HEADLINES

Economy

US: Leading economic index falls much more than expected in July. A reading on leading US economic indicators fell by much more than expected in the month of July, according to a report released by the Conference Board. The Conference Board said its leading economic index slid by 0.6% in July after dipping by 0.2% in June. Economists had expected the index to decrease by 0.3%. Meanwhile, the index fell by 2.1% over the six-month period ending in July 2024, a smaller rate of decline than the 3.1% slump over the six-month period between July 2023 and Jan 2024. (RTT)

EU: Spain trade gap narrows in June. Spain's foreign trade deficit decreased in June from a year ago as imports fell faster than exports, preliminary data from the Economy Ministry showed. The trade deficit dropped to EUR0.71bn in June from EUR2.35bn in the corresponding month last year. In May, the shortfall was also EUR2.3bn. Exports fell 3.0% year-over-year in June, reversing a 2.3% gain in the prior month. Imports declined 7.3% after remaining flat in the prior month. (RTT)

UK: House prices fall. UK house prices declined in Aug in line with the long-term average as some buyers put their home-moving plans on hold to enjoy holidays, while the Bank of England's interest rate reduction lifted buyer demand, data published by the property website Rightmove showed. House prices posted a seasonal drop of 1.5% in Aug after a 0.4% drop in July. Asking prices have fallen in the month of Aug over the last 18 years, and the size of drop matched the long-term average. On a yearly basis, the growth in house prices doubled to 0.8% from 0.4% in the previous month. (RTT)

China: Widely expected to keep lending benchmark LPRs unchanged in Aug. China is expected to leave benchmark lending rates unchanged, a Reuters poll showed, after policymakers surprised global markets by trimming a string of key interest rates in July. Shrinking interest margins at lenders remain the key constraint discouraging commercial banks from further lowering the lending benchmarks, market watchers said, even though the general consensus is that the world's second largest economy needs more stimulus to bolster a fragile recovery. (Reuters)

Japan: Core machinery orders rebound in June. Japan's core machinery orders rebounded more than expected in June, data from the Cabinet Office revealed. Core machinery orders that exclude volatile orders for ships and electric utilities, expanded 2.1% from the prior month, faster than the expected 0.9% increase and reversed May's 3.2% decline. Meanwhile, core machinery orders posted an annual decline of 1.7%, in contrast to the 10.8% increase in May. (RTT)

Thailand: Q2 GDP beats forecast, but policy uncertainty clouds outlook. Thailand's economic expansion accelerated in the second quarter due to stronger consumption, tourism and exports, but analysts said policy uncertainty following a change in government clouds the outlook. Gross domestic product grew 2.3% in the April-June quarter from a year earlier, National Economic and Social Development Council (NESDC) data showed, versus an upwardly revised 1.6% in the first quarter and beating 2.1% forecast in a Reuters poll. (Reuters)

Markets

Sunmow: JV makes winning bid for RM1.02bn Sarawak-Sabah Link Road package. Sunmow Holding's wholly owned subsidiary Sunmow Construction SB's JV has won the bid for works related to Package 4B (Bukit Pagon to Long Luping) of Phase 2 of the Sarawak-Sabah Link Road project, valued at RM1.02bn. The group said the subsidiary had entered into a JV with Kemena Holding SB to bid for the said package on 2 April 2024, and subsequently received a LOA from the project's main contractor Maltimur Aktif Unggul JV SB on 16 Aug 2024. (StarBiz)

EcoFirst: Buys land in Kajang for RM35m. EcoFirst Consolidated’s subsidiary, EcoFirst Worldwide SB, has agreed to purchase a 1.8-hectare piece of freehold land in Kajang, Selangor, from Soils & Foundations SB for RM35m. The land will be developed into residential, commercial, and shop lot spaces, with an expected gross development value (GDV) of RM380.9m by 1Q of 2025. The development is expected to take three to four years, with a 9% land cost to GDV ratio. (The Malaysian Reserve)

OCK Group: Bags RM32.5m in data centre contracts. OCK Group’s subsidiary, EI Power Technologies SB, has secured three new contracts valued at RM32.5m for data centre backup power solutions. The contracts involve supplying, delivering, installing, testing, and commissioning underground storage tanks and fuel distribution systems, including cabling work, to support data centre backup power systems. These systems are crucial for ensuring a continuous fuel supply to backup generators during unexpected power disruptions, enabling data centres to maintain seamless operations during outages. (The Malaysian Reserve)

Tex Cycle: To acquire 60% stake in SEL for RM8.4m. Tex Cycle Technology (M) has proposed to acquire a 60% stake in Safety & Environmental Laboratory SB (SEL) for RM8.4m to enhance its environmental testing and compliance services. It entered into a term sheet with Kaliswaran Palanisamy to acquire 450,000 ordinary shares representing 60% of equity interest in SEL. The proposed acquisition allows Tex Cycle to secure a profit guarantee from SEL with an audited PAT not to be less than RM2m for each of the FYE 2024 and 2025. (StarBiz)

MAHB: Passenger movements in July at highest level postpandemic. Malaysia Airports Holdings (MAHB) recorded 12.4m passenger movements in July, marking a 7.3% increase from the previous month and setting a new post-pandemic monthly high. The group said the growth was largely driven by local airports, which recorded 8.5m passenger movements, comprising 4.5m international passengers and 4m domestic passengers, representing an 8% rise MoM compared to June. (The Edge)

Lagenda Properties: 2Q net profit rises 46% on higher property development, construction performance. Lagenda Properties' 2Q net profit increased 45.8% to RM48.4m from RM33.2m a year earlier, thanks to higher contributions from its property development and construction divisions. Quarterly revenue grew 25.2% to RM245.8m from RM196.4m in the previous year. Lagenda said the property development division saw a 34.1% YoY revenue increase to RM214.5m from RM160m, helped by newly launched projects such as Darulaman Lagenda Phase 3A and Lagenda Teluk Intan Phase 3B. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks climbed Monday as Wall Street pulls closer to its record heights following its roller coaster of a summer. The S&P 500 rallied 1% for its eighth straight gain. That clinched its longest winning streak since November and followed up on the index’s best week of the year. It’s back to within 1% of its all-time high after falling close to 10% below the mark earlier this month. The Dow Jones Industrial Average gained 236 points, or 0.6%, and the Nasdaq composite jumped 1.4%. Trading was quiet elsewhere, including in the bond market. Treasury yields held relatively steady ahead of what’s likely to be financial markets’ main event for the week: a speech on Friday by Federal Reserve Chair Jerome Powell. The setting for the speech in Jackson Hole, Wyoming, has been home to some big policy announcements by the Fed in the past. Expectations aren’t that high this time around, with nearly everyone already expecting the Fed will begin cutting interest rates next month. In stock markets elsewhere, Japan’s Nikkei 225 dropped 1.8%. It was hurt by a rise in the Japanese yen’s value against the US dollar. Such moves can erode profits for Japanese exporters, and big swings in the yen’s value following a recent hike to interest rates by the Bank of Japan was a big factor in markets’ turmoil earlier this month. On Monday, though, movements in other stock markets outside Tokyo were calmer, with European indices modestly higher and Asian indices mixed. Back home, Bursa Malaysia surged 1.53%, with the composite index ending at a 44-month high, driven by positive sentiment bolstered by robust local economic data. At the close, the FBM KLCI rose 24.80 points to 1,648.70 from last Friday’s close of 1,623.90.

Source: PublicInvest Research - 20 Aug 2024