Market Review

The FBM KLCI cooled off by -0.1% to 1,590.38 by following two days of gains as investors remained cautious amid mixed regional market performance. Among the index constituents, the top-performing stocks include AXIATA (+2.6%), SIME (+1.2%), PETD (+1.0%), and PCHEM (+0.9%). All sectors ended slightly in the red with minimal losses, except Telecommunication (+0.5%), Transportation (+0.4%) and Consumer (+0.3%). Overall, the broader market breadth turned negative with 444 gainers against 652 losers.

Economics

Malaysia: Jobless rate stable at 3.3% in June

Malaysia's labour market remained robust in June 2024, with the unemployment rate steady at 3.3%, the Department of Statistics Malaysia (DOSM) said on Friday. The number of unemployed individuals declined slightly to 565.3 thousand, continuing a positive trend amid expanding economic activity. The labour force participation rate rose to 70.4%, with 16.6m employed, particularly in the Services, Manufacturing, Construction, Mining, and Agriculture sectors. While youth unemployment remains a concern at 10.5%, overall joblessness decreased, and the labour market showed resilience, supported by strong economic activities and growth across key sectors. (The Star)

Malaysia: Manufacturing sales for June up 5.9%

The manufacturing sector has maintained its positive momentum since January, with sales value increasing by 5.9% to RM156.1bn in June 2024, the Department of Statistics Malaysia (DOSM) said Friday. This growth, up from 5.5% in May, was primarily driven by the electrical and electronics (E&E) products sub-sector, which expanded by 7.1%, and further supported by an 8.6% increase in the Food, Beverages & Tobacco sub-sector and an 11.1% rise in Non-metallic mineral products, basic metal & fabricated metal products. The sector employed 2.4m people with salaries and wages rising by 1.8% to RM8.2bn. In the second quarter of 2024, the sector achieved RM464.2bn in sales, reflecting a 5.7% growth. (The Star)

US: Harris says US Fed is independent, would never interfere in its decisions

US Vice President Kamala Harris stated on Saturday that the Federal Reserve is an independent entity, and she would not interfere with its decisions if she wins the November 5 presidential election. Speaking in Phoenix, Arizona, Harris emphasised her respect for the Fed's autonomy, contrasting her stance with that of Republican nominee Donald Trump, who recently asserted that US presidents should have a say in the Federal Reserve's decisions. Harris, who was recently named the Democratic Party's presidential nominee, plans to unveil her economic policy positions next week, focusing on lowering costs and strengthening the economy. (Bloomberg)

US: US Fed’s Bowman sees upside inflation risk, signals caution on cuts

Federal Reserve governor Michelle Bowman said on Friday that she might not support an interest rate decrease when US central bankers meet in September, citing ongoing inflation and a strong labour market. In a speech to the Kansas Bankers Association, Bowman acknowledged that while inflation has improved, it remains above the Fed's 2% target. She cautioned about adjusting the policy stance, highlighting potential upward pressures from fiscal policy, housing market issues, and geopolitical risks. Despite recent weaker job data, Bowman noted that the rise in unemployment to 4.3% may not fully reflect labour market conditions, as lay-offs remain low and job search times have lengthened. She emphasised that new data will be reviewed before the September meeting, which could influence decisions on rate cuts. (Bloomberg)

India: Keeps benchmark rate steady as inflation risks persist

India’s central bank maintained its benchmark repurchase rate at 6.5% for the ninth consecutive meeting as inflation persists above its 4% target. With four of the six monetary policy committee members voting to keep the rate unchanged, the decision aligns with forecasts by most economists. Inflation, driven by rising food prices, climbed to 5.1% in June, complicating the prospects for rate cuts. Governor Shaktikanta Das emphasised that high growth cannot be sustained without price stability, prompting the RBI to retain its “withdrawal of accommodation” stance. (Bloomberg)

Companies

Asteel: Bags RM61m Elmina data centre cladding deal

Asteel Group Bhd via its wholly-owned subsidiary Asteel (Sarawak) Sdn Bhd (ASWK), has jointly secured a RM61.2m contract for roof and wall cladding of the EBP1A Hyperscale Data Centre at the Elmina Business Park, Selangor. In a filing on Friday, Asteel said the contract was awarded by Gamuda Engineering Sdn Bhd to a consortium comprising ASWK and Sarnatec Sdn Bhd. The consortium will be responsible for the roofing and wall cladding work, with the project scheduled to run for 15 months from Aug 12. “Each party will hold a 50% equity interest in consortium, profits and losses shared in proportion to their respective interests. "Sarnatec will act as the lead partner, overseeing overall coordination, management and execution of the project, subject to consortium decisions,” Asteel said. (The Edge)

Mitrajaya: Wins RM152m construction contract

Construction firm Mitrajaya Holdings Bhd said on Friday it had won a job worth RM152m from the Northern Corridor Implementation Authority. The contract involves construction of Phase 2A of Kedah Science and Technology Park in Bukit Kayu Hitam, the company said in an exchange filing. The contract was awarded to its wholly owned subsidiary Pembinaan Mitrajaya Sdn Bhd. The contract spans 24 months and is expected to commence by Aug 20, 2024, Mitrajaya said. (The Edge)

Sunreit: Acquire Kluang Mall for RM158m

Sunway Real Estate Investment Trust has agreed to acquire Kluang Mall in Johor from Tenaga Nusantara Sdn Bhd for RM158m. The mall, which serves over 320,000 residents and a broader market in central Johor, is a four-story complex with a 99% occupancy rate, housing over 130 tenants. This acquisition, expected to be completed by Q4 2024, will increase Sunway-REIT's assets under management to RM9.8bn, solidifying its position as Malaysia's second-largest listed REIT. Sunway-REIT anticipates a net property income yield of 6.8% from this property. (The Edge)

OSK: Launches insurance protection plan for its homebuyers

OSK Holdings Bhd has partnered with Dindings Corporate Insurance Agency and RHB Insurance Bhd to introduce Assure+, a comprehensive insurance protection plan for OSK Property homebuyers. In a media statement on Friday, the developer said the insurance scheme comes with a two-year complimentary protection package that includes home content coverage of up to RM50,000, and personal accident coverage of up to RM100,000. Homebuyers are also provided with the flexibility to extend the personal accident coverage to the additional names in the sale and purchase agreement (SPA) for a nominal sum, and the protection plan is aligned with the two-year defects liability period, it added. (The Star)

MN Holdings: Eye TNB’s small-scale solar project in Pulau Tioman

MN Holdings Bhd and a 51%-owned unit of Reservoir Link Energy Bhd are forming a joint venture (JV) to bid for a solar project on Pulau Tioman, initiated by Tenaga Nasional Bhd (TNB). The JV, with an 80:20 split between Founder Energy Sdn Bhd (51% owned by Reservoir Link) and MN Power Transmission Sdn Bhd, aims to supply and install interconnection photovoltaic systems and other related works. Pulau Tioman is part of the Pulau Tenaga Hijau programme, which seeks to achieve 100% renewable energy on selected islands. (The Star)

Ranhill: Appoints five new directors after takeover by YTL Power

Ranhill Utilities Bhd has appointed five new directors following its takeover by YTL Power International Bhd and its subsidiary, SIPP Power Sdn Bhd, which now hold a 53.2% controlling stake in the company. The new directors include Yeoh Keong Yeen, Yeoh Keong Yuan, Faiz Ishak, Annuar Ahmed, and Datuk Seri Yusof Ismail. The takeover was triggered by a mandatory general offer after SIPP acquired a significant stake from Ranhill's founder, Tan Sri Hamdan Mohamad, who has since resigned. (The Edge)

Source: Mercury Securities Research - 12 Aug 2024