HEADLINES

Economy

US: Trump's tax-cut plans could be slowed by a wary bond market. Donald Trump's Republicans are promising to hit the gas next year when they assume full control of the US Congress, with little to stop them from executing the president-elect's promises to slash taxes and reorder the global trade landscape. But the USD28tr Treasury debt market is flashing a red warning light against adding excessively to a debt load already expanding at a pace of USD2tr a year. What is yet to be seen is whether these concerns will be enough to slow Republican lawmakers' ambitions or push them to find offsetting savings on a tax break agenda estimated to cost nearly USD8tr over 10 years. Markets are betting that Trump's tax cuts and tariffs will fuel inflation as investors demand stronger returns on longer-term Treasuries. Yields on the benchmark 10-year US Treasury note have risen to 4.3%, up about 70 bps since "Trump trades" began dominating Wall Street in Sept. (Reuters)

EU: German business sentiment falls more than expected in Nov, Ifo finds. German business morale fell more than expected in Nov in further bad news for a country set to be the worst performer among the G7 rich democracies this year. The Ifo institute said its business climate index decreased to 85.7 in Nov from 86.5 in the previous month. Analysts polled by Reuters had forecast a reading of 86.0. The German economy is lacking strength," Ifo president Clemens Fuest said. Expectations also fell, but only slightly to 87.2 in Nov from 87.3 in the previous month, Ifo said. Robin Winkler, chief economist for Germany at Deutsche Bank Research found it remarkable that expectations remained stable given the political events of the past three weeks. "Either German companies are not yet overly concerned about US trade policy or these concerns are being offset by the prospect of new elections in Germany," Winkler said. (Reuters)

EU: ECB's Lane praises gradualism as end of tight policy nears. The ECB should not keep its monetary policy tight for too long or inflation could fall below target, ECB chief economist Philip Lane, said on Monday, while praising the bank's gradual approach to cutting rates. Lane's comments showed the ECB was becoming more confident it had tamed the most vicious bout of high inflation in at least a generation but it may not be quite ready to step up the pace of policy easing. "Monetary policy should not remain restrictive for too long," French newspaper Les Echos quoted Lane . "Otherwise, the economy will not grow sufficiently and inflation will, I believe, fall below the target." In the Les Echos interview Lane also warned that inflation was not yet back to where the ECB wanted it because services price growth is too high and most of the recent fall was due to moderating energy costs. (Reuters)

UK: BoE's Lombardelli worries over above-forecast inflation, backs gradual rate cuts. BoE Deputy Governor Clare Lombardelli said on Monday she was more worried about the risk that inflation comes in higher - not lower - than the central bank has forecast as she made the case for only gradual reductions in interest rates. Lombardelli, making her first speech since joining the BoE in July, said recent downbeat business surveys suggested that inflation could cool while strong wage growth posed a threat in the opposite direction. She said she thought those risks were balanced. "But at this point I am more worried about the possible consequences if the upside materialised, as this could require a more costly monetary policy response," Lombardelli told a conference. (Reuters)

China: Central bank keeps medium-term loan rate unchanged amid yuan weakness. China kept its medium-term lending rate steady, as the country's central bank seeks to stabilize the yuan which has come under pressure following Donald Trump's victory in the US presidential election. The People's Bank of China kept the medium-term lending facility rate unchanged at 2.0% on CNY900bn (USD124.26bn) worth of one-year loans to some financial institutions, according to the bank's official statement. "It is a well-expected move, given that the market liquidity [has] remained ample," said Bruce Pang, chief economist and head of Research, Greater China at JLL, citing PBOC's move in Oct that injected CNY500bn yuan into the banking system. Keeping the MLF rate intact allows for "greater policy maneuverability" given the change in US administration, at a time when commercial banks' net-interest-margins have remained tight, Pang added. (Reuters)

Japan: Leading index rises less than estimated. Japan's leading index improved less than initially estimated in September, the latest data from the Cabinet Office showed. The leading index, which measures future economic activity, climbed to 109.1 in Sept from 106.9 in the previous month. The flash score was 109.4. Similarly, the coincident index rose to 115.3 in Sept from 114.0 a month ago. The latest score was revised up from 115.7. The coincident index measures the current economic situation. Meanwhile, the lagging index dropped to 106.7 in September from 107.9 in the prior month. (RTT)

India: Slackening demand likely weighed on India's GDP growth in Sept quarter: Reuters poll. India's economy likely grew at its slowest pace in one-and-a-half years in the three months to end-September as weak consumption offset a strong recovery in government spending, which for years has helped drive growth, a Reuters poll found. The economy grew more than 8.0% in the fiscal year to end-March but has since slowed sharply as skyrocketing food inflation drives up the cost of living and forces households to cut spending. Private consumption accounts for about 60% of India's GDP but sales of items from cars to biscuits have plummeted. Passenger vehicle sales recorded their first decline in 10 quarters and sales of two-wheelers experienced a sharp slowdown, while lacklustre quarterly earnings from FMCG company Hindustan Unilever, showed the country's consumption story was under strain. (Reuters)

Markets

Mr DIY: Indonesian business plans IPO to raise up to USD297m. The Indonesian sister company of Mr DIY Group (M) will list shares in Jakarta through an IPO that seeks to raise as much as IDR4.7trn (USD297m or RM1.32bn), in what would be the nation's biggest listing in more than a year. PT Daya Intiguna Yasa, the Indonesian affiliate of the Malaysian home-improvement retailer, plans to offer as many as 2.5bn shares in the IPO, including 2.3bn shares currently held by shareholder Azara Alpina SB, according to Mr DIY's listing document. (The Edge)

RHB: Exits Thai securities market with RM161.81m divestment to Phillip Brokerage. RHB Bank will be divesting its entire 99.95% stake in RHB Securities (Thailand) Public Company Ltd to Singapore-based stock brokerage firm Phillip Brokerage Pte Ltd for THB1,253.77m (RM161.8m), marking its exit from Thailand's stockbroking and securities market. The stake is currently held via its wholly-owned RHB Investment Bank Bhd. The divestment is expected to be completed by the fourth quarter of 2024, subject to the approval of Thailand's Securities and Exchange Commission. (The Edge)

Infomina: Wins RM27m purchase order contract. Infomina has secured a purchase order valued at RM27.3m in the Philippines to deliver technology application and infrastructure operations, maintenance, and support services to Land Bank of the Philippines until Nov 30, 2027. Infomina managing director Yee Chee Meng noted that Land Bank of the Philippines had grown to become the second-largest universal and commercial bank group in the Philippines by total assets, following its acquisition of United Coconut Planters Bank in 2022. (StarBiz)

Ho Hup Construction: Resolves winding-up petition amicably. Ho Hup Construction Company has resolved a winding-up petition filed by its supplier, Joterix SB, over an alleged unpaid sum of RM184,438.80. The petition, initiated in late Aug, sought an unpaid sum of RM184,438.80, alongside statutory interest of 5% per annum from March 1, 2024 and costs of RM3,000, according to Ho Hup Construction's bourse filing dated back then. Despite the claims, Ho Hup assured that the unpaid sum represented only 0.055% of its net assets and it does not expect to incur any losses arising from the winding-up petition, it said. (The Edge)

Radium: Unit acquires 5.26-ha land in Cheras for RM458m. Radium Development through its indirect wholly-owned subsidiary Radium J Velodrome SB, has entered into a conditional sale and purchase agreement to acquire three parcels of contiguous leasehold land in Cheras for RM458m. Radium said the 5.26 hectares (ha) acquisition is a key step in its expansion strategy, significantly boosting its landbank in Kuala Lumpur by over 60%, from 8.40 ha to approximately 13.75 ha. (Bernama)

Haily: Wins RM115m construction contract. Haily Group has accepted a letter of award (LoA) from Permas Jaya SB for the construction and completion for two phases of a residential project in Johor Baru, Johor, worth RM115.1m. Haily said the project will primarily involve the development of double storey cluster houses, semi-detached as well as double storey bungalow houses. "The board expects the LoA to contribute positively to the Haily group's earnings and net assets over the duration of the project, assuming no material delay in the timing." Haily said. (StarBiz)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks rose Monday, with those benefiting the most from lower interest rates and a stronger economy leading the way. The S&P 500 climbed 0.3% to pull closer to its all-time high set two weeks ago. The Dow Jones Industrial Average added 440 points, or 1%, to its own record set on Friday, while the Nasdaq composite rose 0.3%. After climbing above 4.44% immediately after Trump's election, the yield on the 10-year Treasury fell back to 4.26% Monday, down from 4.41% late Friday. That's a notable move, and lower yields make it cheaper for all kinds of companies and households to borrow money. They also give a boost to prices for stocks and other investments. That helped stocks of smaller companies lead the way, and the Russell 2000 index of smaller stocks jumped 1.5%. It finished just shy of its all-time high, which was set three years ago. Smaller companies can feel bigger boosts from lower borrowing costs because of the need for many to borrow to grow. A report coming on Wednesday could influence how much the Fed may cut rates. Economists expect it to show that an underlying inflation trend the Fed prefers to use accelerated to 2.8% last month from 2.7% in September. Higher inflation would make the Fed more reluctant to cut rates as deeply or as quickly as it would otherwise. In stock markets elsewhere, indices moved modestly across much of Europe after finishing mixed in Asia. Back home, the FBM KLCI rose 7.67 points or 0.48% to 1597.45.

Source: PublicInvest Research - 26 Nov 2024