HEADLINES

Economy

US: Smaller US trade deficit supports strong economic growth estimates for 3Q. The US trade deficit narrowed sharply in Aug as exports increased to a record high, suggesting trade could have little or no impact on economic growth in the 3Q. The smaller-thanexpected trade gap reported by the Commerce Department added to data on the labour market and consumer spending in suggesting that the economy remained on solid footing last quarter. The economy's strength likely has no impact on expectations that the Fed will cut interest rates again next month. It, however, reinforced views that the US central bank did not need to pursue another 0.5ppt rate reduction. Economists at Goldman Sachs maintained their forecast for GDP to rise at a 3.2% annualized rate in the JulySept quarter after the trade data. (Reuters)

EU: Italy economy minister says 2024 growth target may be out of reach. The Italian government's 1% economic growth target for this year will be more difficult to reach after downward revisions made last week by national statistics bureau ISTAT, Economy Minister Giancarlo Giorgetti said. ISTAT lowered the YoY GDP growth rates for the first and second quarters and said so-called "acquired growth" at the end of the second quarter stood at 0.4%, down from the 0.6% estimated prior to the revisions. As a result, if there were to be zero quarterly growth in the third and fourth quarters, full-year growth would come in at 0.4% from the previous year. (Reuters)

EU: Eurozone inflation on the decline but job not yet done, ECB's Nagel says. Eurozone inflation is on the decline but the ECB must remain vigilant and ensure that price growth settles at its 2% target even over the medium term, Bundesbank President Joachim Nagel. The ECB has cut interest rates twice this year and further easing in both Oct and Dec is nearly fully priced in, suggesting that investors see a steady decline in rates after they hit a record high. (Reuters)

UK: Tax worries knock UK business confidence, survey shows. British business confidence fell in the 3Q as tax worries hit investment, according to a survey of accountants that chimes with similar concerns from other business groups before the new Labour government's first budget. The Institute of Chartered Accountants in England and Wales said that its quarterly Business Confidence Monitor fell to 14.4 in the three months to Sept, the first decline in a year and down from 16.7 in the previous quarter. "The findings show that businesses are troubled by the tax burden and increasingly reluctant to invest," ICAEW chief executive Alan Vallance said. (Reuters)

China: Vows to hit economic goals, stops short of large stimulus. China said it is confident in reaching its economic targets this year and promised to further support growth, although it held back in unleashing more major stimulus in a disappointment to investors looking for more fuel for a world-beating stock rally. Officials in the National Development and Reform Commission (NDRC), the country’s economic planning agency, said they would speed up spending while largely reiterating plans to boost investment and increase direct support for low-income groups and new graduates. (Bloomberg)

South Korea: BOK to kick off easing cycle with 25bps cut on Oct 11, Reuters poll. The BOK will cut its key interest rate by 25bps to 3.25%, according to a majority of economists polled by Reuters who expect that to be the only reduction this year as it attempts to balance growth and financial stability. Inflation eased rapidly to 1.6% in Sept from 2% in Aug, the lowest since early 2021 and below the BOK medium-term target of 2%. (Reuters)

India: Central bank moving closer to rate cut. India’s new monetary policy committee may lay the groundwork for an interest rate cut as a wave of global easing kicks off and growth in the world’s fastest-expanding major economy moderates. While most of the 35 economists in a Bloomberg survey expect the RBI’s sixmember MPC to keep the repurchase rate unchanged at 6.5%, several predict a switch to a "neutral" stance for the first time since June 2019 from its current hawkish view. The meeting is the first under a new policy committee following the appointment last week of three external members, well-known economists with academic and financial backgrounds. (The Edge)

Markets

Media Prima (Neutral, TP: RM0.45): Clarifies Syed Mokhtar remains as its substantial shareholder. Media Prima has clarified that Tan Sri Syed Mokhtar Al-Bukhary remains a substantial media group shareholder. This comes after Aurora Mulia SB (AMSB) confirmation in a letter that it still holds a direct interest of 353.82m 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 7 Oct 2024. (The Edge)

Ireka: Secures RM1.07bn sub-contract for Pan Borneo Highway project. Ireka Corporation’s wholly-owned subsidiary, Shoraka Construction Sdn Bhd (SCSB), has won a RM1.07 billion highway construction sub-contract. Ireka said the sub-contract was for the road upgrade from Kampung Lomour Baru to Kampung Toupus (Work Package 33) as part of Phase 1B of the Pan Borneo Highway (LPB) project in Sabah. It said work will commence on 30 Sept 2024 and will be for 48 months. (Bernama)

MClean Technologies: Announces diversification, private placement and capital reduction. MClean Technologies 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. It said it is acquiring the plastic injection moulding business from We Total Engineering SB for a net book value of RM6.04m. “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)

Seal: To diversify into renewable energy. Seal Incorporated is proposing to diversify its existing principal activities to include investment in renewable energy (RE) and related activities. Seal said its revenue had been declining for the past three financial years up to the financial year ended 30 June 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. “As part of the group’s strategy to diversify and create an additional revenue and income stream, it has therefore identified the investment in RE and related activities such as solar energy as a viable business to venture into.” (The Star)

Perdana Petroleum: Bags two related-party work orders to provide accommodation workboat. Perdana Petroleum has bagged two work orders worth a combined RM19.1m for the provision of two units of accommodation workboat. Perdana Petroleum said its wholly-owned subsidiary Perdana Nautika SB (PNSB) accepted the work order from DESN Marine Services SB, a wholly owned subsidiary of Dayang Enterprise Holdings. Both work orders commenced on 1 Aug 2024. The first contract worth RM13.3m has a tenure of 153 days, while the second contract is valued at RM5.8m with a duration of 61 days. (The Edge)

MARKET UPDATE

US markets ended the day on a stronger note as optimism grew over the Federal Reserve’s ability to navigate a soft landing for the economy, reflected by last week’s jobs report which showed continued strength in the labour market. Volatility is still expected nonetheless, with just a few weeks to go before the US Presidential elections. The earnings reporting season will kick off this Friday with the big banks JPMorgan Chase and Wells Fargo meanwhile. On the day, the Dow Jones Industrial Average and S&P 500 gained 0.3% and 1.0% respectively, as the Nasdaq Composite jumped 1.5% higher. European markets ended lower as China imposed anti-dumping measures on European brandy imports following the European Union’s vote on electric vehicle tariffs last week. A slowdown in China’s stimulus-fueled rally also dampened sentiment. UK’s FTSE and France’s CAC 40 led losers amongst major markets, slumping 1.4% and 0.7%. Germany’s DAX slipped 0.2%. Asian markets had contrasting fortunes overnight. The Shanghai Composite Index skyrocketed over 10% at the opening in its return from the Golden Week holiday, though paring gains to record an increase of only 4.6%. Hong Kong’s Hang Seng index briefly plummeted over 10%, before recovering slightly to a “smaller” loss of 9.4%. Household spending in Japan fell 1.9% YoY in August in real terms, a softer fall compared to the 2.6% decline expected by consensus. The Nikkei 225 fell 1.0%.

Source: PublicInvest Research - 9 Oct 2024