HEADLINES

Economy

US: New home sales tumble to two-year low in Oct. Sales of new U.S. single-family homes dropped to the lowest level in nearly two years in Oct, likely as a rise in mortgage rates drove buyers to the sidelines and hurricanes disrupted activity. New home sales plunged 17.3% to a seasonally adjusted annual rate of 610,000 units last month, the lowest level since Dec 2022, the Commerce Department's Census Bureau said. The sales pace for Sept was unrevised at a rate of 738,000 units. Economists polled by Reuters had forecast new home sales, which account for about 15% of US home sales, would ease to a pace of 725,000 units. (Reuters)

US: Monthly house prices rise strongly in Sept. US single-family house prices increased solidly in Sept, which together with a resurgence in mortgage rates will further reduce affordability for many prospective homeowners. House prices jumped 0.7% on a MoM basis after an upwardly revised 0.4% rise in August, the Federal Housing Finance Agency said. Prices were initially reported to have gained 0.3% in August. They increased 4.4% in the 12 months through Sept, matching the upwardly revised rise in August. The gain in annual house prices was previously reported to have been 4.2%. (Reuters)

EU: ECB policymakers grow nervous about weak growth, Trump tariffs. Euro zone interest rates will keep falling as inflation is largely defeated and weak economic growth, potentially exacerbated by US trade tariffs, may be the next big issue on the horizon, European Central Bank policymakers said. The ECB has cut interest rates three times already this year and investors expect further cuts at every policy meeting until at least next June as the bloc is once again skirting recessions. (Reuters)

EU: Investors' inflation expectations fall below 2% for first time since 2022. The five-year, five-year forward inflation swap fell to 1.9994%, LSEG data showed, a relatively sharp fall from above 2.2% in Oct. The swap reflects investors' expectations for inflation for the five-year period that begins in five years' time. Former ECB President Mario Draghi in 2014 cited, a five-year-five-year inflation swap, which was then just below 2%, as a worrying sign for the central bank. In the years before 2022, the ECB saw deflation as a major risk. And the latest fall will likely cement expectations for ECB rate cuts. (Reuters)

UK: Gloom spreads across UK retailers after budget tax rises, CBI says. British retailers' optimism has fallen to a two-year low following finance minister Rachel Reeves' first budget as they brace for higher employment costs and soft consumer demand, the Confederation of British Industry said. Reeves announced a GBP25bn (USD31bn) increase in employment taxes in her 30 Oct budget and a 7% rise in the minimum wage, both of which will particularly hurt retailers with low margins and large numbers of staff. "The last time retailers felt this gloomy was back in November 2022, at the peak of the inflation shock," CBI lead economist Ben Jones said. (Reuters)

Japan: Steady service inflation keeps alive BOJ rate-hike prospects. A leading indicator of Japan's service-sector inflation held near 3% in October data showed, offering further evidence that conditions for another near-term interest rate hike by the BOJ were falling into place. Japan's services producer price index, which measures the price companies charge each other for services, rose 2.9% in Oct from a year earlier, BOJ data showed, accelerating from a 2.8% gain in Sept.

South Korea: BOK to hold rates to ease pressure on battered won. The Bank of Korea will keep its key policy rate at 3.25% this week to support the Korean won against a strong U.S. dollar, according to a majority of economists in a Reuters poll who forecast at least three rate cuts next year. Fears US President-elect Donald Trump's policies will drive up inflation in the world's largest economy and the escalation of the Russia-Ukraine war have strengthened the dollar against most major currencies, including the won, which is down 2% this month. That is expected to force the Bank of Korea to pause its easing cycle, which only started last month. (Reuters)

Markets

IJM (Outperform, TP: RM4.20): Penang Development Corp rejects RM818 mil bid by IJM-led consortium to develop Batu Kawan industrial park - report. Penang Development Corporation (PDC) has rejected an RM818m bid by a tripartite consortium led by IJM Corporation to develop the Batu Kawan Industrial Park 2 in Penang, Free Malaysia Today (FMT) reported. The offer was rejected and the state-owned development agency did not provide a reason, FMT said, citing an unidentified source. During the pre-qualification process, seven interested parties were shortlisted but only the IJM-led consortium submitted a bid, the news portal reported. "The RM818m was the highest bid, surpassing the RM780m reserve price for the land," the source was quoted as saying by FMT. (The Edge)

Maxland: Secures RM14.6m via share placement for bus assembly, cooling system ventures. Maxland is issuing new shares representing 20% of its current share base to two companies, including the private vehicle of its non-executive chairman Datuk Abd Aziz Sheikh Fadzir, to raise funds for its new ventures into bus assembly and the development of district cooling systems for industrial buildings. Abd Aziz is also a substantial shareholder and non-executive chairman of aviation and defence engineering solutions provider, Destini. The Sabah-based company is planning to issue 320.7m shares to the investing companies at 4.55 sen apiece for a total of RM14.6m, cash, it said. (The Edge)

Sunway: Profit doubles in 3Q, achieves RM4bn order book replenishment. Sunway posted a net profit of RM376.1m for 3QFY2024, up from RM180.3m a year ago, on stronger operating performance across its core businesses. Quarterly revenue rose 31.8% to RM2.03bn from RM1.54bn a year earlier, on better performance from all segments except quarry. No dividend declared for the quarter. (The Edge)

MAHB: Expects growth as FY24 comes to a close. Malaysia Airports Holdings (MAHB) anticipates further growth as the financial year ending Dec 31, 2004 (FY24) comes to a close, with passenger traffic expected to near pre-pandemic levels. The airport operator said this growth is driven by strong demand from key markets, including China, India, and South-East Asia. Additionally, the relaxation of visa requirements remains a key factor in driving increased passenger arrivals. (StarBiz)

IPO: Winstar Capital targets RM20m from IPO. Winstar Capital Bhd, enroute to a listing on Bursa Malaysia's ACE Market on Dec 19, aims to raise RM19.8m through its IPO. The company noted that the IPO is priced at 35 sen per share and involves the issuance of 73.95m shares, comprising 56.6m new shares and 17.4m existing shares offered for sale, representing 25.5% of the company's enlarged issued share capital of 290m shares. The company said that of the proceeds, RM9.55m (48.25%) will be used to purchase new aluminium extrusion press machinery and equipment, RM6.24m (31.54%) for working capital requirements, and RM4m (20.21%) for listing expenses. (Bernama)

MARKET UPDATE

The FBM KLCI might open higher today as US stocks rose to records Tuesday after Donald Trump's latest talk about tariffs created only some ripples on Wall Street, even if they could roil the global economy were they to take effect. The S&P 500 climbed 0.6% to top the all-time high it set a couple weeks ago. The Dow Jones Industrial Average added 123 points, or 0.3%, to its own record set the day before, while the Nasdaq composite gained 0.6% as Microsoft and Big Tech led the way. Stock markets elsewhere mostly fell after President-elect Trump said he plans to impose sweeping new tariffs on Mexico, Canada and China once he takes office. But the movements were mostly modest. Stock indicex were down 0.1% in Shanghai and nearly flat in Hong Kong, while Canada's main index edged down by less than 0.1%. Trump has often praised the use of tariffs, but investors are weighing whether his latest threat will actually become policy or is just an opening point for negotiations. For now, the market seems to be taking it more as the latter. A report on Tuesday from the Conference Board said confidence among US consumers improved in November, but not by as much as economists expected. Back home, the FBM KLCI added 5.70 points or 0.36% to 1603.15.

Source: PublicInvest Research - 27 Nov 2024