HEADLINES

Economy

US: Fed's Bostic open to another large rate cut if job market weakens. Atlanta Federal Reserve President Raphael Bostic said on Monday he would be open to another half-percentage-point interest rate cut at the US central bank's meeting in November if upcoming data show job growth slowing faster than expected. A surprise to the weak side, would pull me much further into really needing another dramatic move. Bostic said his baseline outlook was for an "orderly" Fed easing over the next 15 months that would end with the central bank's policy rate in the 3.00%-3.25% range at the end of 2025. (Reuters)

US: New York Fed's reverse repo facility sees cash surge on last day of Q3. The New York Federal Reserve said eligible firms parked the largest amount of cash in its reverse repo facility since late June, in a move almost certainly tied to the end of the third quarter. The regional Fed bank said USD465.6bn was placed in its reverse repo facility, the highest level of inflows since the end of the last quarter, when on 28 June reverse repo usage stood at USD664.6bn. Quarter-end dates generally see surging inflows that quickly abate, and that's what analysts and market participants expect to see happen this time. (Reuters)

EU: German inflation eases, spurring hopes for another ECB cut. German inflation fell to its lowest level since Feb 2021 this month, preliminary data showed, helping ECB doves build their case for another interest rate cut next month. German inflation eased slightly more than forecast to 1.8% in Sept, data from the federal statistics office showed. Analysts polled by Reuters had forecast a reading of 1.9% in Sept, after a YoY increase in consumer prices of 2.0% in Aug, based on data harmonised to compare with other European Union countries. (Reuters)

UK: Business confidence falls from eight-year high, Lloyds says. British business confidence ebbed slightly this month after reaching an eight-year high in July and Aug, as concerns about the broader economic outlook rose to a six-month high, a survey from Lloyds Bank showed. Lloyds' overall business barometer - which represents the difference between the percentage of firms with positive and negative views - fell by 3ppts to a three-month low of +47%. (Reuters)

UK: Shop prices fall by the most since August 2021, survey shows. Prices in British shops fell at the fastest pace in more than three years in Sept, the British Retail Consortium said, adding to signs that the inflation squeeze on consumers has faded. Annual shop price deflation dropped to 0.6% in the 12 months to Sept, the BRC said, its weakest since Aug 2021 and slower than the 0.3% fall in the month before. It was the seventh time in nine months that the pace of price growth has weakened.. (Reuters)

China: Factory, service sector activity skids. China's factory activity shrank for a fifth straight month and the services sector slowed sharply in Sept, suggesting Beijing will need even more stimulus to hit its 2024 growth target with only three months left in the year. The National Bureau of Statistics (NBS) PMI released nudged up to 49.8 in Sept from 49.1 in Aug, still below the 50-mark separating growth from contraction but beating a median forecast of 49.5 in a Reuters poll. The reading was the highest in five months. (Reuters)

Markets

AmBank (Trading Buy, TP: RM5.30): Grants RM193m financing for Senibong Cove project in Johor Bahru. AMMB Holdings (AmBank Group) has granted financing facilities totalling RM115m to Senibong Cove Development SB and RM78m to JBB Builders (M) SB, the appointed contractors for the reclamation of 60.7 hectares of waterfront land in Senibong Cove, Johor Bahru. The project is an extension of the Senibong Cove masterplan and expansion of landbank, to provide more high-quality designed homes in curated communities. (The Edge)

Kawan Food (Outperform, TP: RM2.30): To close China plant due to US tariff impact, limited room for expansion. Kawan Food is closing its manufacturing facility in China, due to the impact of US tariffs and limited room for expansion. The group, which produces food products like paratha, flatbread and pastries, operates two manufacturing plants — one in Pulau Indah and the other in China through wholly owned Kawan Food (Nantong) Co Ltd (KFN). The imposition of US tariffs on Chinese imports since 2018 had made it more competitive and efficient to export from the Pulau Indah factory. (The Edge)

Samaiden: Secures RM52m contract to build solar power plant in Sungai Petani. Samaiden Group has secured a two-year contract worth RM52m to build a 14MW LSS PV power plant in Sungai Petani, Kedah, in a related-party transaction from Legasi Green Power SB. The scope includes the design, supply, delivery, installation, testing and commissioning in connection with the project, and it shall be completed within 12 months. (The Edge)

TCS: Secures RM117m construction contract from S P Setia. TCS Group Holdings through its wholly owned subsidiary, TCS Construction SB has secured a contract worth RM116.6m from a subsidiary of S P Setia, I&P Kota Bayuemas SB. The contract involves building and related infrastructure works for 561 units of affordable housing as part of the Setia Bayuemas project in Klang, Selangor. (The Edge)

JTGB: Gets RM50.9m underground cable installation job. Jati Tinggi Group (JTGB) has accepted a letter of award from Worktime Engineering SB to install 132 kilovolts of underground single circuit cables in Cyberjaya for RM50.9m. JTGB said the scope of works would include the supply and erection of power cables, fibre optic cables, joint and termination, testing, commissioning, and all ancillary works. “The contract shall commence on the date of acceptance of the letter of acceptance and for a contract period of 22 months.” (StarBiz)

Dagang Nexchange: DNeX and Google Cloud partner to provide next-generation sovereign cloud for Malaysia. Dagang Nexchange (DNeX) and Google Cloud have formed a multi-year partnership to provide next-generation sovereign cloud services in Malaysia, meeting the increasing demand for secure and compliant cloud solutions in regulated industries. Under the agreement, DNeX will be authorised by Google Cloud to operate Google Distributed Cloud (GDC) as a managed GDC provider (MGP), with a focus on air-gapped configurations for organisations in Malaysia. (StarBiz)

MARKET UPDATE

The FBM KLCI might open higher today after Wall Street closed its latest winning month and quarter with more records on Monday. The drift higher for US stocks followed a wild start to the week for financial markets in Asia, where Japanese stocks tumbled and Chinese indices soared. The S&P 500 climbed 0.4% to an all-time high and clinched its fifth straight winning month and fourth straight winning quarter. The Dow Jones Industrial Average added 17 points, or less than 0.1%, to its record set on Friday. The Nasdaq composite rose 0.4%. Interest rates and the strength of the economy are usually the two main levers that set prices for stocks. In Asia, the levers were pulling in opposite directions. Japan’s Nikkei 225 slumped 4.8% on worries the country’s incoming prime minister will support higher interest rates and other policies that investors see as less market-friendly. Shigeru Ishiba is set to take over on Tuesday. In China, meanwhile, indices soared 8.1% in Shanghai and 2.4% in Hong Kong following the latest announcements of stimulus for the world’s second-largest economy. It was the best day for Shanghai stocks in nearly 16 years. China’s central bank announced moves on Sunday to ease mortgage rates for existing home loans by Oct. 31. That followed a flurry of announcements last week from China’s central bank and government intended to prop up the Chinese economy, whose growth has been flagging in part because of the weight of a struggling real-estate sector. Markets in mainland China will be closed Tuesday through Oct. 7 for a holiday marking 75 years of communist rule. Back home, the FBM KLCI ended lower by 11.18 points or 0.67% to 1648.91.

Source: PublicInvest Research - 1 Oct 2024