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: World Bank raises growth forecast to 4.9% after stronger-than-expected first half of 2024

The World Bank has raised its forecast for Malaysia's economic growth for 2024 to 4.9%, up 0.6 percentage points from its previous forecast of 4.3% in April 2024, following the country's stronger-than-anticipated performance in the first half of the year that reflected robust growth in consumption, investment, and trade activity. As an open trading economy, Malaysia is benefiting from the upcycle in global economic growth, which is expected to stabilise around 2.6% this year, despite ongoing geopolitical tensions and high interest rates, according to the World Bank’s lead economist for Malaysia, Dr Apurva Sanghi. (The Edge)

Malaysia: Continues to amass forex reserves, now at US$119.7bn

Malaysia continued to build up foreign reserves and amassed the biggest hoard in nearly a decade at the end of September, according to the central bank. The latest international reserves totalled US$119.7bn, the most since Dec 15, 2014, compared with US$117.6bn as of Sept 13, Bank Negara Malaysia (BNM) said in a statement on Monday. The reserves level has considered the quarterly foreign exchange revaluation changes. “The reserves position is sufficient to finance 4.8 months of imports of goods and services, and is 0.9 times the total short-term external debt,” BNM said. The short-term external debt comprises borrowings from non-residents with maturity of one year or less, mostly by resident banks for their foreign currency liquidity operations as well as multinational corporations, including foreign banks, borrowing from their overseas parents or headquarters. (The Edge)

Hong Kong: Banks tap Hong Kong's discount window for most funds since 2019

Hong Kong banks borrowed the largest amount of short-term cash in almost five years from authorities, a move pointing to a sudden demand for liquidity. The Hong Kong Monetary Authority — the city’s de facto central bank — loaned out HK$4.8bn (US$617m or RM2.6bn) through its discount window on Monday, the most since December 2019. Lenders have tapped the facility six times in about a month, with the next largest amount HK$3.3bn. The lending comes amid a climb in borrowing costs in the city, where one- month Hong Kong interbank offered rates have climbed to the highest in around two months. Demand for local assets amid a Chinese stock surge has contributed to the increase in Hibor, as supply of the Hong Kong dollar tightened. (Bloomberg)

US: Fed’s Musalem argues for more rate cuts, says data to drive easings

Federal Reserve Bank of St Louis president Alberto Musalem said on Monday that he supports more interest rate cuts, as the economy moves forward on a healthy path, while noting that it is appropriate for the central bank to be cautious and not overdo easing monetary policy. "Further gradual reductions in the policy rate will likely be appropriate over time," the official said at a meeting of the Money Marketeers of New York University, noting that "patience" has served the Fed well. "I will not prejudge the size or timing of future adjustments to policy." Musalem, who took office earlier this year and who does not hold a vote on the rate-setting Federal Open Market Committee (FOMC), spoke as the interest rate outlook has once again been upended. (Reuters)

Companies

MClean Tech: Announces diversification, private placement and capital reduction

MClean Technologies Bhd is proposing a 25% private placement, acquisition of a plastic injection moulding business and diversification into the plastic injection moulding business, together with a proposed share capital reduction. In a statement, the precision cleaning and surface treatment solutions provider said it is acquiring the plastic injection moulding business from We Total Engineering Sdn Bhd for a net book value of RM6m. “The proposed acquisition and the diversification represent a strategic move by MClean Group to enhance its revenue streams, diversify its service offerings while gaining access to We Total’s well- established customer base in key industries such as electrical and electronic, automotive, oil and gas, and medical devices.” Additionally, MClean said it plans to issue up to 49.3m new shares via private placement to potential investors, representing 25% of its issued share capital. (The Star)

Ireka Corp: Secures RM1.1bn highway upgrade job in Sabah

Ireka Corp Bhd, a Practice Note 17 (PN17) construction company, has secured a sub-contract worth RM1.1bn for the upgrade of a section of the Pan Borneo Highway in Sabah. The two-year sub-contract, granted by Sabah-based Gammerlite Sdn Bhd, involves the upgrading of the road from Kampung Lomou Baru to Kampung Toupus, Ireka said in a statement on Tuesday. "The award of this contract is a testament to Ireka's technical expertise and long-standing reputation for delivering large-scale infrastructure projects. This achievement further strengthens Ireka’s position in the construction sector, contributing to the group’s future growth and sustainability goals," the company said. (The Edge)

Media Prima: Clarifies Syed Mokhtar remains as its substantial shareholder

Media Prima Bhd has clarified that Tan Sri Syed Mokhtar Al-Bukhary remains a substantial media group shareholder. This comes after Aurora Mulia Sdn Bhd’s (AMSB) confirmation in a letter that it still holds a direct interest of 353.8m shares, representing 31.9% of Media Prima, and Syed Mokhtar continues to hold his substantial shareholding in the company via AMSB, said Media Prima in a statement. Media Prima emphasised that this clarification is intended to ensure complete transparency and address any potential misinterpretations arising from the company’s announcement to Bursa Malaysia on Oct 7, 2024. (The Edge)

Seal Incorporated: To diversify into renewable energy

Seal Incorporated Bhd is proposing to diversify its existing principal activities to include investment in renewable energy (RE) and related activities. In a filing with Bursa Malaysia, Seal, which is primarily involved in property investment, building contractor, project manager for property development and extraction and sale of timber, said its revenue had been declining for the past three financial years up to the financial year ended June 30, 2024. “The group’s financial performance over the financial years under review had mainly relied on property development and property investment which collectively contributed approximately 86% of the group’s total revenue. (The Edge)

Public Bank: Public Bank, LPI Capital shares to be suspended pending major announcement

Trading of Public Bank Bhd and LPI Capital Bhd shares will be suspended from 9 am on October 9, pending the release of a material announcement. In a filing with Bursa Malaysia, it said trading in the structured warrants relating to Public Bank will also be suspended at the same time. LPI Capital and Public Bank closed up 22 sen each, closing at RM13.00 and RM4.57, amid speculation of potential corporate developments at Public Bank. Public Bank is scheduled to hold a press conference on Oct 11. During the conference, managing director and chief executive officer Tan Sri Dr. Tay Ah Lek, along with several key stakeholders, will share important updates and information related to a "major announcement", according to the media invite sent on Tuesday. (The Star)

Source: Mercury Securities Research - 9 Oct 2024