HEADLINES

Economy

US: Job openings unexpectedly increase in Nov. Job openings in the US unexpectedly increased in the month of Nov, according to a report released by the Labor Department. The Labor Department said job openings rose to 8.098m in Nov from an upwardly revised 7.839m in Oct. Economists had expected job openings to dip to 7.700m from the 7.744m originally reported for the previous month. Job openings increased in the professional and business services, finance and insurance and private educational services sectors but decreased in the information sector. Meanwhile, the Labor Department said hires slipped to 5.269m in Nov from 5.394m in Oct, while total separations fell to 5.126m in Nov from 5.306m in Oct. (RTT)

US: Services index rises more than expected in Dec. The Institute for Supply Management released a report showing its reading on US service sector activity increased by more than expected in the month of Dec. The ISM said its services PMI climbed to 54.1 in Dec from 52.1 in Nov, with a reading above 50 indicating growth. Economists had expected the index to rise to 53.3. The bigger than expected increase by the headline index partly reflected a jump by the business activity index, which shot up to 58.2 in Dec from 53.7 in Nov. The new orders index crept up to 54.2 in Dec from 53.7 in Nov, while the employment index edged down to 51.4 in Dec from 51.5 in Nov but continued to indicate job growth in the service sector. (RTT)

US: Trade deficit widens in Nov as imports rebound more than exports. With imports rebounding by more than exports, the Commerce Department released a report showing the US trade deficit widened roughly in line with economist estimates in the month of Nov. The Commerce Department the trade deficit increased to USD78.2bn in Nov from a revised USD73.6bn in Oct. Economists had expected the trade deficit to climb to USD78.0bn from the USD73.8bn originally reported for the previous month. The wider trade deficit came as the value of imports shot up by 3.4% to USD351.6bn in Nov after plunging by 3.9% to USD339.9bn in Oct. The rebound by the value of imports partly reflected sharp increases by imports of industrial supplies and materials and capital goods. (RTT)

EU: Euro zone inflation rose to 2.4% in Dec, meeting expectations. Annual inflation in the euro zone rose for a third straight month to reach 2.4% in Dec, statistics agency Eurostat said. The preliminary reading was in line with the forecast of economists polled by Reuters and marked an increase from a revised 2.2% print in Nov. Core inflation held at 2.7% for a fourth straight month, also meeting economists' expectations, while services inflation nudged up to 4% from 3.9%. Headline inflation was widely expected to accelerate after hitting a low of 1.7% in September, as base effects from lower energy prices fade. The full extent of increases in the reading, along with persistence in services and core inflation, will be closely watched by the European Central Bank, which markets currently expect to cut interest rates from 3% to 2% across several trims this year. (CNBC)

India: Forecasts 2024/25 economic growth of 6.4%, slowest in four years. India forecast annual growth of 6.4% in the year ending in March, the slowest in four years and below the lower end of government's initial projection, dragged by a weaker manufacturing sector and slower corporate investments. India's had initially projected a growth rate of 6.5%-7%. The forecast by the National Statistics Office (NSO) follows several disappointing economic indicators in the second half of 2024, including low growth, high inflation, anaemic capital flows and a record trade gap, that cast doubt on the robustness of the country's growth. (Reuters)

South Korea: USD9.30bn current account surplus. South Korea poste a current account surplus of USD9.30bn in Nov, the Bank of Korea said, easing from USD9.78bn in Oct. The goods account recorded a USD9.75bn surplus as exports increased annually by 1.2% to USD57.10bn and as imports decreased by 4.4% to USD47.35bn, both compared to one year earlier. The services account posted a USD2.09bn deficit owing to deficits in the manufacturing services, travel, and other business services accounts. The primary income account recorded a USD1.94bn surplus due to an increase in interest income. The secondary income account recorded a USD0.30bn deficit. (RTT)

Philippine: Inflation rises to 2.9%, highest in 4 months. The Philippines' CPI accelerated more than expected in Dec to the highest level in four months, data from the Philippine Statistical Authority showed. The CPI climbed 2.9% YoY in Dec, faster than the 2.5% rise in Nov. Meanwhile, economists had forecast inflation to increase slightly to 2.6%. However, inflation remained within the central bank's target range of 2 to 4%. The core inflation rate, which excludes the prices of selected food and energy items, also rose to 3.0% from 2.8%. The annual price growth in utility costs quickened to 2.9% from 1.9%. (RTT)

Vietnam: Central bank to keep flexible monetary policy, monitor Trump policies. Vietnam will maintain a flexible monetary policy aimed at controlling inflation, while authorities will monitor the policies of US President-elect Donald Trump in order to adjust domestic policies accordingly, its central bank said. Bad debt was on a rising trend and Vietnam's bond and stock markets are facing difficulties, as is the property sector, despite signs of recovery, deputy central bank governor Dao Minh Tu told a regular press briefing. Vietnam's manufacturing-led economy expanded 7.09% last year to USD476.3bn, outpacing the 5.05% growth of 2023, official data showed.

Markets

Property (Neutral): Special economic zone set to elevate Johor. The Johor-Singapore Special Economic Zone (JS-SEZ) will bring a positive transformation to the state, says Menteri Besar Datuk Onn Hafiz Ghazi. (StarBiz) Comment: Malaysia and Singapore announced an agreement on a special economic zone (SEZ) in Johor on Tuesday, aiming to support investment and free up movement of goods and people between the countries. To recap, SEZ was first mooted in principle about a year ago. We understand that SEZ aims to attract high-value investments in sectors ranging from manufacturing and logistics to tourism and energy transition with plans to target 50 projects within the economic zone in the first five years of its inception, and the creation of 20,000 skilled jobs. Details are still light especially on the progress on streamlining investment and tax policies to attract fresh investment. All told, the signing is positive to landowners such as UEM Sunrise, Eco World and SP Setia in our coverage in the longer term, but we are neutral for now, pending more details. The sector's valuations are not cheap currently in our view, with the sector now trading at about 0.7x (+1SD) or at average discount to book value currently. As such, we believe the upside is limited for now. As such, we keep our Neutral stance.

UUE Holdings: Gets RM36.5m contract extensions from Komasi Engineering. UUE Holdings, through its wholly owned subsidiary Kum Fatt Engineering SB, has secured contract extensions and renewals worth approximately RM36.5m from Komasi Engineering SB. The contracts involve underground cable installation and commissioning works within TNB's distribution network. The first contract, valued at over RM22m, extends the installation, testing, and commissioning of 33kV underground cables in Terengganu and Kelantan until Oct 8. (The Malaysian Reserve)

Nestcon: Wins RM25m earthworks contract for Senai Airport City project. Nestcon's wholly owned subsidiary Nestcon Infra SB (NISB) has secured a RM25m contract for earthworks and erosion control in Johor's Senai Airport City. In tandem with the third phase of Senai Airport City's industrial development expansion measuring some 300 acres, NISB has been appointed as the contractor for earthworks to provide investors with industrial plots ready with platform and corresponding infrastructure. (The Edge)

Infomina: Wins RM22m JPJ contract. Infomina has accepted a contract worth RM22.4m from the Road Transport Department (JPJ). The company said the contract has a tenure of three years, commencing from Feb 1, 2025 to Jan 31, 2028. The contract covers maintenance and support services to the back-end application, infrastructure maintenance for data centres, disaster recovery infrastructure and network systems, as well as communication services for the Automated Awareness Safety System. (StarBiz)

ITMAX: Secures RM12m Penang CCTV contract. ITMax System has accepted a job from the Penang city council for the upgrading and maintenance of a selection of close circuit camera (CCTV) systems for RM11.8m. The group said the contract will run for 60 months from Jan 13, 2025 to Sept 12, 2030. The effective date for site possession by ITMAX is Jan 13, 2025, and all upgrading works for the CCTV system are to be completed within nine months from the site possession date. (StarBiz)

MARKET UPDATE

The KLCI might open lower today after good news on the US economy is back to being bad for Wall Street, and the stock market slumped Tuesday following better-than-expected reports on the job market and business activity. The S&P 500 fell 1.1% after giving up an early gain. The Dow Jones Industrial Average dropped 178 points, or 0.4%, while the Nasdaq composite tumbled 1.9%. Stocks dropped under the weight of rising yields in the bond market, which jumped immediately after the release of the encouraging reports on the economy. One said US employers were advertising more job openings at the end of November than economists expected. The other said activity for finance, retail and other services businesses grew much faster in December than expected. The strong reports are of course good news for workers looking for jobs and for anyone worried about a possible recession that earlier seemed inevitable to pessimists. But such a solid economy could also keep up pressure on inflation, and it could make the Federal Reserve less likely to deliver the cuts to interest rates that Wall Street loves. In stock markets elsewhere, some notable Chinese companies fell after the US Defense Department added dozens of them to a list of companies it says have ties to China's military. The announcement caused some of the companies to protest and say they will seek to have the decision reversed. Added to the list were gaming and technology company Tencent, artificial intelligence firm SenseTime and the world's biggest battery maker CATL. Tencent's stock that trades in Hong Kong fell 7.3%. That helped pull the Hang Seng index down 1.2%, but indices were stronger elsewhere in China and across much of Asia and Europe. Back home, the KLCI added 4.32 points or 0.27% to 1629.79.

Source: PublicInvest Research - 8 Jan 2025