HEADLINES

Economy

US: Trump's murky tariff policy sets the stage for market volatility. Investors were tentatively breathing a sigh of relief as US President Donald Trump's initial policy diktats on tariffs were less stringent than they had feared, despite setting a tone of uncertainty in global markets. Trump had vowed to immediately impose steep tariffs of 10% to 20% on global imports into the US and 60% on goods from China. After assuming office on Monday, he did not immediately impose tariffs, he only issued an order that directed agencies to "investigate and remedy" the US trade deficits. However, Trump told reporters that he was considering imposing 25% tariffs on Mexico and Canada on 1 Feb. Taken together, it made for a volatile market. (Reuters)

EU: ECB policymakers line up behind rate cuts. ECB policymakers lined up behind further interest rate cuts, indicating that next week's reduction is all but a done deal and further moves will also come even if the US Fed remains cautious. Having cut rates four times already in response to weak growth and falling inflation, the ECB is expected to keep moving quickly in 2025 with traders even increasing rate cut bets this week after US President Donald Trump did not announce much feared trade tariffs against the bloc. ECB President Christine Lagarde along with policymaking council members Francois Villeroy de Galhau, Klaas Knot, and Yannis Stournaras all backed further policy easing. (Reuters)

UK: Borrowing jumps in Dec as debt interest climbs. Britain ran a bigger-than-expected budget deficit in Dec, swelled by debt interest costs and a one-off purchase of military homes, according to official data that underlined the fiscal pressure faced by finance minister Rachel Reeves. Public sector net borrowing was GBP17.8bn (USD22bn) in December, more than GBP10bn higher than a year earlier, the Office for National Statistics said. Economists polled by Reuters had a median forecast of 14.1 billion pounds for headline public sector net borrowing. Since the 30 Oct budget that raised borrowing and increased tax on employers to help restore public services and investment, economic and financial data has largely turned against Reeves, adding to the likelihood that she will need to do more to meet the government's self-imposed fiscal rules. (Reuters)

China: Unveils plan to encourage insurance funds into stock markets. China said it will guide big state insurers and commercial insurance funds to increase investments in the A-share market, in a latest move to boost its lagging stock market. Under a plan jointly released by six financial regulators including the securities regulator, big state-owned insurance companies will be directed to raise both the size and proportion of their investments in Chinese stocks listed on the mainland and equity funds. The regulators will implement a long-term performance evaluation for state-owned insurance companies, with the annual return on equity weighted no more than 30% of the evaluation, and at least 60% for a longer three-to-five-year cycle. (Reuters)

India: Budget likely to raise major subsidies by 8% to USD47bn in next fiscal. India is likely to raise spending on food, fertiliser, and cooking gas subsidies to INR4.1tr (USD47.41bn) in the next fiscal year, government sources said, a moderate 8% YoY increase to cover higher food and energy costs. Indian Finance Minister Nirmala Sitharaman will present the national budget on 1 Feb amid slowing growth in Asia's third-largest economy and rising global uncertainties. The latest economic slowdown has been largely attributed to weakness in urban regions and investments from companies. (Reuters)

South Korea: Economy barely grows in Q4 amid political chaos. South Korea's economy barely grew in the fourth quarter of 2024, missing market expectations, as domestic demand was hurt by the country's worst political crisis in decades, advanced central bank estimates showed. GDP expanded 0.1% from a quarter earlier on a seasonally adjusted basis, compared with increases of 0.1% in the third quarter and 0.2% forecast in a Reuters survey. In December, consumer and business sentiment dampened amid political chaos, after President Yoon Suk Yeol was impeached and suspended from duties over his short-lived bid to impose martial law, followed by the impeachment of Prime Minister Han Duck-soo. (Reuters)

Markets

Sunway: Shortlists bankers for healthcare unit's IPO. Sunway has started the ball rolling for the IPO of its healthcare unit Sunway Healthcare Group, according to sources. Maybank Investment Bank and AmInvestment Bank are said to be the front-runners as principal advisers for the IPO, while Affin Hwang Investment Bank and CIMB Investment Bank have been shortlisted as joint book runners. Sunway Healthcare Holdings SB (SHH) is 90.26%-owned by Sunway City SB, which is in turn wholly owned by Sunway, while the other 9.73% in SHH is owned by Greenwood Capital Pte Ltd, an indirect unit of Singapore's sovereign wealth fund GIC Pte Ltd. (The Edge)

Jentayu: SC denies Jentayu's extension bid to complete acquisitions of RE firms. Jentayu Sustainables said the Securities Commission Malaysia (SC) has denied the group's bid for an extension of time up to March 26, 2025, to complete its acquisition of three RE firms proposed in 2021. Jentayu said its board will be convening a special board meeting to decide on its next course of action. The companies, Telekosang Hydro One SB and Telekosang Hydro Two SB own and operate the 40MW Telekosang Hydro power plant project in Sabah, while Jentayu Solar SB owns and operates a 5.99MW solar power plant in Pokok Sena, Kedah. (The Edge)

Power Root: Sued by EXIM Bank over insurance claim payout. Power Root has been slapped with a lawsuit from Export-Import Bank of Malaysia (EXIM Bank) for RM7.4m over insurance claim payout dispute. EXIM Bank is demanding repayment of RM675,509.22 for funds disbursed to its subsidiaries, namely Power Root (M) SB, Power Root Manufacturing SB and Power Root ME Free Zone Company. (The Edge)

CapitaLand Malaysia Trust: Posts record net property income of RM264m in FY2024. CapitaLand Malaysia Trust posted a 15% rise in its net property income (NPI) for the 4QFY2024 to RM72.5m from RM63.0m on higher revenue contribution from the majority of CLMT's properties, supported by stronger retail sentiment. Gross revenue grew 10.6% to RM120m from RM108.5m on positive rental reversions and higher occupancy. It announced a distribution of 1.22 sen per unit. Looking ahead, CLMT said it will continue to seek acquisition opportunities in industrial and logistic assets across Penang, Johor and the Klang Valley this year. (The Edge)

Sentral REIT: Net property income flat in 4Q, up 20.4% for full year. Sentral REIT ended the final financial quarter with a flat net property income (NPI), as revenue gains were offset by operating expenses for Menara CelcomDigi. NPI for the 4QFY2024 rose a marginal 1.25% to RM36.7m from RM36.3m, according to the office tower property trust. Revenue increased 5.54% to RM47.4m from RM44.9m, while property operating expenses rose 10.52% to RM11.5m versus RM10.4m a year earlier. (The Edge)

IPO: Northern Solar's IPO oversubscribed. Northern Solar Holdings IPO for the public portion has been oversubscribed by 73.2 times. The company, which is scheduled to list on the ACE Market of Bursa Malaysia on Feb 6, aimed to raise RM42.4m from its IPO. The solar renewable energy specialist said a total of 25,772 applications seeking 1.47bn shares with a value of RM924.59m were received from the public for 67.3m new shares made available for subscription. (StarBiz)

MARKET UPDATE

US markets climbed as technology shares rallied on artificial intelligence optimism and President Donald Trump's new term in office. The Dow Jones Industrial Average rose 0.3%, the S&P 500 advanced 0.6%, and the Nasdaq Composite climbed 1.2%. European markets were broadly higher, with the household goods, industrials, technology and insurance sectors leading the market with gains of more than 1%. The German DAX rose 1.0%, the French CAC 40 advanced 0.8%, while the FTSE 100 closed virtually unchanged. Meanwhile, Asian markets were mixed after US President Donald Trump's latest comments on tariffs heightened uncertainty in Chinese markets. Tokyo's Nikkei 225 rose 1.5%, while the Hang Seng Index slipped 1.6%, and the Shanghai Composite declined 0.8%.

Source: PublicInvest Research - 23 Jan 2025