Market Review

On Wednesday, the FBM KLCI closed slightly higher at 1,604.3(+0.1%), with gains in utility stocks helping to mitigate the selling pressure in the plantation sector. For index constituents, significant positive performance is seen in YTL (+7.2%) and YTLPOWR (+6.9%) as investors react to positive earnings guidance from management. With strong gain in YTL- related counters, utilities (+1.8%) remains the best-performing sector. The overall broader market breadth turned positive for the first of this week, with 590 gainers outweighing 480 losers.

Economics

Malaysia: Producer price index continues to fall at 2.4% in October

Malaysia's Producer Price Index (PPI) fell by 2.4% in October 2024, continuing the decline from September, mainly due to a significant drop in the mining sector (-17.3%) and a decrease in the manufacturing sector (-2.6%). However, the agriculture, forestry, and fishing sector saw a 13.8% increase, driven by the growth of perennial crops. On a month-on-month basis, the PPI decreased by 0.7%, with the agriculture sector showing a notable rise of 6.0%, while global commodity prices are expected to decline in the coming years. (Bernama)

US: Fed cites volatility, uncertainty as reasons to go slow on rate cuts

Federal Reserve officials were divided during their November meeting over how much further to cut interest rates, with some suggesting a gradual reduction while others considered pausing cuts if inflation remained high or accelerating cuts if the economy weakened. The Fed's decision to reduce the benchmark rate by 0.25% to 4.50%-4.75% was influenced by stronger-than-expected economic data, which raised concerns that current rates may not be restricting economic activity enough. While many officials agreed on the uncertainty around the neutral interest rate, market expectations for a rate cut in December have decreased, with the odds now just above 50%. (Reuters)

EU: ECB's Schnabel sees only limited room for further rate cuts

The European Central Bank (ECB) needs to be wary of cutting interest rates too far, as borrowing costs are already near a level that no longer restrains the economy and going lower could backfire, according to executive board member Isabel Schnabel. Officials can continue to loosen monetary policy, but should do so only gradually to avoid taking rates below the so-called neutral threshold, Schnabel said in an interview. Easing too much could squander valuable policy space, the hawkish policymaker warned. "Given the inflation outlook, I think we can gradually move towards neutral if the incoming data continue to confirm our baseline," Schnabel said in her Frankfurt office. "I would warn against moving too far, that is into accommodative territory." (Bloomberg)

US: GDP grows at solid 2.8% pace, helped by consumer spending

The U.S. economy grew at a solid pace of 2.8% in the third quarter of 2024, driven primarily by a 3.5% increase in consumer spending, the highest this year. However, inflation remained moderate, with the personal consumption expenditures (PCE) price index rising at 1.5%, and the core PCE climbing 2.1%. While some economists worry about potential inflationary pressures from President-elect Donald Trump's fiscal plans, the economy's resilience, evidenced by strong consumer demand and business investment, has helped reduce recession fears, with the labor market still relatively stable. (Bloomberg)

Australia: CPI gauge misses estimate as RBA set to stand pat

Australia's consumer price index (CPI) rose 2.1% in October, below the expected 2.3%, with government rebates helping to lower costs for electricity and rent. However, the trimmed mean core inflation, which excludes volatile items, increased to 3.5%, signaling ongoing price pressures. The Reserve Bank of Australia (RBA) is expected to maintain interest rates at 4.35% until at least May 2025, as policymakers remain cautious about inflation risks despite recent declines in some costs, including energy and rents. (Bloomberg)

Companies

Kerjaya Prospek: Declares seven sen dividend following 30% higher 3Q profit

Kerjaya Prospek Group Bhd's net profit grew by 29.6% in the third quarter, primarily driven by its construction segment amid improved progress across ongoing projects. Net profit for the three months ended Sept 30, 2024 (3QFY2024), stood at RM46.1m, compared with RM35.6m in the same period a year earlier, as revenue climbed 39.4% to RM504.8m, from RM362.2m. The group, which is principally involved in the construction of commercial and high-rise residential buildings, property development, and the manufacturing of lighting and kitchen solutions, also declared a seven sen dividend for the quarter under review, amounting to RM88.3m in total. (The Edge)

Petronas Gas: Posts 3Q net profit of RM493.7m, 18c div/share

Petronas Gas Bhd expects strong financial performance in 2024, supported by stable contracts and operational efficiency, while focusing on cost optimisation amid inflation. In Q3 2024, the company reported a net profit of RM493.7m, up from RM468.5m in Q3 2023, with revenue rising to RM1.7bn. For the first three quarters, the group posted a net profit of RM1.4bn on RM4.9bn in revenue, driven by higher gas processing revenue, though offset by lower utilities segment revenue, and declared an 18 sen per share interim dividend. (The Star)

Meta Bright: Partners with Tunas Manja on rooftop solar PV installations

Meta Bright Group Bhd, a property development to renewable energy group, is partnering grocery and retail operator Tunas Manja Sdn Bhd (TMG) to implement cost-effective energy efficiency initiatives. Through the partnership, Meta Bright will focus on the installation of rooftop solar photovoltaic (PV) systems at TMG-owned and -operated buildings under the Net Energy Metering (NEM) 3.0 Programme. The first installation under this partnership will take place at TMG Mart Wisma Air Putih in Kuantan, with plans to extend the initiative to other TMG locations. Meta Bright will take the lead in developing, designing, financing, installing and maintaining the PV systems for TMG's properties. (The Edge)

Binastra: Clinches RM68m sewage treatment contract

Construction company Binastra Corp Bhd bagged a contract on Thursday to redevelop a sewage treatment plant in Taman Bukit Cheras, Kuala Lumpur. The company said the RM67.6m contract, awarded by F3 Cheras Development Sdn Bhd, involves the construction of new sewer force mains, gravity sewer mains and pumping stations. It also encompasses upgrading existing sewage facilities and decommissioning outdated infrastructure across multiple sites, said Binastra in a statement. (The Edge)

JF Technology: Plans RM46m private placement to fund new investment and capital expenditure

JF Technology Bhd plans to raise RM46.35m through a private placement of up to 92.71m shares at 50 sen per share to fund business expansion and new investments. The company will allocate RM27m for future investments in complementary industries, RM15m for factory expansions and equipment upgrades, RM3.25m for working capital, and RM1.1m for placement-related expenses. The placement is expected to be completed by Q2 2025, with Malacca Securities acting as the principal adviser and placement agent. (The Edge)

Affin Bank: Sarawak emerges as largest shareholder of Affin with 31.25% stake

The Sarawak state government has become the largest shareholder in Affin Bank Bhd, acquiring 165.1m shares (6.87%) from Lembaga Tabung Angkatan Tentera (LTAT). This, combined with the 20.08% stake held by its unit SG Assetfin Holdings Sdn Bhd (SAH), brings its total holding in Affin to 31.25%. This makes Sarawak the first state government in Malaysia to hold the largest stake in a bank. As a result, LTAT's stake in Affin has decreased to 22.01%, and Boustead Holdings has divested its entire stake. The shares were sold at a discount of 4.05% to 17% compared to the last market price of RM2.96. (The Edge)

Source: Mercury Securities Research - 28 Nov 2024