HEADLINES

Economy

US: The 24 hours of rate cuts that end year of global central- bank easing. A year when inflation subsided enough for monetary policy easing to start in most advanced economies is about to conclude with a 24-hour flurry of decisions led by the Fed. The US announcement will take center stage, followed by peers in Japan, the Nordics and the UK over the following day, amounting to half of the world's 10 most-traded currency jurisdictions. Those events will draw most attention among investors bracing for the last big week for monetary policy in 2024. By close of play, at least 22 central banks accounting for two-fifths of the global economy will have set borrowing costs. (Bloomberg)

US: Import prices unexpectedly edge higher in Nov. Import prices in the US unexpectedly edged higher in the month of Nov, according to a report released by the Labour Department. The Labour Department said import prices crept up by 0.1% in Nov, matching the downwardly revised uptick in Oct. Economists had expected import prices to dip by 0.2% compared to the 0.3% increase originally reported for the previous month. The report also said the annual rate of import price growth accelerated to 1.3% in Nov from 0.8% in Oct. The YoY growth was expected to accelerate to 1.0%. The modest monthly increase by import prices largely reflected a rebound by prices for fuel imports which shot up by 1.0% in Nov after falling by 0.8 % in Oct. (RTT)

EU: As euro zone risks mount, markets seek clarity on pace of ECB rate cuts. Euro zone markets swung after the ECB gave up a long-standing hawkish tilt, but analysts were split on the signals it gave on how fast it will cut rates. At first sight all looked rosy for markets betting on speedy rate cuts from the ECB next year as the economic outlook sours and given potential tariffs from US President-elect Donald Trump and political turbulence in France and Germany. The central bank, which delivered its fourth rate cut of the year, no longer pledged to keep "keep policy rates sufficiently restrictive for as long as necessary" to bring down inflation. (Reuters)

EU: German economy will hardly grow in 2025, says Bundesbank. Germany's economy will hardly grow in 2025 after shrinking again this year, according to fresh forecasts from Bundesbank. GDP will fall by 0.2% in 2024, it said, slashing a June prediction for 0.3% growth. Output will expand by just 0.2% in 2025, rather than the 1.1% seen earlier, and could even fall if US trade tariffs materialize. The Bundesbank expects the economy to stagnate this winter and only begin to slowly recover during next year. For 2026 and 2027, it forecasts growth of 0.8% and 0.9%. Overall, economic output in 2027 could be 1.3-1.4% below the baseline scenario due to a US policy shift, the report said. According to different models, a trade conflict could even cause German GDP to stagnate or shrink again in 2025. (Bloomberg)

UK: Economy suffers first back-to-back declines since 2020. Britain's economy shrank for a second month in a row in Oct in the run-up to the government's first budget, the first back-to-back falls in output since the onset of the COVID-19 pandemic, and a setback for new finance minister Rachel Reeves. GDP contracted by 0.1% MoM in Oct, as it did in Sept, the Office for National Statistics said. It was the first consecutive drop in monthly GDP, which is volatile and prone to revision since March and April 2020, when Britain enforced its first coronavirus lockdown. Reeves and Prime Minister Keir Starmer who made stronger economic growth the centrepiece of the Labour Party's election campaign this year had warned that the budget would include painful tax increases. (Reuters)

China: Annual growth on track to hit target of around 5%, senior official suggests. China's economic growth this year will be about 5%, a high-level official said, suggesting that the country is hitting its annual target. The world's second-largest economy is going to achieve major goals for 2024 and contribute to nearly 30% of global growth, Han Wenxiu, deputy director of the Central Financial and Economic Affairs Commission's general office, said. Earlier this year the country's annual growth target was set at around 5% and policymakers have unveiled a series of stimulus measures in recent months in an effort to hit the target and revive growth. (South China Morning Post)

Japan: Business mood improves slightly, global risks cloud outlook. Japanese big manufacturers' sentiment improved slightly in the three months to Dec, a quarterly survey showed, boding well for the central bank's plans to gradually raise interest rates from near-zero levels. Non-manufacturers also remained upbeat on business conditions, though concerns over rising raw material and labour costs weighed on retailers' morale, the survey showed. The data released ahead of the BoJ's two-day policy meeting next week highlights how an intensifying labour shortage is becoming a headache for companies and a potential constraint to economic growth. (Reuters)

Markets

Lotte Chemical Titan: Shuts down operations temporarily in Pasir Gudang to cut losses. Lotte Chemical Titan Holdings has announced the temporary shutdown of one of its plants at the Pasir Gudang Complex in Johor, effective Dec 15, to mitigate losses stemming from a prolonged downturn in the petrochemical industry. LC Titan will consider resuming the operation of the plant, named Naphtha Cracker Number 1 plant, when market conditions become more favourable. The plant has a nameplate capacity of 430,000 tonnes per annum, LC Titan noted. (The Edge)

T7 Global: Gets LOA from Petronas Carigali for pan-Malaysia services. T7 Global has received a LOA from Petronas Carigali SB for the provision of pan-Malaysia offshore maintenance, construction, modification (MCM), and hook-up commissioning (HUC) services. The oil-and-gas company said the contract, awarded to its wholly owned Tanjung Offshore Services SB, was for Package C1, Peninsular Malaysia Asset (PMA). However, the contract value was not disclosed. The contract, which commenced on Sept 27, is for a period of five years, with an optional three-year plus two-year extension, according to T7 Global. (The Edge)

Datasonic: To raise RM554.95m as part of transformation plan. Datasonic Group has proposed a transformation plan to emerge as a leader in physical and digital identity markets with an AI-based and digital-centric identity management ecosystem. To support the plan, Datasonic will raise up to RM554.95m through the bonus issue of up to 1.55bn warrant. This is on the basis of one warrant for every two shares held by shareholders. Datasonic said it intends to broaden the market presence, increase its portfolio of products and services, and accelerate its internal research and development activities. (BTimes)

Carzo: Unit gets writ and summons to pay RM48,705 to its supplier. Loss-making group Carzo Holdings announced that its wholly-owned subsidiary, Carzo SB (CZSB), has been served with a writ of summons and statement of claims from its fruit supplier. The writ of summons and statement of claims dated Dec 4, 2024, were served to CZSB at the Kuala Lumpur Magistrate Court on Dec 5, 2024. CZSB is engaged in the business of distributing, wholesale, and trading fruits and vegetables, as well as manufacturing and processing related products. (The Edge)

GIIB: Ex CEO Tai Boon Wee cleared of forgery after prosecution drops charge. GIIB Holdings said its former CEO, Tai Boon Wee, who faced a forgery charge involving the misrepresentation of the company's financial report, was discharged by the Sessions Court. The court made the decision after the prosecution withdrew the charge. Tai had claimed trial on May 15 to one count of forgery, involving the misrepresentation of the company's 2023 interim third-quarter financial report as genuine. (The Edge)

Ibraco: Expands further with asphalt mixing plant in Kuching. Property developer Ibraco has diversified further into the building and construction supply chain with its latest investment in an asphalt mixing plant here. The plant is set to begin commissioning this month, following the commercial operation of the group's mild steel cement lined (MSCL) pipe manufacturing plant in Demak Laut Industrial Park in the third quarter of 2024. The MSCL pipe plant has an annual production capacity of 30,000 tonnes of MSCL pipes. (StarBiz)

MARKET UPDATE

The KLCI might open lower today after major stock indices on Wall Street drifted to a mixed finish Friday, capping a rare bumpy week for the market. The S&P 500 ended essentially flat, down less than 0.1%, after wavering between tiny gains and losses most of the day. The benchmark index posted a loss for the week, its first after three straight weekly gains. The Dow Jones Industrial Average slipped 0.2%, while the Nasdaq composite rose 0.1%, ending just below the record high it set on Wednesday. Wall Street's rally stalled last week amid mixed economic reports and ahead of the Federal Reserve's last meeting of the year. The central bank will meet this week and is widely expected to cut interest rates for a third time since September. Expectations of a series of rate cuts has driven the S&P 500 to 57 all-time highs so far this year. The Fed has been lowering its benchmark interest rate following an aggressive rate hiking policy that was meant to tame inflation. It raised rates from near-zero in early 2022 to a two-decade high by the middle of 2023. Inflation eased under pressure from higher interest rates, nearly to the central bank's 2% target. The economy, including consumer spending and employment, held strong despite the squeeze from inflation and high borrowing costs. A slowing job market, though, has helped push a long-awaited reversal of the Fed's policy. Inflation rates have been warming up slightly over the last few months. A report on consumer prices this week showed an increase to 2.7% in November from 2.6% in October. The Fed's preferred measure of inflation, the personal consumption expenditures index, will be released next week. Wall Street expects it to show a 2.5% rise in November, up from 2.3% in October. European markets slipped. Britain's FTSE 100 fell 0.1%. Britain's economy unexpectedly shrank by 0.1% month-on-month in October, following a 0.1% decline in September, according to data from the Office for National Statistics. Asian markets closed mostly lower. Back home, the KLCI ended higher by 6.67 points or 0.42% to 1608.75. MSCI's gauge of stocks across the globe fell 2.27 points, or 0.26%, to 866.14.

Source: PublicInvest Research - 16 Dec 2024