HEADLINES

Economy

Global: IMF chief sees inflation dropping further in 2024, not yet fully defeated. Inflation is easing faster than expected but has not been fully defeated, International Monetary Fund (IMF) chief Kristalina Georgieva said, urging central bankers to carefully calibrate their decisions on cutting interest rates to incoming data. Georgieva said headline inflation for advanced economies was 2.3% in the final quarter of 2023, down from 9.5% just 18 months ago, and the downward trend was expected to continue in 2024. That would create the conditions for central banks in major advanced economies to begin cutting rates in the second half of the year, although the pace and timing would vary, she told an event hosted by the Atlantic Council think tank. "On this final stretch, it is doubly important that central banks uphold their independence," Georgieva said, urging policymakers to resist calls for early rate cuts when necessary. "Premature easing could see new inflation surprises that may even necessitate a further bout of monetary tightening. (Reuters)

US: Weekly jobless claims fall more than expected; continuing claims rise. The number of Americans filing new claims for unemployment benefits fell more than expected last week, suggesting that the labour market remained fairly tight, though it could be taking longer for some laid off workers to land new jobs. Initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 211,000 for the week ended April 6, the Labor Department said. Economists polled by Reuters had forecast 215,000 claims in the latest week. Claims, however, tend to be volatile around this time of the year because of the Easter, Passover and public schools' spring breaks, whose timing shifts every year. The labour market remains resilient despite 525 bps worth of interest rate hikes from the Federal Reserve (Fed) since March 2022 to tame inflation. (Reuters)

EU: ECB holds rates steady, signals easing ahead. The ECB left its key interest rates unchanged on Thursday, but signalled policymakers are gaining confidence on inflation returning to the 2% target and could lower rates in coming months. The Governing Council, led by ECB President Christine Lagarde, left the main refinancing rate, or refi, unchanged at 4.50%, as expected. The deposit facility rate was held steady a record high 4.00% and the lending rate was retained at 4.75%. Policymakers consider that the key interest rates are at levels that are making a substantial contribution to the ongoing disinflation process, the ECB said. Future decisions will ensure that its policy rates will stay sufficiently restrictive for as long as necessary, the bank added. "If the Governing Council's updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction," the ECB said. (RTT)

UK: Lenders to boost secured lending to households in 2Q – BoE. UK lenders plan to increase the availability of secured credit to households in the second quarter as well as they see an improvement in demand for mortgage lending, the Credit Conditions Survey results from the BoE showed. Banks said the availability of secured credit to households rose in three months to Feb and it will rise again over the coming quarter. At the same time, the availability of unsecured credit to households is forecast to remain unchanged in the second quarter, as seen in the first quarter. The overall availability of credit to the corporate sector was unchanged in the first quarter but is seen rising slightly in the second quarter. Respondents said demand for secured lending and unsecured lending is forecast to increase again in the 2Q. (RTT)

China: Weak consumer, producer prices point to more stimulus. China's consumer inflation cooled more than expected in March, while producer price deflation persisted, maintaining pressure on policymakers to launch more stimulus as demand remains weak. Worrying deflationary pressures in the world's second-largest economy appear to be slowly easing, though a protracted property crisis is still weighing heavily on consumer and business confidence. Consumer prices rose by a muted 0.1% in March from a year earlier, National Bureau of Statistics (NBS) data showed, versus a 0.7% rise in Feb which was the first gain in six months and a 0.4% rise in a Reuters poll. Data over the Jan-Feb period and factory surveys for March had been a relief for Chinese officials seeking to spur a feeble post-Covid recovery, but economists warned of Lunar New Year distortions. (Reuters)

Thailand: PM says rate cut would have been right for economy, public 'suffering'. Thailand's economy would have benefited from a cut in key interest rates, Prime Minister Srettha Thavisin said in a response to the Bank of Thailand's (BOT) decision to hold interest rates steady. Srettha has been at loggerheads with the central bank for months, urging it to cut rates that are a decade high of 2.50% to try to drive an economy he insists is in crisis, and lagging regional peers. "The independence of the central bank should not be independent of the suffering of the people," Srettha told reporters, adding he did not want to pressure the central bank. (Reuters)

Markets

Solarvest: Plans RM56.7m private placement to fund solar projects. Solarvest Holdings has proposed to raise up to RM56.71m via a private placement of 6% of its enlarged share base to fund its solar power projects. The group announced that up to 40.22m shares will be issued to independent third parties under the proposal. The issue price will be fixed later, but the RM56.71m estimate was based on an illustrative issue price of RM1.41, a 9.62% discount to Solarvest shares' five-day volume-weighted average price up to April 1. (The Edge)

Capital A: AirAsia X extend negotiation period for proposed acquisitions until April 30. Capital A’s sale of AirAsia's aviation business to AirAsia X (AAX) has been extended to April 30, 2024. Capital A said the group and AAX have mutually agreed to extend the negotiation period to execute the definitive agreement until the end of this month. Capital A plans to dispose of its entire stake in AirAsia (AAB), a wholly-owned subsidiary of the group, and its 100% equity interest in AirAsia Aviation Group Ltd (AAAGL). AAAGL operates passenger airline services through subsidiaries in Thailand, Indonesia, the Philippines and Cambodia. (StarBiz)

Berjaya Food: Vincent Tan said to weigh taking Starbucks Malaysia owner private. Malaysian tycoon Tan Sri Vincent Tan is considering taking Kuala Lumpur-listed Berjaya Food private, according to people with knowledge of the matter. Tan is in talks with banks about financing for a potential deal, said the people, asking not to be named as the matter is private. Shares of Berjaya Food, which owns 100% of Starbucks Corp’s Malaysian operations, have dropped about 28% in the past year, giving it a market value of USD229m. (StarBiz)

Inta Bina: Wins RM349m building project. Inta Bina Group has accepted a letter of award from Eco Ardence for main building works worth RM348.92m for the proposed Maya Integrated Development in Shah Alam, Selangor. Inta Bina said phase one, comprising commercial shop lots, office tower, podium car park, tower and facilities deck, would be completed in 33 months, commencing from April 15. (StarBiz)

SCIB: Gets revised contract for PR1MA job. Sarawak Consolidated Industries (SCIB) has secured a RM162m revised contract from AUEI Teras Holding SB for the Perumahan Rakyat 1 Malaysia or PR1MA affordable housing scheme in Kota Baru, Kelantan. The industrialised building systems specialist said the contract would see SCIB delivering 632 residential units within a 36-month construction period followed by a 24-month defect liability period. SCIB had secured the letter of award from AUEI Teras Holding on May 18, 2021 for an initial contract amount worth RM120m. (StarBiz)

Nextgreen: Ties up with IOI on paper pulp plant. Nextgreen Global (NGGB) has partnered with IOI Corp’s unit, IOI Paper Pulp SB, to establish Malaysia’s first large-scale zero-waste paper pulp plant, which is projected to yield about RM300m in revenue by 2026. Located within NGGB’s 410-acre Green Technology Park in Pekan, Pahang, the initiative is expected to cost an investment of about RM600m. This partnership will see the establishment of Nextgreen IOI Pulp SB (NIP) with NGGB holding a 55% stake and IOI holding the remaining 45%. (StarBiz)

MARKET UPDATE

The FBM KLCI might open higher today after the Dow Jones Industrial Average fell 2.43 points, or 0.01%, to 38,459.08, the S&P 500 gained 38.42 points, or 0.74%, to 5,199.06 and the Nasdaq Composite added 271.84 points, or 1.68%, to 16,442.20. The US Producer Prices index (PPI) came in softer than expected, supporting the narrative that price growth is still cooling. On Wednesday, hotter-than-expected CPI data sent stocks sharply lower and benchmark Treasury yields to their highest level since November. The report doused hopes that the central bank could implement as many as three rate cuts before year-end, possibly starting as soon as its June policy meeting. MSCI's gauge of stocks across the globe rose 2.10 points, or 0.27%, to 774.88 after falling earlier by 0.46%. Europe's STOXX 600 index closed down 0.4% earlier. Elsewhere, Japan’s Nikkei 225 lost 0.35%, Hong Kong’s Hang Seng gave away 0.26% while Shanghai Composite Index gained 0.23%.

Source: PublicInvest Research - 12 Apr 2024