HEADLINES

Economy

US: New York manufacturing index pulls back more than expected in Dec. After reporting a sharp increase by its reading on regional manufacturing activity in the previous month, the Fed Bank of New York released a report showing a sharp pullback by the index in the month of Dec. The New York Fed said its general business conditions index plummeted to 0.2 in Dec after spiking to 31.2 in Nov, although a positive reading still indicates growth. Economists had expected the index to tumble to 12.0. The steeper than expected drop by the general business conditions index came after it reached its highest level since Dec 2021 in the previous month. The plunge by the headline index came amid significant decreases by the new orders and shipments indexes, which fell sharply but remained positive. (RTT)

US: Services activity expands by most in more than three years. Activity at US service providers is expanding at the fastest pace since Oct 2021, providing momentum for the economy even as the downturn in manufacturing worsens. The S&P Global flash Dec index for service providers increased to 58.5 from 56.1. A figure exceeding 50 indicates expansion. The group's composite index for future output jumped 3.3 points to 71.1, the highest since May 2022. The data show a growing divergence in the economy, characterised by solid growth in services and a further deterioration in manufacturing. (Bloomberg)

EU: Lagarde says direction for ECB rates is clear, more cuts coming. The ECB will lower interest rates further, with risks to the inflation outlook now "two-sided," President Christine Lagarde said. Speaking days after the ECB reduced borrowing costs to 3%, Lagarde told reporters in Vilnius that the direction of travel is clearly "downward" and that the most recent move "is not the last interest-rate cut that we'll do." "What we see now is a change of risk position," Lagarde said. Even after four cuts, the ECB reckons rates are still constricting economic activity at their current level. Most officials say policy can gradually move to a neutral setting that neither restricts nor stimulates growth. (Bloomberg)

EU: French private sector contracts for fourth month. France's private sector contracted for the fourth straight month in Dec as both manufacturers and services providers registered declines in output, flash survey results from S&P Global showed. The HCOB composite output index posted 46.7 in Dec, up from 45.9 in Nov. A reading below 50 indicates contraction. The index signaled an extension of the downturn seen in the private sector since Sept. Although the pace of decline slowed from Nov, the score suggested the second-sharpest fall over the last eleven months. (RTT)

UK: Private sector logs steady growth. The UK private sector logged a steady growth in Dec with rising activity across the services economy offsetting an accelerated downturn in manufacturing output, flash survey results from S&P Global showed. The flash composite output index posted 50.5 in Dec, unchanged from Nov's 13-month low. Divergent trends were recorded in the manufacturing and service sectors in Dec. The factory PMI fell to an 11-month low of 47.3 compared to 48.0 in Nov. The reading was seen at 48.4. By contrast, the services PMI rose to 51.4, up from 50.4 in the prior month. (RTT)

China: Weak consumption drags on economy as Trump tariff threat looms. China's industrial output growth quickened slightly in Nov, while retail sales disappointed, keeping alive calls for Beijing to ramp up consumer-focused stimulus as policymakers brace for more US trade tariffs under a second Trump administration. The mixed data underline how challenging it will be for China's leaders to mount a durable economic recovery heading into 2025, when trade relations with China's biggest export market could worsen while domestic consumption also stays weak. (Reuters)

India: Economy ends 2024 with solid momentum as business growth hits four-month high. India's private sector output grew at the fastest pace in four months, preliminary readings from a survey showed, helping the economy end 2024 on a positive note underpinned by sturdier demand in services and manufacturing and record jobs growth. Asia's third-largest economy grew a softer 5.4% last quarter, but easing inflation is expected to spur demand among private sector firms, improving the outlook for next year. (Reuters)

Japan: Factory activity softens for sixth straight month, PMI shows. Japan's factory activity shrank for the sixth straight month on lackluster demand, while the service sector extended gains in Dec, business surveys showed on Monday, highlighting the economy's increasing reliance on services. The au Jibun Bank flash Japan PMI dropped at a slower pace to 49.5 in Dec, from 49.0 in Nov. The index has remained below the 50.0 threshold, separating expansion from contraction since June. Business confidence in the factory sector softened to the lowest level since May 2022. (Reuters)

Markets

George Kent: Wins RM45.5m construction job in Kwasa Damansara. George Kent (Malaysia) has been awarded the contract for the proposed construction, completion, testing, and commissioning of the suction tank, pump house, water reservoir, 11kV switching station unit, and all associated works at the Kwasa Damansara township development in Sungai Buloh, Selangor. The contract, valued at RM45.5m, was awarded by Kwasa Land SB, George Kent said in a statement. Work on this project is scheduled to commence on Jan 9, 2025, with the target completion date set for July 8, 2027. (BTimes)

KKB Engineering: Bags two contracts totaling RM89m. KKB Engineering has secured contracts from PETROSNiaga SB (PNSB) and Gamuda totaling RM89m. In a filing with Bursa Malaysia, KKB said the contract from PNSB will be for the supply and delivery of new liquefied petroleum gas cylinders. Meanwhile, the contract from Gamuda is for the manufacture, supply, delivery and unloading of mild steel concrete lined pipes and specials in Sabah. (StarBiz)

Nestle: Names Raja Nurmaria executive director group corporate affairs Malaysia, Singapore. Nestle (Malaysia) has named Raja Nurmaria Murni Raja Nur Azmi as its new executive director for group corporate affairs, covering Malaysia and Singapore. She succeeds Datuk Adnan Pawanteh in this role. Murni, who has been with Nestle since 2011, started as a media and advertising manager, where she managed media strategies and campaigns for the company's Malaysian brands. (BTimes)

Advancecon: Bags RM44.6m Elmina West contract. Civil engineering services specialist Advancecon Holdings' wholly-owned subsidiary, Advancecon Infra SB, has secured a RM44.6m contract from Sime Darby Property SB. In a filing with Bursa Malaysia, Advancecon stated that the contract involves the construction of main infrastructure works for Phase 3, Parcels 2 and 3, of the proposed development at Elmina West. The project, scheduled for completion within 18 months, is expected to conclude by July 1, 2024. (BTimes)

Oasis: Disposes of industrial land for RM16.5m. Oasis Harvest Corp is disposing of a parcel of industrial land in Puchong, Selangor to Crest Group for RM16.5m. In a filing with Bursa Malaysia, Oasis said the land consists of a three-storey detached factory with a three-storey office, annexed together with a guardhouse. Oasis said the proceeds from the disposal will be used to repay bank borrowings, for outlet marketing and events as well as working capital requirements. (StarBiz)

Mah Sing: Concludes RM250m secured and unrated sukuk issuance. Mah Sing Group has completed its issuance of secured and unrated Sukuk Murabahah of RM250m in nominal value under its existing Sukuk Murabahah Programme. In a filing to Bursa Malaysia, the real estate developer said the Sukuk Murabahah has a five-year tenure and a fixed profit rate of 4.50% per annum, payable semi-annually. Mah Sing said the proceeds raised from the issuance will be used for Shariah-compliant purposes, which may include land banking, capital expenditures, investments, and working capital of Mah Sing and its subsidiaries and associate companies, as well as the refinancing of the group's existing borrowings and redemption of the existing Sukuk Murabahah. (Bernama)

MARKET UPDATE

The KLCI might open flat today as US stock indices drifted amid mixed trading Monday, ahead of this week's upcoming meeting by the Federal Reserve that could set Wall Street's direction into next year. The S&P 500 rose 0.4%, coming off its first losing week in the last four. The Nasdaq composite climbed 1.2% to a record, while the Dow Jones Industrial Average was a laggard and fell 110 points, or 0.3%. The market's main event, though, will arrive on Wednesday when the Federal Reserve will announce its last move on interest rates for the year. The widespread expectation is that it will cut its main rate for a third straight time, as it tries to boost the slowing job market after getting inflation nearly all the way down to its target of 2%. The question is how much more it will cut rates next year, and Fed officials will release projections for where they see the federal funds rate ending 2025, along with other economic indicators, once their meeting concludes. Fed Chair Jerome Powell will also answer questions in a press conference following the meeting. In stock markets elsewhere, indices fell modestly across much of Europe and Asia. They sank 0.9% in Hong Kong and 0.2% in Shanghai after China reported lackluster economic indicators for November despite attempts to strengthen the world's second-largest economy. South Korea's Kospi fell 0.2% as law enforcement authorities pushed to summon impeached President Yoon Suk Yeol for questioning over his short-lived martial law decree, and the Constitutional Court met to discuss whether to remove him from office or reinstate him. Back home, the KLCI lost 1.9 points or 0.12% to end at 1606.85.

Source: PublicInvest Research - 17 Dec 2024