streaming giant reported stronger profit for the latest quarter than analysts expected. That was despite a slowdown in subscriber growth. Trading overall on Wall Street remained relatively calm, as the S&P 500 closed its sixth straight winning week. That’s its longest such winning streak of 2024. Solid economic data has boosted hopes the US economy can make a perfect escape from the worst inflation in generations, one that ends without a painful recession that many investors had seen as nearly inevitable. And with the Federal Reserve now cutting interest rates to keep the economy humming, the expectation among optimists is that stocks can rise even further. In stock markets in China, Chinese indices jumped in their latest sharp swing. Stocks rose 2.9% in Shanghai and 3.6% in Hong Kong after a report showed growth slowed during the summer for the world’s second-largest economy. The slowdown, exacerbated by a weak real-estate market, has raised expectations for big stimulus from the Chinese government and central bank, though doubts are still prevalent about how much effect they will have. Stock indices were mixed elsewhere in Asia and Europe. Back home, the FBM KLCI closed up by 4.55 points or 0.28% to 1645.99. 45.99 last Friday. Market breadth remained positive as gainers outpaced icipated to trend sideways between the 1636 and 1652 horizons in the near re at 1636, 1622 and 1600, while resistance levels stand at 1652, 1664 and y sectoral indices are potentially staging a breakaway from their downtrends.

Source: PublicInvest Research - 21 Oct 2024