HEADLINES

Economy

US: home prices forecast to rise modestly as Fed cuts rates - Reuters poll. US home prices will rise relatively modestly this year and next despite tight supply and expected US Federal Reserve interest rate cuts, according to housing analysts polled by Reuters who said purchasing affordability will improve but would remain strained. (Reuters)

US: Solid consumer spending pushes against hopes for hefty Fed rate cut. US consumer spending increased solidly in July, suggesting the economy remained on firmer ground early in the third quarter and arguing against a half-percentage-point interest rate cut from the Federal Reserve. The report from the Commerce Department also showed prices rising moderately last month, curbing inflation. (Reuters)

EU: Lowest inflation in 3 years sets up ECB for cut. Inflation in the euro zone fell to its lowest level in three years in August, setting the stage for a further cut in the ECB’s interest rates despite an Olympics-driven surge in the price of services. Inflation in the 20 countries sharing the euro currency fell to 2.2% this month, the slowest pace since July 2021 and closing in on the ECB's 2% target, according to a flash reading by Eurostat. While the fall was mostly driven by lower energy prices and may even reverse later this year, it was still likely to seal the deal on a second ECB rate cut on Sept 12 after a first move in June. (Reuters)

China: Weak factory PMI raises pressure for consumer stimulus. China's manufacturing activity sank to a six-month low in August as factory gate prices tumbled and owners struggled for orders, pressuring policymakers to press on with plans to direct more stimulus to households. The National Bureau of Statistics purchasing managers' index slipped to 49.1 from 49.4 in July, its sixth straight decline and fourth month below the 50 mark.. It missed the median forecast of 49.5 in a Reuters poll. (Reuters)

Japan: Core inflation in Japan's capital perks up, backs case for BOJ hikes. Core inflation in Japan's capital accelerated for a fourth straight month in August, tracking comfortably above the central bank's 2% target and backing market expectations of more interest rate hikes ahead. The Tokyo core CPI, which excludes volatile fresh food costs, rose 2.4% in August from a year earlier, faster than a median market forecast of 2.2% and the 2.2% gain in July. (Reuters)

India: Outperforms other major economies even as growth slows in April-June. India's economic growth slowed to 6.7% YoY in the April-June quarter as a decline in government spending during national elections weighed, data showed on Friday, but it remained the world's fastest-growing major economy. The rise in gross domestic product was less than a 6.9% expansion forecast by a Reuters poll, and compared to 7.8% growth in the previous quarter. (Reuters)

Markets

MSM: Wins deal to export grain sugar to China, aims to deliver 45,000 tonnes this year. MSM Malaysia Holdings has secured a deal to export grain sugar to China and targets to deliver 45,000 tonnes by the end of this year. While it did not disclose the value of the deal, MSM said China is one of the group's top five export destinations — alongside the Philippines, Singapore, Indonesia and Vietnam. MSM has a 100,000–200,000 tonne per annum target in the medium term for China, with available capacity headroom from MSM Johor refinery through an ongoing ramp-up programme. (The Edge)

Icon Offshore: Announces RM437.5m acquisitions to more than double fleet size. Icon Offshore has announced a slew of acquisitions totalling RM437.5m, to be paid in shares, that would more than double its fleet size. The proposed purchases include Yinson Holdings’ offshore marine business for RM160m. If all of the transactions are successful, Icon Offshore will immediately expand its fleet by an additional 40 maritime assets. The acquisitions involve four different companies in their entirety, substantial stakes of two other companies, and the remaining shares of two of its majority-owned subsidiaries. (The Edge)

Pansar: Clinches RM805m contract for Kuching Urban Transportation System. Pansar has clinched an RM804.7m contract for the Kuching Urban Transportation System (KUTS) Blue-Line Package 2 in Sarawak. The contract was awarded to Pansar's wholly-owned Perbena Emas SB (PESB), in collaboration with China Road & Bridge Corporation (CBRC). The award came through a letter of acceptance from Sarawak Metro SB (SMSB), which is wholly-owned by Sarawak Economic Development Corp. (The Edge)

Skyworld Development: Signs MoU for second project in Vietnam. Skyworld Development has announced a second venture in Vietnam through its fully owned subsidiary, SkyWorld Development (Vietnam) Company Limited (SkyWorld Vietnam). In a statement, the urban property developer said SkyWorld Vietnam signed a memorandum of understanding (MOU) with SkyVenue Land Group Joint Stock Company, SkyBridge Company Limited and the shareholders of SkyVenue to jointly develop the remaining plots of the Guocoland Commercial Complex project in Thuan An City, Binh Duong Province, Vietnam. (StarBiz)

MAHB: 2Q net profit doubles on higher contribution from associates, JVs. Malaysia Airports Holdings Bhd’s net profit for 2QFY2024 doubled to RM205.8m from RM102.5m a year earlier, thanks to higher contributions from associate and joint venture companies. Revenue rose 11.93% to RM1.38bn from RM1.23bn in 2QFY2023, driven by higher passenger volumes from new airline operations, resumption of airline routes, introduction of new services. (The Edge)

EA Technique: Posts bumper 2Q earnings on writebacks, eyes PN17 exit in 1Q2025. EA Technique (M) booked a net profit of RM94.7m or 7.14 sen per share for 2QFY2024, over 12 times the RM7.8m or 1.47 sen per share it made in 2QFY2023, primarily due to writebacks to other income. The writebacks are associated with the creditor scheme and one-off expenses from its Practice Note 17 (PN17) regularisation plan. This marks the eighth consecutive quarter in the black for the group, which seeks to exit the PN17 status by 1Q2025. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after stocks on Wall Street finished broadly higher last Friday as the market closed out its fourth straight winning month with solid gains. A late-afternoon rally helped stocks bounce back from a mid-afternoon slide. The S&P 500 rose 1%, with about 76% of the stocks in the index notching gains. The benchmark S&P 500 closed August with a 2.3% gain for the month. It’s now up 18.4% so far this year and is within 0.4% of the all-time high it set in July. The Dow Jones Industrial Average rose 0.6%, setting its fourth all-time high this week. The Nasdaq composite ended 1.1% higher. Wall Street spent the day mulling over encouraging reports on inflation, consumer spending and income. The Commerce Department said its personal consumption and expenditures report showed prices rose just 0.2% from June to July, up slightly from the previous month’s 0.1% increase. Compared with a year earlier, inflation was unchanged at 2.5%. Economists had expected the PCE, which is the Federal Reserve’s preferred measure of inflation, would to show that inflation edged up to 2.6% in July. It was as high as 7.1% in the middle of 2022. Markets in Europe rose initially following a report showing inflation fell sharply in the European Union this month. The report sets up the European Central Bank to cut interest rates next month. Major stock indexes in the region turned red by late afternoon. France’s CAC 40 slipped 0.1%, Germany’s DAX and Britain’s FTSE 100 were essentially flat. Markets in Asia rose. Japan’s benchmark Nikkei 225 added 0.7% to finish at 38,647.75 after data on the world’s fourth largest economy came in mostly positive. US stock exchanges will be closed Monday for the Labor Day holiday. Back home, Bursa Malaysia staged a sharp rebound at the close last Friday, with the benchmark index bouncing 1.53% amid a strong performance in regional markets. At the close, the FBM KLCI jumped 25.25 points to 1,678.80 from Thursday's close of 1,653.55.

Source: PublicInvest Research - 2 Sept 2024