Economy

Global: Expect more turbulence for US and China in 2024. After a year that brought panic over spy balloons, a fight over semiconductors and an intensifying military rivalry, China and the US are ending the year with an uneasy detente. This follows a Nov meeting between US President Joe Biden and Chinese President Xi Jinping where both men signaled a desire to stop the free fall in their countries' relations. 2024 could bring new turbulence. From presidential elections in Taiwan and the US to continued US-China trade fights, Biden and Xi face no shortage of problems that could cause a stumble in the new year. (Reuters)

US: Economy grows less than previously estimated in 3Q. The US economy unexpectedly grew by less than previously estimated in the 3Q23, the Commerce Department revealed in a report released. The report said real GDP jumped by 4.9% in the third quarter, reflecting a downward revision from the previously reported 5.2% surge. Economists had expected the pace of GDP growth to be unrevised. The Commerce Department said the slower than previously estimated GDP growth primarily reflected a downward revision to consumer spending. (RTT)

US: 30-year mortgage rate slides to 6.67%, lowest since June. Mortgage rates in the US continued their slide, dropping to the lowest level since June and bolstering hopes for a housing rebound in the new year. The average for a 30-year, fixed loan was 6.67%, down from 6.95% last week, Freddie Mac said. Borrowing costs have fallen each week since peaking at 7.79% in late October. The decline is welcome news for would-be homebuyers who’ve been postponing purchases in one of the least-affordable housing markets on record. (Bloomberg)

US: Leading economic index decreases in line with estimates in Nov. With stock prices making virtually the only positive contribution, the Conference Board released a report showing a continued decrease by its reading on leading US economic indicators in the month of Nov. The Conference Board said its leading economic index slid by 0.5% in Nov after slumping by a downwardly revised 1.0% in Oct. Economists had expected the leading economic index to fall by 0.5% compared to the 0.8% decrease originally reported for the previous month. (RTT)

UK: Retailers report weak Christmas trading, CBI survey finds. UK retailers have reported a gloomy Christmas trading period, hinting at a weakening in the UK economy as 2023 draws to a close, according to a major British business group. Sales volumes fell in the year to Dec at a faster pace than the previous month, the Distributive Trades Survey from the Confederation of British Industry (CBI) found, while retailers said volumes were “below average” for the time of year. (Bloomberg)

UK: Posts bigger than expected budget deficit in Nov. Britain ran up a higher-than-expected budget deficit of GBP14.3bn (RM84.3bn) in Nov, adding to the strain on the public finances and underscoring the limited room for pre-election tax cuts by Prime Minister Rishi Sunak's government. Economists polled by Reuters had expected public sector net borrowing, excluding state-owned banks, of GBP12.9bn. Borrowing in the first eight months of the financial year totalled GBP116.4bn, GBP24.4bn higher than in the April-Nov period a year earlier, the Office for National Statistics said. Public sector net debt, excluding state owned banks, stood at GBP2.67trn, equivalent to 97.5% of economic output. (Reuters)

China: Mega banks cut deposit rates further to boost growth. China’s biggest state-owned banks are launching a third round of deposit rate cuts in a year, as lenders work to maintain profitability amid shrinking margins and government policies aimed at boosting consumption and demand. Industrial & Commercial Bank of China Ltd said it will lower deposit rates as much as 25 bps on some tenors starting Dec 22. After the adjustment, the lender will pay an annual 1.45% for one-year deposits, down from 1.55%, and 1.65% on two-year deposit, down from 1.85%. It will pay 1.95% on threeyear deposits, down from 2.2%, and 2% on five-year deposits, down from 2.25%. (Bloomberg)

Hong Kong: Inflation eases slightly to 2.6%. Hong Kong's consumer price inflation eased slightly in Nov after rising in the previous two months, data released by the Census and Statistics Department showed. The CPI, climbed 2.6% YoY in Nov, following a 13-month high of 2.7% in Oct. Meanwhile, economists had expected inflation to remain stable at 2.7%. Food costs alone grew 2.7% annually in Nov, though slower than the 3.0% rise in the prior month. (RTT)

Indonesia: Central bank sits tight, sees room for easing in second half 2024. Indonesia's central bank held policy rates steady to support the rupiah and keep inflation at bay, but indicated there was room for monetary easing in the second half of 2024. Bank Indonesia (BI) kept the benchmark seven-day reverse repurchase rate unchanged at 6%, as widely expected by economists in a Reuters poll. Its two other policy rates were also kept steady. (Reuters)

Markets

Foundpac: Acquires industrial land. Foundpac Group is acquiring a piece of leasehold industrial land in Bayan Lepas, Penang, from Bluemetal SB for RM41.9m. Foundpac said the proposed acquisition was undertaken to consolidate its production operations located in Penang (namely the factories located in Batu Maung, Bayan Lepas and Prai) to a single premise. (StarBiz)

Protasco: Files bankruptcy notices against ex-director Tey and associate Ooi, demands RM123m from each. Protasco has initiated bankruptcy proceedings against former director Datuk Tey Por Yee and his associate Datuk Ooi Kock Aun, demanding a total sum of RM123.37m from each of them.This move followed a ruling by the Kuala Lumpur High Court on Aug 30, which ordered Tey and Ooi to pay the company RM84.6m for breach of fiduciary and statutory duties related to a 2014 sale and purchase agreement. Subsequently, their motion to stay the execution of the judgement was dismissed on Nov 22. (The Edge)

SMIS Corp: Sells down stake in Indonesian subsidiary. SMIS Corp is selling a 35% stake in its Indonesian subsidiary PT Grand Surya Techno Tbk, reducing its stake to 60%, to Japan-based Sugihara Co Ltd in a deal worth USD1.37m (RM6.4m). SMIS said it has decided to sell the 35% stake to Sugihara as the latter intends to extend its relationship with SMIS and to have strategic participation in the operations of PTGST in Indonesia via the proposed disposal. (The Edge)

Kumpulan Jetson: Rejects requisition for EGM. Kumpulan Jetson has turned down a requisition from 10 shareholders to convene an EGM on the grounds that they did not collectively hold at least 10% of the company's shares on the day of the request. Kumpulan Jetson claimed that the number of shares held by certain requisitionists, namely Lee Yee Wee, Shaun Sai Wen Fei, Teo Chor Eng, Tey Giap Leong and Muhd Alamin Ramli, as at Dec 8, was wrongly stated in the notice.

Epicon: Partners PNSB’s unit to develop affordable housing in Rawang. Epicon has partnered with PNSB Construction SB, a subsidiary of Permodalan Negeri Selangor to develop an affordable housing project in Rawang, Selangor. Epicon said it has inked a consortium agreement with PCSB to establish a consortium to develop the housing project, Rumah Idaman MBI, that will have 2,251 housing units, and to explore future collaborations of such nature. PCSB is predominantly involved in constructing and developing various projects under PNSB and the Selangor state government. (The Edge)

RSB: To sell Sarawak land for RM165m. Rimbunan Sawit is selling five parcels of agricultural land collectively measuring 9.9ha in Miri, Sarawak, to Mahawangsa Sungai Bok Plantation SB for RM165m. RSB said the disposal is part of its strategy to constantly evaluate its portfolio of investments and where possible, seek opportunities to realise the value of its investments for the benefit of shareholders. (StarBiz)

PT Resources: Net profit doubles to RM18.7m in 2Q, thanks to strategic bulk purchasing. PT Resources Holdings posted a net profit of RM18.7m for 2Q, double the RM8.34m it made in the corresponding quarter a year ago, despite lower revenue, thanks to the group having secured supplies at competitive prices through bulk purchasing. Earnings per share rose to 3.5 sen from 1.85 sen, the frozen seafood processor, wholesaler, and retailer's bourse filing showed. (The Edge)

MARKET UPDATE

US stocks rose with the S&P 500 recovering from its worst day since September as the year-end rally resumed. The Dow Jones Industrial Average gained 322.35 points or 0.9%. Meanwhile, the Nasdaq Composite advanced 1.3% and the S&P 500 added 1.0%. The S&P 500 advance was broad-based with more than 450 names rising in the index. Micron Technology was the best performer, jumping 8.6% after the memory chipmaker topped quarterly expectations, and offered current-quarter guidance that exceeded forecasts. However, European markets retreated, failing to move higher despite the resumption of a Wall Street rally. The UK’s FTSE 100, German’s DAX and French CAC were down 0.3%, 0.3% and 0.2% respectively. Most Asia-Pacific markets fell during the session, led by Japan’s Nikkei 225 and Topix indexes shedding 1.6% and 1%, respectively. The downturn in Asia and Europe came after US stocks dropped sharply on Wednesday, as investors seemingly took profits after nine straight positive sessions.

Back home, FBM KLCI closed 0.6% lower to settle at 1,455.58. Sarawak-based plantation group Rimbunan Sawit Bhd has proposed to dispose of 9,935 hectares of oil palm land in Miri for a total of RM165m. It intends to utilise RM86.1m of the proceeds to repay borrowings and reduce its gearing level to 0.6x. Another RM19.1m will be used for replanting, and RM59.1m for working capital.

Source: PublicInvest Research - 22 Dec 2023