HEADLINES

Economy

Global: World economy fault lines shift from prices to politics and debt. The global economy is heading toward year end with unexpected tailwinds as slowing inflation clears a path for an unlikely soft landing. But while the economics side of the equation is looking up, political hurdles lie ahead. Hanging over the outlook is the toss up US presidential election that offers starkly different economic outcomes for the world. That comes on top of soaring government debt, escalating conflict in the Middle East, the grinding war between Russia and Ukraine, and tensions in the Taiwan Strait. Unemployment in advanced economies remains the same as where it was in 2022, around the time central banks began to lift borrowing costs at the fastest pace in decades, according to the OECD. Bloomberg Economics is forecasting global GDP will grow by 3% this year, below the 3.3% pace of 2023, but well clear of bearish forecasts at the start of the year. (Bloomberg)

US: Apollo’s Slok sees rising chance Fed holding rates in Nov. The chances that Fed officials will leave interest rates unchanged in Nov are mounting as the US economy powers ahead, according to Torsten Slok, chief economist at Apollo Management. There are plenty of reasons for the robust US economy, in Slok’s view. A dovish Fed, elevated share and home prices, narrow credit spreads, as well as “wide open” corporate financing in both the public and private markets are just some of them. “The bottom line is that the expansion continues,” he wrote in a research note, highlighting the Atlanta Fed currently estimates 3Q GDP growth of 3.4%. The central bank’s forecast from Sept, or dot-plot, revealed two more cuts indicated for this year after they made a jumbo 50bps reduction at their last meeting bringing the target rate 4.75% to 5.0%. (Bloomberg)

EU: ECB’s Simkus says it’s clear that rates will be lowered further. ECB Governing Council member Gediminas Simkus said borrowing costs will be reduced further should the downtrend in inflation persist, though he wouldn’t predict the outcome of officials’ next meeting. “The direction is clear less restrictive monetary policy,” the Lithuanian central-bank chief said. They’re betting on a spate of interest-rate cuts at the next few meetings with inflation already below the 2% target and the 20-nation eurozone economy barely growing. A Dec move is very likely, according to people familiar with the matter. “In Dec, we’ll have much more hard data; GDP, inflation, PMIs, new forecasts,” he told. “All this will provide more data on the pace of the inflation trend, is it moving faster or slower?”. (Bloomberg)

EU: German producer prices fall more than expected in Sept. German producer prices fell more than expected in Sept, declining 1.4% YoY, due mainly to significantly lower energy prices, the federal statistics office said. Analysts polled by Reuters had expected a 1.0% decline. The main reason for the dip was lower energy prices, which were 6.6% lower in Sept compared with the same month last year. Mineral oil products in particular were down 14.4%. Excluding energy prices, producer prices were up 1.2%, with higher costs for capital, consumer and intermediate goods. Sept marked the 15th decline in a row in Germany's PPI, considered a key inflation indicator. (Reuters)

UK: City of London job vacancies fall 17% YoY, data shows. War, inflation and Britain's departure from the EU led to a 17% fall in job vacancies in London's financial services sector in the 3Q versus the same time a year ago, recruitment firm Morgan McKinley said. Mark Astbury, associate director at Morgan McKinley, also said hiring was likely to remain subdued because of the Labour government's budget on Oct 30, the first since its election in July, and the US presidential election on Nov 5. The data also showed City vacancies rose 7% in the 3Q from the previous quarter. Astbury said this reflected demand for staff in regulatory compliance, digital transformation and environment, social and governance (ESG) projects. (Reuters)

UK: House price growth weakens; rightmove. UK house prices increased at a below seasonal average pace in Oct due to the rise in buyer choice and increasing seller competition, property website Rightmove said. House prices grew 0.3% MoM in Oct, which was much lower than the average seasonal 1.3% increase at this time of year. Prices had increased 0.8% in Sept. Buyers' choice increased to a level not seen for ten years, putting downward pressure on price growth. Buyers are making use of their increased negotiating power that helped to keep price rises subdued. (RTT)

China: Cuts key lending rates to support growth. China cut benchmark lending rates as anticipated at the monthly fixing, following reductions to other policy rates last month as part of a package of stimulus measures to revive the economy. The one- year loan prime rate (LPR) was lowered by 25bps to 3.10% from 3.35%, while the five-year LPR was cut by the same margin to 3.6% from 3.85% previously. The lending rates were last cut in July. PBOC Governor Pan Gongsheng told a financial forum last week lending rates will decrease by 20bps to 25bps on Oct. 21. The PBOC announced cuts to banks' reserve requirement ratio by 50bps and the benchmark seven-day reverse repo rate by 20bps on Sept 24, kicking off the most aggressive stimulus since the pandemic that include measures to support the ailing property sector and boost consumption. (Reuters)

Markets

MY EG: To commence collaboration on e-government projects with Heitech Padu. My EG Services and Heitech Padu have commenced their partnership as per their teaming agreement to implement various e-government projects in Malaysia. The agreement that was entered on 15 April 2024, paves the way for the parties to combine their efforts in executing significant e- government projects. (StarBiz)

PTT Synergy: Inks RM400m build-to-lease contract with major semiconductor manufacturer. PTT Synergy Group (PTTS) said its indirect wholly owned subsidiary, Projek Tetap Teguh SB (PROTT), has entered into a build-to-lease agreement with a multinational semiconductor manufacturer based in northern Peninsular Malaysia. Under the agreement, PROTT will construct and lease a state-of-the-art warehouse and distribution center, with a total lease value for the first 10 years amounting to approximately RM399.7m. (The Malaysian Reserve)

DNeX: Appoints Faizal Sham Abu Mansor as group CEO. Dagang Nexchange (DNeX) has appointed Faizal Sham Abu Mansor as its group CEO, effective 1 Nov 2024. Faizal will take over the leadership of the management team from executive chairman Tan Sri Syed Zainal Abidin Syed Mohamed Tahir Jamalullail on 31 Dec 2024, following which Syed Zainal Abidin will be redesignated non-executive chairman of the board on 1 Jan 2025. (StarBiz)

AWC: Bags housekeeping services job in JB Sentral. Facilities and waste management services company AWC has secured a RM30.5m contract to undertake housekeeping services for the JB Sentral building in Johor Bahru. The contract, awarded by KCJ Engineering SB, is valid for four years and six months. With this latest contract, AWC’s order book stands at over RM700m, while its tender book has exceeded RM1bn across all business divisions. (The Edge)

Khee San: Gets shareholders’ nod for regularisation plan to exit PN17. Candy maker Khee San said its shareholders have approved the company's regularisation plan to exit PN17 status. All eight resolutions relating to the regularisation plan were passed at an extraordinary general meeting. The regularisation plan includes a proposed rights issue with warrants, a scheme of arrangement with creditors, a share capital reduction and the establishment of an employee share scheme of up to 15% of its share base for eligible directors and employees. (The Edge)

EP Manufacturing: Plans diversification into vehicle assembly. EP Manufacturing (EPMB) plans to diversify its principal activities to include vehicle assembly, aiming to enhance its existing automotive business. The company highlighted its ongoing exploration of new opportunities within the automotive sector to generate additional revenue streams and ensure recurring profits. (The Malaysian Reserve)

Censof: Lands RM5.4m contract from Land Public Transport Agency. Its wholly owned subsidiary, Century Software (Malaysia) SB, has accepted a RM5.4m contract awarded by the Land Public Transport Agency (APAD) pertaining to the subscription service for the Sistem Perlesenan Kenderaan Perdagangan (iSPKP) project. The project is set for a duration of four years, running from 16 Oct 2024 to 15 Oct 2028. (The Malaysian Reserve)

MARKET UPDATE

The FBM KLCI might open flat today after US stocks edged back from their all-time highs Monday as some of the steam came out of Wall Street’s long, record-breaking rally. The S&P 500 slipped 0.2%, coming off a sixth straight winning week, its longest such streak of the year. The Dow Jones Industrial Average dropped 344 points, or 0.8%, from its own record that was likewise set on Friday, while the Nasdaq composite rose 0.3%. Trading was mixed in markets around the world. Crude oil prices rose to regain some of last week’s sharp losses, while US Treasury yields climbed and stock indices mostly fell in Europe after finishing mixed in Asia. In the bond market, the yield on the 10-year Treasury rose to 4.19% from 4.08% late Friday. This upcoming week doesn’t include many top-tier economic reports to move Treasury yields. A preliminary update will arrive on Thursday about US business activity. The Bank of Canada will also announce its latest decision on interest rates Wednesday, where it could cut by half a percentage point. In stock markets elsewhere, indices were mixed in China after its central bank cut a couple lending rates. Lower rates can help reduce pressure on borrowers, particularly the property developers that have suffered following a crackdown on excessive borrowing several years ago. But any impact on market sentiment appeared to be short-lived. Stocks rose 0.2% in Shanghai but fell 1.6% in Hong Kong. Chinese stocks have been zooming higher and lower in recent weeks. A slowdown for the world’s second-largest economy 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. Back home, the FBM KLCI closed down by 0.31 of a point or 0.02% to 1645.68. 45.68 yesterday. Market breadth turned negative as decliners outnumbered cipated 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

Source: PublicInvest Research - 22 Oct 2024