HEADLINES

Economy

US: Sharp downgrades to US unit labor costs bode well for inflation outlook. US unit labor costs grew far less than initially thought in the third quarter, pointing to a still favorable inflation outlook even though price increases have not moderated much in recent months. The report from the Labor Department also showed labor costs actually declined in the second quarter instead of rising as had been estimated last month. Moderate labor costs growth is likely to be welcomed by Federal Reserve officials when they hold their last meeting of year next week. The US central bank is expected to cut interest rates by 25bps, the third reduction in borrowing costs since it started its monetary policy easing cycle in Sept. (Reuters)

US: Small business optimism jumps to highest in over 3 years. Small business confidence in the US surged in Nov to its highest level in more than three years as the uncertainty regarding future economic conditions reduced following the election of Donald Trump as the next president and businesses are now looking forward to favorable tax and regulation policies, results of a survey by the National Federation of Independent Business showed. The NFIB Small Business Optimism Index gained eight points to reach 101.7 in Nov, which was far higher than the 94.6 reading economists had forecast. The latest score was the highest since June 2021. The measure thus ended a 34-month streak of remaining below the 50-year average of 98. (RTT)

EU: Austria production index falls 1.3%. Austria's production index posted a slower decline in Oct, figures from Statistics Austria showed. The production index for industry and construction fell 1.3% on a yearly basis, slower than the 2.4% decrease in Sept. Industrial output was down 2.8%, while construction output grew by 3.8%. Within main industrial groupings, output of consumer durables logged the biggest annual fall of 13.5%. This was followed by a 6.2% drop in intermediate goods and a 2.9% decline in capital goods output. Meanwhile, production of energy goods showed a growth of 6.4%. Monthly, the production index rose 1.5% in Oct, reversing a 1.1% fall seen in Sept. (RTT)

EU: Latvia trade gap widens in Oct. Latvia's foreign trade deficit increased in Oct from a year ago, as imports grew faster than exports, preliminary data from the statistical office showed. The trade deficit rose to EUR291.9m in Oct from EUR205.3m in the corresponding month last year. In Sept, the shortfall was EUR264.2m. As compared to last year, exports climbed 1.3%, and imports grew by 5.8%. On a monthly basis, both exports and imports surged by 10.0% and 10.1%, respectively, in Oct. (RTT)

EU: Hungary inflation rises to 3.7% in Nov. Hungary's CPI increased further in Nov to the highest level in four months, the Hungarian Central Statistical Office said. Consumer prices climbed 3.7% YoY in Nov, faster than the 3.2% rise in Oct. Economists had expected inflation to rise to 3.8%. Further, the inflation rate remained above the central bank's target of 3.0%. However, core inflation softened slightly to 4.4% from 4.5% a month ago. The annual price growth in food products accelerated to 4.9% from 4.5%, and costs for services grew sharply, though at a slightly slower pace of 7.0% versus a 7.2% surge a month ago. (Bloomberg)

EU: Turkish industrial output falls further. Turkey's industrial production declined for the fifth straight month in Oct, the Turkish Statistical Institute reported. Industrial production posted an annual decline of 3.1% in Oct, which was worse than the 2.3% fall in Sept. Among sectors, output produced in the mining and quarrying sector plunged by 14.2% from last year, and that of manufacturing contracted by 3.3%. On the other hand, production of electricity, gas, steam, and air conditioning supplies registered an increase of 7.6%. MoM, industrial production fell 0.9 after a 1.6% rebound in Sept. (RTT)

China: Exports slow sharply, imports shrink ahead of Trump tariffs. China's exports grew at a slower pace in Nov than the bumper month before, while imports unexpectedly shrank, in a worrying sign for the world's No 2 economy as Donald Trump's imminent return to the White House brings fresh trade risks. US President-elect Trump has pledged to slap an additional 10% tariff on Chinese goods in a bid to force Beijing to do more to stop the trafficking of chemicals used to make fentanyl. (CNA)

Australia: Central bank gaining confidence on inflation. Australia's central bank held its key interest rate at a 13-year high of 4.35%, expressing growing confidence that inflation is moving toward target. The Australian dollar fell and government bond yields dropped in response to the news, with traders increasing bets that rates will be cut in Feb. Business confidence in Aus fell sharply in Nov, signalling that the private sector of the economy is under heavy pressure. A National Australia Bank survey showed that gains made in Oct have reversed, with weakness in mining and retail leading the downturn. (Bloomberg)

Markets

PGF Capital: Buys 9.6-acre land for RM600m mixed development in Kulim Hi-Tech Park. PGF Capital is acquiring two parcels of land totaling 9.6 acres in Kulim Hi-Tech Park, Kedah, for a mixed development project valued at RM600m. The land, purchased through its JV company Nexel Development KHTP SB, will host a condominium, hotel, serviced residences, and commercial elements. PGF is buying the land from Kulim Technology Park Corporation SB for RM12.7m, to be funded by internal funds and bank borrowings. (The Malaysian Reserve)

OCK Group: To invest RM350m in solar power plant expansion. OCK Group is set to invest RM350m in a large-scale solar photovoltaic (LSSPV) power plant in Kedah through its subsidiary Solarpack Suria Sungai Petani SB (3SP). The company signed a conditional investment agreement with Spain-based Zelestra Corporacion SAU and Solarpack Asia SB (SPK Asia). OCK will acquire 1,000 redeemable preference shares in SPK Asia and settle a RM14.2m loan from Zelestra. (The Malaysian Reserve)

JHM: Unit bags RM300m Proton contract. JHM Consolidation's 52%-owned subsidiary JHM Dekai Auto Lighting SB has secured a contract for the supply of parts for specific car models to Perusahaan Otomobil Nasional SB (Proton). It said with an estimated value of RM300m, it is expected to commence in the late third quarter of FYE 31 Dec 2025, for a period of five years. (StarBiz)

SkyWorld: Signs agreement to develop Malaysia's largest affordable housing project in Penang. SkyWorld Development said that it has signed an agreement with the Penang state agencies to jointly develop the country's largest affordable housing project that is valued at RM13bn. Under the joint development agreement signed with the Penang Development Corporation (PDC) and its subsidiary PDC Properties, the project aims to deliver over 38,000 Rumah Mampu Milik Madani (RMM) and Rumah Bakat Baru Madani (RBB) homes priced at between RM225,000 and RM420,000. (The Edge)

Sunview: Wins RM196m contracts for two solar power plants in Kedah. Sunview Group has won two contracts worth a total of RM196.1m through its subsidiary, Fabulous Sunview SB, to build two ground-mounted photovoltaic solar power plants with a combined capacity of 40MWp in Sungai Petani, Kedah. The contracts, awarded by Dayasinar Energy (RM98.3m) and Solarscape Energy (RM97.8m), cover the design, procurement, and construction of the facilities. (The Malaysian Reserve)

MN Holdings: Gets RM162.6m contract to build switching station. MN Holdings said it was awarded a contract worth RM162.6m to build a high-voltage main switching station for a data centre project in Malaysia. The announcement lifted shares of the underground utilities engineering company to a new record high since its listing in April 2022. (The Edge)

FGV: Terminates agreement with Qatar's Baladna and Touch Group for dairy farming project. FGV Holdings' subsidiary, FGV Integrated Farming Holdings SB (FGVIF), has terminated the conditional shareholders agreement with Qatar-based Baladna Food Industries W.L.L and Touch Group Holdings SB due to the expiration of the deadline to meet the required conditions. (The Malaysian Reserve)

MARKET UPDATE

The KLCI might open lower today after US stock indices drifted lower Tuesday in the run up to the highlight of the week for the market, the latest update on inflation that's coming on Wednesday. The S&P 500 dipped 0.3%, a day after pulling back from its latest all-time high. They're the first back-to-back losses for the index in nearly a month, as momentum slows following a big rally that has it on track for one of its best years of the millennium. The Dow Jones Industrial Average fell 154 points, or 0.3%, and the Nasdaq composite slipped 0.3%. Wednesday's update and a report on Thursday about inflation at the wholesale level will be the final big pieces of data the Federal Reserve will get before its meeting next week, where many investors expect the year's third cut to interest rates. The Fed has been easing its main interest rate from a two-decade high since September to take pressure off the slowing jobs market, after bringing inflation nearly down to its 2% target. Lower rates would help give support to the economy, but they could also provide more fuel for inflation. In stock markets elsewhere, indices were mixed in China after the world's second-largest economy said its exports rose by less than expected in November. Stocks rose 0.6% in Shanghai but fell 0.5% in Hong Kong. Indices fell across much of Europe ahead of a meeting this week by the European Central Bank, where the widespread expectation is for another cut in interest rates. Back home, the KLCI dropped 2.46 points or 0.15% to 1608.97.

Source: PublicInvest Research - 11 Dec 2024