Market Review

The FBMKLCI closed lower by 0.5% on Wednesday due to the selling pressure in banking stocks and selective heavyweights such as Press Metal (-3.9%), YTL Power (-2.0%), and IHH (-1.0%). All sectors ended in the red today, except REIT and Transportation sectors (both +1.1%). Industrial Products & Services (-1.6%), Construction (-1.5%) and Property (-1.1%) were among the worst performing sectors. Likewise, the broader market breadth was negative, with 773 decliners against 341 gainers.

Economics

Malaysia: CPI up 2% y-o-y in June, matching pace in May

The Consumer Price Index (CPI) rose 2.0% in June when compared to the same month in 2023, the Department of Statistics Malaysia said in a statement. The food and beverages group, which accounts for nearly 30% of the index’s weightage, rose 2.0% in June. The category that covers housing, water, electricity, gas and other fuels was up 3.2%, while the restaurant and accommodation services index climbed 3.3%. However, both clothing and footwear as well as insurance and financial services groups, declined 0.1% in June from a year earlier. Inflation for transport, which includes the purchase of vehicles and public transport services, rose 1.2% y-o-y in June, picking up from May’s rate of 1.4%, following diesel subsidy re-targeting. Core inflation came in at 1.9% in June, the same pace as in May. The official forecast calls for a headline inflation rate of 2% to 3.5% in 2024, versus 2.5% in 2023, with core inflation at 2% to 3% against the 3% average in 2023. (The Edge)

Malaysia: Gross fixed capital formation recorded at RM314.5bn in 2023

Malaysia's gross fixed capital formation (GFCF) was recorded at RM314.5bn at constant prices in 2023 versus RM298.2bn in 2022, said the Department of Statistics Malaysia (DOSM). Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the GFCF remained the second largest component of gross domestic product (GDP) with a 20.1% share of the total economy. The GFCF for services rose by 6.1% and the growth in fixed asset acquisition in manufacturing moderated by 5.5%. The private sector remained the main contributor to the GFCF at 77.2%; it grew by 4.6% versus 7.2% in 2022. The public sector's 22.8% share of the GFCF rose by 8.6% versus 5.3% in 2022. (Bernama)

Japan: Kishida calls for more money to develop Japan's chip sector

Prime Minister Fumio Kishida’s administration is drafting legislation to propel further investment in Japan's chipmaking capacity. Tokyo has said it will diversify support to the country’s chip supply chain, which it sees as critical to catch up in AI. Options may involve extending public guarantees on loans to the sector. Rapidus is the country’s most ambitious effort in the sector yet, with plans to manufacture state-of-the-art two-nanometre chips that would be tailored to customers' designs. To enable full-scale mass production at Rapidus, Japan will also need to secure a stable supply of cheap and clean power sources, Kishida said. (Bloomberg)

Malaysia: Reviews dumping laws as cheap china goods spark concern

Malaysia’s Trade Ministry is reviewing its anti-dumping legislation and plans to present it to Parliament next year, joining Indonesia in heeding concerns about cheap Chinese products hurting local businesses. The government supports protecting small- and medium-sized enterprises from the effects of unfair trade following the large influx of cheap imported goods from countries including China, Deputy Trade Minister Liew Chin Tong said in parliament Wednesday. The Malaysian Trade Ministry is open to working with the association to study the impact of Chinese products on local businesses, Liew added. But he was quick to add that the government doesn’t target individual nations, signalling the delicate balancing act Malaysia has to play in attracting trade while ensuring domestic producers remain competitive. (Bloomberg)

US: 30-Year mortgage rate eases to lowest level since February

The contract rate on a 30-year fixed mortgage slipped 5 basis points to 6.82% in the week ended July 19, according to Mortgage Bankers Association data released Wednesday. An index of mortgage applications to buy a home decreased by 4% to the lowest level since the end of May. While mortgage rates remain below 7%, they’re still twice as high as they were at the end of 2021. Combined with elevated home prices, many potential homebuyers have been shuffled to the sidelines, evidenced by waning sales of previously owned houses. A National Association of Realtors measure of homebuyer affordability declined for a fourth straight month in May and stood at one of the lowest levels in the group’s data back to 1989. (Bloomberg)

Companies

YTL: Acquires NSL stake for RM792m

YTL Corp Bhd’s subsidiary YTL Cement Bhd has entered into a conditional sale and purchase agreement with 98 Holdings Pte Ltd for the proposed acquisition of shares in NSL Ltd for SGD227.6m (about RM792.32m) in cash, representing about 81.24% equity interest. “The acquisition provides a unique opportunity for YTL Corp’s expansion via YTL Cement and its subsidiaries into the industrialised building system sector in Malaysia, Dubai, Finland and Singapore. “It also facilitates the expansion of YTL Cement’s environmental services business into Singapore through NSL’s environmental service business in the republic with synergistic advantages,” it said. (Bernama)

Sime Darby: Expands Porsche assembly facility in Kulim

Sime Darby Bhd has announced the expansion of Porsche’s assembly facility at Inokom in Kulim, Kedah. The facility has been expanded to 11,000 sq m to accommodate higher capacity and a new assembly line for a second model variant of the plug-in hybrid Porsche Cayenne S E-Hybrid Coupe, Sime Darby and Porsche said in a joint statement. The model would also be exported to Thailand from the facility, the statement read. (The Edge)

Malakoff: Inks MOU with South Korea’s KOEN for potential collaborations

Malakoff Power Bhd, a wholly-owned subsidiary of Malakoff Corp Bhd, signed a memorandum of understanding (MOU) with Korea South-East Power Company (KOEN) to explore potential collaborations. In a statement on Wednesday, Malakoff said the MOU aims to facilitate the exchange of information, experiences and positive practices in the operation and maintenance of power plants. The MOU also included aims to support supply chain management, site visits, technical workshops and training. (The Edge)

Sunway: Achieves RM1.1bn in bookings for its Signature Series 2024 campaign

Sunway Bhd’s Sunway Property said its Signature Series 2024 campaign has achieved RM1.1bn in bookings across 14 properties nationwide. In a statement on Wednesday, the master community developer said this marked the third consecutive year of growth, with the achievement surpassing the RM1bn bookings in 2023 and RM800m in 2022. (The Edge)

AME Elite: Launch RM1bn GDV industrial park in Penang in 2H2024

AME Elite Consortium Bhd plans to launch the 176-acre Northern TechValley industrial park in Penang, with a gross development value (GDV) of RM1bn, in the second half of 2024. It is also actively pursuing opportunities to extend its presence into other high-potential locations across Malaysia, based on its latest annual report. (The Edge)

GHL: Files application to exit Bursa after takeover by NTT Data Japan Corp

GHL Systems Bhd has applied to Bursa Malaysia Bhd to withdraw its listing status, with its shares to be suspended at 9 am on July 31. (The Edge)

Source: Mercury Securities Research - 25 Jul 2024