HEADLINES

Economy

Global: OECD sees global growth stabilising at 3.2% this year. Global growth is in the process of stabilising as the drag from central bank rate hikes fades and falling inflation boosts households' incomes, the OECD said, marginally raising its outlook for this year. The world economy was projected to grow 3.2% both this and next year, the Organisation for Economic Cooperation and Development forecast, nudging up its 2024 forecast from 3.1% previously while leaving 2025 unchanged. As the lagged impact of central bank tightening evaporates, interest rate cuts would boost spending going forward while consumer spending benefitted from lower inflation, the OECD said in an update of its latest economic outlook. (Reuters)

Global: Debt hits record USD312trn, climate finance a challenge, banking trade group says. Global debt hit a record high of USD312trn at the end of the second quarter, driven by borrowing in the United States and China, while a key debt ratio in emerging markets also scaled a fresh peak, data from a banking trade group showed. The Institute of International Finance (IIF), a financial services trade group, said that global debt rose by USD2.1trn in the first half to USD312trn — a new high point after previous data was revised lower. The IIF flashed warning signs on the trend of ever-increasing government borrowing in its latest Global Debt Monitor report, forecasting global government borrowing would rise from its current level of USD92trn to USD145trn by 2030 and top USD440trn by 2050. (Reuters)

US: New-home sales fell in Aug after upward revision. Sales of new homes in the US pulled back in Aug after a sharp increase in the prior month, as still-high mortgage rates and prices keep homes out of buyers’ reach. New single-family home sales decreased 4.7% last month to an annualised rate of 716,000 after rising at the fastest pace since early 2022, government data showed. The median estimate in a Bloomberg survey of economists called for a 700,000 pace. The median sales price, meantime, decreased 4.6% to USD420,600. That marked the seventh straight month of YoY price declines, extending what was already the longest streak since 2009. Despite the decline in sales, sentiment in the housing market is looking up. (Bloomberg)

US: Holiday spending on buy now, pay later to hit record due to debt-laden shoppers. US shoppers are expected to spend a record USD18.5bn (RM76.6bn) using third-party buy now, pay later (BNPL) services for holiday purchases in the last quarter of the year, according to projections by data firm Adobe Analytics released. With many Americans recently carrying more debt, spending on buy now, pay later services is set to increase by 11.4% over the holiday season a year ago, Adobe said. BNPL services let shoppers expand their purchasing power by paying for merchandise in monthly installments spread out over as many as 36 months; however, the most common payments are fourinstallment plans. (Reuters)

EU: French consumer confidence strongest since early 2022. French consumer sentiment strengthened to the highest level in more than two years in Sept, survey results from the statistical office INSEE showed. The consumer confidence index rose to 95 from revised 93 in Aug. The score was forecast to remain unchanged at Aug's initially estimated value of 92.0. This was the highest score since Feb 2022. However, the reading was below its long-term average of 100. Households' opinion on their past and future financial situation improved in Sept. The past financial situation index rose to -21 from -23 and the expectations index climbed to -6 from -9. (RTT)

China: Cuts one-year policy rate by most ever in stimulus drive. China’s central bank lowered the interest rate charged on its one-year policy loans by the most on record, kicking off a sweeping programme to revive confidence in the world’s second-largest economy. The People’s Bank of China (PBOC) cut the rate of the medium-term lending facility (MLF) to 2% from 2.3%, according to a statement. The 30 bps cut was the biggest since the bank began using the monetary tool to guide market interest rates in 2016. The expected move followed governor Pan Gongsheng’s announcement the previous day of a broad stimulus package that amounted to an adrenaline shot for an economy on the cusp of a deflationary spiral. (Bloomberg)

Indonesia: Prabowo aims to save USD13.3bn with energy subsidies cuts, key adviser says. Indonesia's president-elect Prabowo Subianto plans to cut energy subsidies and will give cash handouts to families in need, his key economic adviser said. Burhanuddin Abdullah told a business forum that the new government could save up to IDR200trn (USD13.3bn or RM55.1bn) with well-targeted energy subsidies. "We want to improve data ... so that subsidies can be given as cash transfers directly ... to families that deserve it. That's what we're going to do," he said. The 2025 budget has planned spending of IDR3,621trn but most of that will go towards debt repayment and other obligations, so savings are needed to fund new programmes, he said. (Reuters)

Markets

KLK (Neutral, TP: RM21.33): Partners with Alami Commodities to market palm oil, specialty fats in Middle East. Kuala Lumpur Kepong has formalised a MOU with Alami Commodities SB for their joint venture (JV), KLK Alami Edible Oils SB (KAEO) to manufacture, sell and market palm oil and specialty fats. Formalising an MOU means turning the non-binding document into a legally binding agreement. Under the terms of the JV, KLK will own 65% of KAEO, which will operate a refinery and packaging plant located in Teluk Panglima Garang, Selangor that will be fully commissioned in 2025, while Alami will hold the remaining 35%. (The Edge)

Reservoir Link: Bags three-year well leak service job from Hibiscus’ unit. Reservoir Link Energy has secured a letter of award from Hibiscus Oil & Gas Malaysia Ltd (HML), a subsidiary of Hibiscus Petroleum, for the provision of well leak diagnostic and remedial services. The energy-related services provider said its wholly-owned subsidiary Reservoir Link SB (RLSB) was awarded a five-year contract effective Sept 19, 2024 to Sept 18, 2027, with a one-year extension option at HML’s discretion. (The Edge)

Keyfield International: Bags jobs worth RM130.3m from Petronas Carigali. Keyfield International's subsidiary Keyfield Offshore SB has accepted eight work orders from Petronas Carigali SB for the provision of six accommodation workboats (AWB) and two anchor handling tug and supply vessels (AHTS) valued at RM130.3m. The group said the work order awards (WOA) are scheduled to be carried out in the 2HFY24. (BTimes)

KJTS: Secures RM19m Thai resort project. KJTS Group’s Thailand subsidiary KJTN Engineering Co Ltd has undertaken to provide retrofit work, operations and maintenance services for a chiller plant and to supply chilled water at the Centara Grand Mirage Beach Resort Pattaya in Thailand. The 20-year agreement with its hotel owner, Central Plaza Hotel Public Co Ltd, has a fixed fee of 148.82m baht (RM18.78m). As per the agreement, Central Plaza Hotel will pay KJTN a fixed monthly fee of 620,072 baht (RM78,320) during the operations and maintenance service period from June 1, 2025 to May 31, 2045, as well as a monthly variable fee based on the chilled water supplied during the same period. (StarBiz)

AAX: Issues circular on proposed RM6.8bn acquisition. AirAsia X (AAX) has released a detailed circular on the RM6.8bn acquisition of Capital A’s entire equity stake in AirAsia Aviation Group Ltd and AirAsia for its shareholders’ review ahead of its EGM on Oct 16. The proposed acquisition aims to create a focused aviation powerhouse, encompassing seven airlines across Malaysia, Thailand, Indonesia, the Philippines and Cambodia. (StarBiz)

Farlim: To rake in RM10.74m gain from Perak land sale. Farlim Group (Malaysia) is disposing of a leasehold housing scheme in Gopeng, Perak for RM33m in cash. With a net book value of RM21.58m, the group is expected to book a proforma gain of RM10.74m, said the property company in a bourse filing. The land disposal is to unlock the value and monetise its investment at a premium of a 28.65% or RM7.35m premium to the RM25.65m market value ascribed by its valuer, Henry Butcher. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today after US stocks edged back from their records overnight as financial markets around the world took a pause following big recent moves. The S&P 500 slipped 0.2% a day after setting an all-time high for the 41st time this year. The Dow Jones Industrial Average dropped 293 points, or 0.7%, after likewise setting a record the day before, while the Nasdaq composite edged up by less than 0.1%. Treasury yields ticked higher in the bond market after sinking the prior day on a surprisingly weak update on confidence among US consumers. The worst drop in three years raised worries about the US economy’s strength, but it also raised expectations for the Federal Reserve to deliver another dose of bigger-than-usual relief through a big cut to interest rates at its next meeting. In stock markets elsewhere, indices moved more modestly after jumping the day before on hopes that new stimulus measures from China would prop up the world’s second-largest economy. Chinese indices rose again Wednesday, but they pared their gains as the day progressed, while European indexes slipped. Prices for crude oil also gave back gains. Indices rose 1.2% in Shanghai, fell 1.3% in South Korea and slipped 0.2% in London. Back home, the FBM KLCI added 3.01 points or 0.18% to 1673.38

Source: PublicInvest Research - 26 Sept 2024