HEADLINES

Economy

US: Consumer spending solid; inflation showing progress as year ends. US consumer spending increased in Nov amid strong demand for a range of goods and services, underscoring the economy's resilience, which saw the Federal Reserve projecting fewer interest rate cuts in 2025 than it had in September. The report from the Commerce Department showed moderate monthly rises in prices, with a measure of underlying inflation posting its smallest gain in six months. (Reuters)

EU: German retailers more pessimistic in holiday season, Ifo says. The business climate index in Germany's retail sector fell slightly in normally consumer spending-heavy Dec, as retailers assess their current situation as somewhat worse than in November, the Ifo Institute said. Business expectations for the coming months also declined slightly, Ifo added. This year was very challenging for the retail sector and the overall economic environment is likely to remain difficult in 2025, "even though many retailers are hoping for an improvement in consumer sentiment," said Ifo expert Patrick Hoeppner. Although the business climate in the consumer goods industry initially improved in the first half of 2024, things went downhill in the second half of the year, Ifo surveys showed. (Reuters)

UK: Retailers report gloomy run-up to Christmas, CBI says. British retailers reported a weak run-up to the Christmas holidays with sales falling again and businesses worrying about higher costs in 2025, the Confederation of British Industry said. The CBI's monthly retail sales headline balance improved only marginally to -15 in Dec from -18 in Nov. It had also contracted in Oct. "Retailers have endured a gloomy festive period," CBI Principal Economist Martin Sartorius said. "Looking ahead, retailers expect sales to fall again in January, while wholesalers and motor traders are braced for sharper sales declines." (Reuters)

Japan: Tokyo inflation likely accelerated on suspended energy subsidies, Reuters poll. Consumer inflation in Tokyo likely accelerated in Dec on higher food costs and after the government's suspension of its gas and electricity subsidies, a Reuters poll showed. The expected pickup could prod the BoJ, which decided to keep interest rates unchanged at 0.25% on Thursday, to raise borrowing costs in the new year. The core CPI in Tokyo, a leading indicator of nationwide price trends, was expected to have sped up to 2.5% YoY in Dec from 2.2% in Nov, the median forecast of 17 economists showed. A higher rate of increase in food costs, including rice, is expected to contribute to a rise in inflation as well, the analysts said. The government, though, is set to revive subsidies for electricity and gas prices for three months from Jan to ease high fuel costs. (Reuters)

India: Rupee hits all-time low as dollar extends climb, RBI likely steps in. The Indian rupee weakened to its record low on Friday, hurt by persistent dollar strength after strong U.S. economic data reinforced the Federal Reserve's hawkish tilt while likely intervention by the Reserve Bank of India capped the currency's losses. The rupee declined to 85.10 against the USD in early trading, inching past its previous record low of 85.0850 hit on Thursday. The local unit was last quoted at 85.0975 as of 10:00 a.m. IST. State-run banks were spotted offering dollars, most likely on behalf of the RBI, traders said. (Reuters)

Singapore: Low inflation not enough for a January easing, analysts say. Slowing inflation has created room for Singapore's central bank to ease monetary policy in January but it may wait until later in 2025 so it can assess incoming US President Donald Trump's policies, analysts said. A Reuters poll found that Nov inflation data, which could be the last inflation read before the Monetary Authority of Singapore reviews policy next month, is expected to show the core rate steady at Oct's three-year low of 2.1%. The MAS has forecast core inflation would be around 2% in the fourth quarter. Analysts at DBS Bank expect core inflation to hold steady at 2.1% in Nov and average 1.8% in 2025, but said the MAS was unlikely to ease policy at its Jan review. (Reuters)

Markets

Pan Malaysia: To open more A&W outlets. Pan Malaysia Corp (PMC) is cooking up plans for 2025 as the company focuses on expanding the A&W franchise after acquiring the remaining 49% stake from Inter Mark Resources SB in a related party transaction for RM69.5m through a combination of RM41.7m in cash and the issuance of 111.1m new PMC shares at 25 sen per share in April 2024. Initially involved in the manufacturing, export, distribution of chocolate and confectionery products, PMC's focus shifted to the fast food industry following the acquisition of a 51% stake in the franchise for RM21.04m in 2021. (StarBiz)

Catcha Digital: Expands into automotive digital media by investing in Drive 2 Digital. Catcha Digital is acquiring a 60% stake in Drive 2 Digital SB (D2D) for RM16.2m, cash, marking its entry into the automotive digital media sector, with a focus on Chinese and Malay language automotive content. The acquisition is contingent upon D2D achieving profit targets of RM3.5m in the first 12 months following the deal's completion, and RM4.2m in the subsequent 12 months. (The Edge)

MAHB: Adviser recommends acceptance but independent directors disagree. Hong Leong Investment Bank (HLIB) has concluded that the RM11 per share takeover offer for Malaysia Airports Holdings (MAHB), from the consortium led by Khazanah Nasional and the Employees Provident Fund (EPF), is not fair - as it is below its valuation - but reasonable in the absence of a competing bid. The independent adviser advised shareholders of MAHB to accept the offer, as it represents a chance for them to realise their investments in MAHB. MAHB's non-interested directors, however, concluded that the offer is both unfair and unreasonable, and have recommended that shareholders reject it instead. (The Edge)

Johor Plantations: Appoints JCorp unit as main infra contractor for Kota Tinggi palm oil project. Johor Plantations Group has appointed Tg Langsat Development SB (TLD) as earthwork and main infrastructure contractor for its Integrated Sustainable Palm Oil Complex (iSPOC) project in Johor for RM39.0m. The contract is deemed a related-party transaction as TLD is a wholly-owned unit of TPM Technopark, which in turn is a wholly-owned subsidiary of Johor Corporation (JCorp). (The Edge)

PLB Engineering: Auditor flags material uncertainty over group's ability to continue as going concern. PLB Engineering's external auditors, Grant Thornton Malaysia PLT, have expressed an unmodified audit opinion with material uncertainty regarding the group's ability to continue as a going concern. Grant Thornton highlighted the group's and the company's net losses of RM12.8m and RM17.1m, respectively, in the audited financial statements for FY2024. It also noted that the group's and the company's current liabilities exceeded their current assets by RM54.8m and RM52.2m, respectively. (The Edge)

Bahvest: Buys mining equipment from Chinese firm to build new plant. Bahvest Resources has proposed to buy mining equipment from China-based Chengdu Mining Maintenance Technology Co Ltd for RM22.8m, to be used to build a new gold mining processing plant. The plant is located less than 1km from the company's existing facility in Bukit Mantri in Tawau, Sabah. The commissioning of the plant is expected to commence within 12 months. (The Edge)

MARKET UPDATE

The KLCI might open higher today after stocks on Wall Street finished broadly higher last Friday. US markets bounced back as investors digested key inflation data that showed a deceleration in price increases during the month of November. The Dow Jones Industrial Average rose 1.2%, while the S&P 500 and Nasdaq Composite added 1.1% and 1%, respectively. Fed said it expects to slow the pace of interest rate cuts next year as inflation persists. The Personal Consumption Expenditures index, which is the Fed's preferred measure of inflation, showed Friday that prices edged higher in November, but not as much as economists had predicted. Markets in Europe closed lower, led by losses in the healthcare sector after Danish firm Novo Nordisk tumbled on disappointing data from its next-generation obesity drug trial. Germany's DAX fell 0.4%, while France's CAC 40 and the FTSE 100 both declined by 0.2%. In Asia, stocks were mostly lower as investors digested inflation data out of Japan and interest rate decision from China. The Hang Seng and Shanghai Composite fell by 0.1%. Back home, Bursa Malaysia closed lower last Friday, with the benchmark dropping 0.54%, -8.68 points to 1591.41.

Source: PublicInvest Research - 23 Dec 2024