HEADLINES

Economy

US: Construction spending beats expectations in Dec. US construction spending increased more than expected in Dec, boosted by single-family homebuilding, but high mortgage rates could curb further gains in new residential construction. The Commerce Department's Census Bureau said that construction rose 0.5% after an upwardly revised 0.2% increase in Nov. Economists polled by Reuters had forecast construction spending would advance 0.2% after being previously reported as unchanged in Nov. Construction spending increased 4.3% on a YoY basis in Dec. It advanced 6.5% in 2024. Spending on private construction projects shot up 0.9%. (Reuters)

US: Manufacturing rebounds, tariffs could derail tentative recovery. US manufacturing grew for the first time in more than two years in Jan, but recovery was likely to be short-lived after President Donald Trump imposed tariffs on goods from Canada, Mexico and China at the weekend, which will potentially further raise raw material prices and snarl supply chains. The survey from the Institute for Supply Management (ISM), which was conducted before the escalation in trade tensions, showed raw material inventories at factories were already declining last month, sending prices rising for the fourth straight month. (Reuters)

EU: Finland HICP inflation eases slightly. Finland's EU measure of inflation eased for the second straight month in Jan, though slightly, a flash data from Statistics Finland showed. The harmonized index of consumer prices, or HICP, rose 1.6% YoY in Jan, slower than the prior month's 1.7% gain. The annual price growth in food and non-alcoholic beverages eased to 0.93% in Jan from 1.23% a month ago. A decline of 0.78% in utility costs had also curbed the rise in prices. Meanwhile, transport charges increased at a faster pace of 1.97%. On a monthly basis, the HICP rose 0.4% in Jan versus 0.2% in the previous month. (RTT)

EU: Austria inflation rises to 8-month high. Austria's CPI rose further in Jan to the highest level in eight months, a flash estimate from Statistics Austria showed. The CPI climbed 3.3% YoY in Jan, faster than the 2.0% increase in Dec. Further, this was the highest inflation since May 2024, when prices had risen the same 3.3%. With this, the inflation rate is now well above the ECB's stability target of 2.0%. The upward trend in inflation is primarily due to the fact that price-lowering measures like the electricity price cap are no longer effective from Jan 2025, network charges have risen automatically, and the CO2 tax has also been increased, the agency said. (RTT)

UK: Factory activity contracts for fourth straight month in Jan, PMI shows. British factories reported another tough month in Jan as output, new orders and employment all fell, with companies hit by higher costs even before payroll taxes and the minimum wage go up in April, a survey showed. In a latest sign of an economic slowdown ahead of Thursday's expected interest rate cut by the BoE, the S&P Global Purchasing Managers' Index for UK manufacturing remained below the 50-mark that divides growth from contraction for a fourth month in a row. There was a slight easing in the pace of contraction as the index rose to 48.3 in Jan from 47.0 in Dec, a fraction above a preliminary estimate for Jan of 48.2. (Reuters)

China: Manufacturing growth weakens in Jan. China's manufacturing sector expanded at a slower pace in Jan as staffing declined the most since 2020 and exports orders fell for the second consecutive month amid international policies posing significant challenges for the economy. The Caixin PMI fell to 50.1 in Jan from 50.5 in Dec, survey results from S&P Global showed. However, the reading above 50.0 indicates expansion in the sector. Production growth accelerated in Jan, in line with the trend for new orders. Higher new business driven by better underlying demand and increased promotional efforts supported the growth in output. However, new export orders decreased for the second straight month. Sentiment improved among manufacturers on the back of better demand and hopes for further growth. Meanwhile, employment declined at the fastest pace since Feb 2020 as concerns regarding expectations for growth affected hiring decisions. (RTT)

India: Manufacturing growth strongest in 6 months. India's manufacturing activity expanded at the quickest pace in six months in Jan, largely on the back of strong export demand, data compiled by S&P Global showed.The HSBC final manufacturing PMI rose to 57.7 in Jan from 56.4 in Dec. The flash reading was 58.0. A score above 50.0 indicates expansion.New orders grew at the fastest pace in six months, led by higher export demand, which was the best seen in just under 14 years.In line with greater new orders, goods producers raised production volumes at the fastest pace in three months. Consequently, firms lifted their workforce numbers, with the rate of job creation increasing to its highest level since the series was created. (RTT)

Hong Kong: Economic growth improves to 2.4%. Hong Kong's economy expanded at an accelerated pace in the final quarter of 2024, the advance estimates from the Census and Statistics Department showed. GDP advanced 2.4% YoY in the fourth quarter, faster than the 1.9% growth in the third quarter. On a seasonally adjusted QoQ basis, real GDP increased by 0.8% compared to the previous quarter. On the expenditure side, government consumption expenditure grew 1.9% annually versus a 1.7% increase in the Sept quarter. Meanwhile, the decline in household consumption softened to 0.2% from 1.2%. Exports of goods showed a growth of 1.2%, while imports of goods rose marginally by 0.1%. Exports of services rose further by 5.6%, and imports of services advanced by 8.7%. (RTT)

New Zealand: Building consents sink 5.6% in Dec. The total number of building permits issued in New Zealand in Dec was down a seasonally adjusted 5.6% on month in Dec, Statistics New Zealand said, coming in at 2,478. That follows the downwardly revised 4.9% increase in Nov, originally 5.3%. In the year ended Dec, the actual number of new dwellings consented was 33,600, down 9.8% from a year earlier. The annual value of non-residential building work consented was NZD9.3bn, down 0.9% from a year earlier. In the Dec 2024 quarter, the seasonally adjusted number of new homes consented fell 3.5%, after rising 5.5% in the Sept 2024 quarter. (RTT)

Markets

Steel Hawk: Gets contract extension from PETRONAS Carigali. Steel Hawk has secured a contract extension for the provision of onshore facilities maintenance, construction and modification services from PETRONAS Carigali SB (PCSB). Steel Hawk, which is involved in the provision of onshore and offshore support services for the oil and gas industry, said the contract is on a call-out basis, which does not have a fixed contract value. (StarBiz)

Mulpha: To dispose of Gold Coast shopping mall for RM233m. Mulpha International (MIB) has entered into a contract for the proposed disposal of the "Capri on Via Roma" shopping centre and associated marina in Queensland, Australia for AUD85.5m (approximately RM233.4m) in cash. The sale, conducted through Mulpha Capri Retail Pty Ltd, will be to Capri Holding GC Pty Ltd. The agreement was signed on Jan 31, 2025, with the completion expected in Q2 of 2025, subject to approval from Australian authorities. (The Malaysian Reserve)

KJTS: To buy Malakoff's energy-efficient cooling unit for RM66m cash. KJTS Group is to acquire the entire equity stake in Malakoff Corp's energy-efficient cooling unit Malakoff Utilities SB for RM65.5m in cash. The move is aimed at scaling up KJTS' cooling operations by leveraging its expertise in energy-efficient cooling solutions to enhance Malakoff Utilities' performance. (The Edge)

AZRB: Bags RM63.4m construction contract. Ahmad Zaki Resources (AZRB) has received a contract from the Malaysian Public Works Department for the construction and completion of a bridge at Kampung Binjai, Kuala Lipis, Pahang, worth RM63.4m. AZRB said the contract duration is for 36 months from Feb 12, 2025. AZRB said the bridge will span approximately 400 meters in length and 11 meters in width, crossing the Sungai Lipis River in Pahang. (StarBiz)

KGW: Partners with AGS to strengthen trans-Pacific trade. KGW Group (KGW), a leading provider of logistics services, has entered into a strategic collaboration with Accelerated Global Solutions Inc (AGS), following AGS's acquisition of a 15% equity stake in KGW. The partnership enhances KGW's capabilities in providing integrated supply chain solutions and strengthens its leadership in trans-Pacific trade. (The Malaysian Reserve)

Harrisons: Awards RM28m contract for warehouse construction. Harrisons Holdings (Malaysia) said that its wholly-owned subsidiary, Jantoco Realty SB (JRSB), has awarded a RM28m construction contract to Budiwan SB (BSB) for the development of a single-storey warehouse at the Kota Kinabalu Industrial Park (KKIP) in Sabah. The project is scheduled to begin on Feb 6, 2025, and is expected to be completed by April 6, 2026. (The Malaysian Reserve)

Maxland: Leases more Kulim High-Tech Park land, this time for district cooling system venture. Maxland has inked another 60-year land lease agreement with Kulim Technology Park Corp SB, but this time for land to venture into the district cooling system business. Its wholly owned unit, Maxland Kool SB, entered into the agreement with Kulim Tech Corp to lease a 4.85-acre parcel in Industrial Zone Phase 2 of the Kulim High-Tech Park (KHTP) for RM10.6m. (The Edge)

MARKET UPDATE

The KLCI might open lower today after the threat of a punishing trade war sent Wall Street on a roller coaster Monday. After initially falling sharply on worries about President Donald Trump's tariffs, US stocks pared their losses after Mexico said it had negotiated a one-month reprieve. The S&P 500 ended up falling 0.8% after Asian and European indices logged worse drops. The Dow Jones Industrial Average lost 122 points, or 0.3%, and the Nasdaq composite sank 1.2%. The US stock market had been on track for a much worse loss at the start of trading on worries about how much pain US companies would feel because of the tariffs. The S&P 500 was briefly down nearly 2%, and the Dow dropped as many as 665 points. Some of the heaviest losses hit Big Tech and other companies that could be hurt most by higher interest rates that could result from the US tariffs announced on imports from Canada, Mexico and China. In stock markets elsewhere, indices fell 1% in London, 1.2% in Paris and 1.4% in Frankfurt. In Asia, South Korea's Kospi sank 2.5%, and Japan's Nikkei 225 fell 2.7%. Back home, the KLCI lost 3.29 points or 0.21% to 1553.63.

Source: PublicInvest Research - 4 Feb 2025