HEADLINES

Economy

US: Economy on solid footing set to back US Fed's interest- rate hold. The US economy remained at a comfortable cruising speed in the final stretch of 2024, powered by healthy consumer spending and creating even more separation from its global counterparts. Economists surveyed by Bloomberg project the government's initial estimate of 4Q gross domestic product, the sum of goods and services produced to show an annualised 2.7% increase. That would follow back-to-back quarters of about 3% growth. Report on US economic activity surfaces a day after the conclusion of the first Fed policy meeting of 2025. Against a backdrop of healthy demand and stubborn inflation, officials are widely expected to hold borrowing costs steady. (Bloomberg)

US: Existing home sales rise in Dec, house prices hit record high in 2024. US existing home sales increased to a 10-month high in Dec, but further gains are likely to be limited by elevated mortgage rates and house prices, which are keeping many prospective buyers on the sidelines. Despite the bigger-than-expected rise reported by the National Association of Realtors, home sales in 2024 were the lowest in three decades. The median house price last year hit a record high of USD407,500. While housing supply has improved, it remains below pre-pandemic levels. (Reuters)

EU: Eurozone's private sector unexpectedly returns to growth. The euro area's private sector grew in Jan after two months of contraction, surprising analysts as the embattled manufacturing sector showed small signs of improvement. S&P Global's composite purchasing managers' index (PMI) rose to a five-month high of 50.2 from 49.6 the previous month, edging back above the 50 level that separates expanding from shrinking output. Analysts had estimated a reading of 49.7. The result reflects a slightly stronger showing for manufacturers, though at 46.1 they remain deep in contraction territory. The services industry continues to be the bright spot, with its gauge broadly stable at 51.4. (Bloomberg)

EU: Spain producer prices rise 2.3% in Dec. Spain's producer prices increased for the second straight month in Dec amid an accelerated rise in energy costs, provisional data from the statistical office INE showed. The producer price index posted an annual increase of 2.3% in Dec, faster than the 1.2% rise in Nov. Within overall prices, energy prices grew the most by 7.5% annually in Dec, extending from a 3.1% increase seen a month ago. This upward trend in energy prices was a consequence of the rise in prices of oil refining and prices of production, transportation, and distribution of electrical energy, the agency said. (RTT)

UK: Slow UK growth ticks up in Jan but price pressures climb, PMI shows. Tepid growth across British businesses edged up at the start of 2025 but employment and optimism contracted again and price pressures rose, according to a survey that underscored the challenge facing the BoE. The preliminary "flash" reading of the UK S&P Composite Purchasing Managers' Index (PMI) rose slightly to 50.9, a three-month high, from 50.4 in Dec. Economists polled by Reuters had expected a further decline in Jan to 50.0, the PMI's dividing line between growth and contraction. The survey chimed with other signs of lacklustre growth and a weakening jobs market since finance minister Rachel Reeves raised payroll tax rises for businesses in her first budget on Oct. 30. Separate data published showed retailers reported a sharp fall in sales volumes in Jan while consumer confidence fell abruptly. (Reuters)

China: Starts lowering price goals to match deflationary reality. Almost all Chinese regions have lowered their inflation targets for this year, in what's likely a prelude to a decision in March to lower the national goal below 3% for the first time in over two decades. With the world's second-biggest economy struggling to emerge from deflationary pressure, authorities around China are starting to concede that faster price growth will be a challenge after consumer inflation reached only 0.2% in 2023 and last year. All but four of China's 31 mainland provinces have set an aim of ending this year with price growth around 2%, according to statements from their governments following meetings this month. That's down from the 3% target that most of them had last year, which was the same for China as a whole. (Bloomberg)

Japan: BOJ raises interest rates to highest in 17 years, yen jumps. The BOJ raised interest rates to their highest since the 2008 global financial crisis and revised up its inflation forecasts, underscoring its confidence that rising wages will keep inflation stable around its 2% target. The decision marks the BOJ's first rate hike since July last year and comes days after the inauguration of US President Donald Trump, who is likely to keep global policymakers vigilant ahead of potential repercussions from threatened higher tariffs. BOJ Governor Kazuo Ueda said the central bank will keep raising interest rates as wage and price increases broaden, adding that there was scope to push up borrowing costs further before they reach levels deemed neutral to the economy. But he offered few clues on the timing and pace of future rate hikes, saying the decision will be based on how soon Japan will see trend inflation sustainably hit the BOJ's target. (Reuters)

Singapore: Home prices rise, rents flat as curb chatter grows. Singapore home prices rose at the same pace as initially estimated in the last quarter of 2024, amid analyst forecasts that the government may intervene to cool the market this year. Private residential prices climbed 2.3% in the fourth quarter from the previous three months, according to final figures released by the Urban Redevelopment Authority (URA), matching an earlier estimate. For the whole of 2024, prices rose 3.9%. Rents for private homes closely watched by expats and locals alike were unchanged from the previous three months, when they gained 0.8%. It contributed to a 1.9% fall in rents in 2024, the first drop since 2020. The resurgence in residential values was driven by a flurry of projects released around the end of last year. Lower interest rates attracted buyers, driving an increase in new home sales in 2024. (Bloomberg)

Markets

MAHB: GDA exceeds threshold with 92.82% acceptance as of 24 Jan. The Malaysian Airports Holdings (MAHB) takeover offer by Khazanah Nasional-led consortium has met the acceptance threshold ahead of the 4 Feb deadline. The Gateway Development Alliance (GDA) consortium also said that the takeover offer may only become unconditional on Jan 28. GDA - which also includes the Employees Provident Fund, BlackRock's Global Infrastructure Partners and Abu Dhabi Investment Authority - had obtained an acceptance level of 92.82% as of last week. The current acceptance level is higher than the revised acceptance conditions of at least 85% made by GDA on Jan 20. (Business Times)

MRCB: In JV to build 300-bed hospital in Melaka. Malaysian Resources Corporation's (MRCB) unit, MRCB Land SB, is involved in a joint venture to construct a hospital in Melaka. The construction outfit said that the gross development cost for Phase 1 is estimated to be approximately RM520m. The joint venture and shareholder agreement were signed between MRC. Land, Melaka Corporation's PM Multilink SB (PMM), and Majestic Quest Sdn Bhd (MQSB). MQSB is a 70:30 joint venture company between MRCB Land and PMM. (Bernama)

TMC Life Sciences: Issues profit warning due to contract issues. TMC Life Sciences warned that it expects to report a loss for the second quarter ended 31 Dec 2024 (2QFY2025), compared to the net profit recorded in the same period last year. The company attributed the anticipated loss primarily to "termination and discount of customer contracts", according to its profit guidance statement filed with Bursa Malaysia, following a preliminary review of its unaudited results for 2QFY2025. TMC Life Sciences advised shareholders and potential investors to exercise caution when trading in the company's shares. (The Edge)

Willowglen: Lands RM6.5m security system contract. Willowglen MSC said that its wholly-owned subsidiary, Willowglen Services PL, has been awarded a contract valued at approximately RM6.54m by Intac Systems Solution PL, Singapore. The contract, which involves the supply, installation, testing, and commissioning of security systems, commenced on 24 Jan, 2025 and is expected to be completed by July 12, 2026. The new contract is anticipated to positively impact the company's earnings and net assets per share for the financial years ending 31 Dec 2025 to 2026. (The Malaysian Reserve)

Chin Hin Group: To increase stake in Ajiya to 66.36%. Chin Hin Group (CHGB) has proposed to increase its stake in Ajiya by another 12.27% through the acquisition of 38.37m additional shares for RM54.2m -- a move that would bring its shareholding in the latter to 66.36%. The group said it has entered into a Share Sale Agreement (SSA) with Ajiya's major shareholder, Yeo Ann Seck for the acquisition on the basis of RM1.45 for each ordinary share held. (The Star)

Taghill: Clinches RM152m mixed-development project in Pahang. Taghill Holdings formerly known as Siab Holdings, has secured a RM152m construction job in Kuantan, Pahang. Its wholly owned subsidiary, Taghill Projects SB (TPSB), accepted the letter of award (LOA) from Kuantan Waterfront Resort City SB (KWR) for the proposed development of a commercial strata scheme. The project includes four business blocks, one serviced apartment block, and a six-level podium parking structure with residential facilities. (The Edge)

MARKET UPDATE

US markets pulled back after reaching new records, as investors digested the latest batch of earnings and weighed President Trump's hints at a softer stance on China tariffs. The Dow, S&P 500 and Nasdaq slipped 0.3%, 0.2% and 0.5% on Friday. Meanwhile, stock futures traded lower as investors look ahead to a major earnings week with four of the "Magnificent 7" are set to report quarterly earnings. European markets were lower despite a largely positive week for global stocks. The German DAX and UK FTSE fell 0.1% and 0.7% while French CAC dropped 0.4%. Asia markets climbed after US stocks hit record highs overnight as the US President called for lower interest rates and cheaper oil prices. The Hang Seng rose 1.7% while Shanghai Composite gained 0.7%. Back home, KLCI fell 0.2% to 1,573.73. Leading the market lower was YTL Power, which fell 10.9% to close at RM3.61 after announcing bonus issue of warrants.

Source: PublicInvest Research - 27 Jan 2025