HEADLINES

Economy

US: Core US inflation picks up, damping odds of outsize Fed cut. Underlying US inflation unexpectedly picked up in Aug on higher prices for housing and travel, undercutting the chances of an outsize Fed interest-rate cut next week. The so-called core consumer price index (CPI) — which excludes food and energy costs — increased 0.3% from July, the most in four months, and 3.2% from a year ago, Bureau of Labor Statistics (BLS) figures showed. (Bloomberg)

US: 30-year mortgage rate slides to lowest since Feb 2023. US mortgage rates slid last week to the lowest level since Feb 2023, emboldening homebuyers and spurring a pickup in refinancing applications in welcome news for the real estate market. The contract rate on a 30-year fixed mortgage dropped 14 bps to 6.29% in the week ended Sept 6, marking the sixth straight weekly decline, Mortgage Bankers Association (MBA) data showed. (Bloomberg)

US: Incomes rose last year but poverty rates changed little, Census data shows. US inflation-adjusted household income increased but poverty rates showed only modest changes last year, the US Census Bureau reported, offering a mixed snapshot of how American households fared as the economy returned to precoronavirus pandemic growth levels, job growth boomed and inflation eased. Real median household income rose to USD80,610 (RM349,014) in 2023, up 4.0% from 2022, back to the peak reached in 2019, while earnings for workers as a whole were higher than before the pandemic, a boost to households after multiple years in which workers' wages were outpaced by high inflation. in 2022. (Reuters)

UK: Economy stagnates for second month in setback for Starmer. The UK economy stagnated for a second month in July, suggesting that a rapid recovery from recession is now losing momentum in a blow for Prime Minister Keir Starmer. GDP was unchanged after flatlining in June, the Office for National Statistics (ONS) said. Economists were forecasting a 0.2% increase. Declines in production and construction were offset by the powerhouse services industry. (Bloomberg)

China: Unworkable housing rescue math is prolonging crisis. In May, China’s central government urged more than 200 cities to buy unsold homes to ease oversupply. More than three months later, only 29 have heeded the call. The glacial pace of implementation — driven in large part by the unattractive economics of the plan for local governments — underscores the challenge Chinese President Xi Jinping faces as he tries to arrest a record property slump that’s threatening to undermine the country’s growth targets. (Bloomberg)

Thailand: Household debt rises to 16-year high as economy slows, survey shows. The average household debt in Thailand is seen rising to the highest in at least 16 years as an uneven postpandemic economic recovery hurts family incomes, according to a survey. The debt pile per household is set to jump 8.4% to THB606,378 (USD17,959 or RM78,142) this year, according to a survey by the University of Thai Chamber of Commerce. That’s the highest family debt obligation since the university began the survey. (Bloomberg)

Markets

Mr DIY: Indonesian unit said to eye IPO in late 2024. Mr DIY Group (M) is considering listing its Indonesian unit in Jakarta as soon as this year, or early 2025, according to people familiar with the matter. Mr DIY is working with banks on an IPO plan, the people said, asking not to be identified discussing private information. It could seek to raise as much as USD300m (RM1.3bn), two of the people said, which would give a welcome boost to Indonesia’s lackluster IPO market. Deliberations are ongoing, including on details such as size, the people said. Mr DIY aims to use proceeds from the offering to expand its business, the people said. (Bloomberg)

Suria Capital: Signs JV agreement for Jesselton Docklands 2 mixed commercial project in Kota Kinabalu. Suria Capital Holdings said it has signed a new joint development agreement (JDA) to formalise the development of a mixed commercial project within the Kota Kinabalu port area. The project, dubbed the "Jesselton Docklands 2," spans 11.54 hectares and will be jointly developed by Jesselton Docklands 2 Sdn Bhd, a joint venture between Suria Capital and BEDI Development, a 75%-owned subsidiary of property developer EXSIM Development SB. (The Edge)

Mikro MSC: To buy TES Productions for RM30m, diversify into signage business. Mikro MSC is proposing to diversify its business to include the design, manufacture, and installation of signs and advertising displays, as well as the provision of interior fit-out services. Mikro announced its plan to acquire a 100% stake in Singapore-based TES Productions & Projects Pte Ltd for RM30m as part of this diversification. It said the purchase consideration will be satisfied via the issuance of 134.83m ordinary shares in Mikro at an issue price of approximately RM0.2225 per share. (The Star)

Citaglobal: Clinches RM51m in new construction contracts. Citaglobal Bhd has won two construction contracts totaling RM51.0m. The first, a 20-month project to build a riverwall in Kuching, Sarawak, is subcontracted from NL Builder SB. The second, worth RM31.6m, involves infrastructure work for the Kuching Urban Transportation System’s redline, awarded by Avos (Malaysia) SB. (The Malaysia Reserve)

Widad: To acquire Nilai industrial lands; purchase price to be determined. Widad Group has signed a heads of agreement (HOA) with Guper Bonded Warehouse SB to acquire five adjacent parcels of industrial land totalling approximately 56,231 square meters in Nilai, Negeri Sembilan. The group said the purchase price will be determined later by Widad and Guper Bonded, based on the terms and conditions outlined in the HOA and subject to those specified in the sale and purchase agreement. (The Star)

Alpha IVF: Makes foray into China. Alpha IVF Group Bhd has commenced operations in China with the opening of a new sales representative office in Shanghai's Huangpu District. This marks Alpha IVF's second international expansion following its IPO in March 2024, adding to its recent venture into the Philippines. Last week, Alpha IVF announced its entry into the Philippine medical sector, focusing on obstetrics, gynaecology, and fertility, through a joint venture with two local doctors, forming Alpha IVF (Manila) Inc. (The Star)

MARKET UPDATE

The FBM KLCI might open higher today after US stock indices stormed back from big early drops on Wednesday to finish higher, led by a handful of influential Big Tech companies. The S&P 500 rallied 1.1% after erasing a morning wipeout of 1.6%, one where almost every stock within the index had been falling. A majority of the index’s stocks still finished lower for the day, but the performances by Nvidia and other tech stocks were enough to drive it to a third straight gain and back within 2% of its all-time high set in July. The Dow Jones Industrial Average rose by 124 points, or 0.3%, after rallying back from a drop of 743 points. The Nasdaq composite jumped 2.2%. The sharp see-saw trading, where the Nasdaq composite roared back from an earlier 1.4% slide, followed the government’s latest update on inflation at the consumer level. Overall inflation slowed to 2.5% in August from 2.9% in July, a touch better than expected. But prices rose more than expected from July into August when ignoring food and energy, and economists say that can be a better predictor of where inflation is heading. All together, the data seemed to confirm that the Fed will indeed cut its main interest rate at its meeting next week, which would be the first such cut in more than four years. But it bolstered expectations that the Fed will begin with only a traditional-sized move of a quarter of a percentage point instead of the more severe half-point that some had been expecting. In stock markets elsewhere, indices fell across much of Europe and Asia. Japan’s Nikkei 225 dropped 1.5% after a Japanese central bank official was quoted by Japanese media as indicating the Bank of Japan was getting ready to raise interest rates. The comments also pushed the value of the Japanese yen higher against the US dollar, a move that earlier in the summer helped send financial markets around the world reeling. Back home, the FBM KLCI dropped 20.55 points or 1.24% to 1639.80.

Source: PublicInvest Research - 12 Sept 2024