HEADLINES

Economy

US: Bumpy ride for corporate bond spreads expected in 2025. It could be a bumpy ride for US corporate bond spreads in 2025, with investors and strategists expecting more market volatility, as the new Trump administration implements a reform agenda that could be inflationary and slow the pace of US interest rate cuts. Corporate credit spreads, the premium over Treasuries that companies pay for debt, widened last week after the Federal Reserve's Dec meeting. The Fed cut interest rates by 25bps but Chair Jerome Powell expressed caution about further reductions without seeing progress in lowering stubbornly high inflation. The widening of spreads on Thursday followed a rise in Treasury yields after the Fed's hawkishness. Strategists expect this pressure on spreads to persist as they see demand moderating for corporate bonds, which drove spreads to their tightest in decades this year. (Reuters)

EU: Spain's Q3 GDP quarterly growth confirmed at 0.8%. Spain's GDP grew 0.8% in the third quarter, the country's National Statistics Institute (INE) said, confirming the expectations of analysts polled by Reuters and the preliminary reading. On an annual basis, Spain's 3Q economic output expanded 3.3%, a downwards revision from the preliminary reading of 3.4%, INE said. Analysts had expected a 3.4% growth, according to the Reuters poll. (Reuters)

EU: Lagarde says ECB very close to reaching its inflation goal, FT reports. European Central Bank (ECB) President Christine Lagarde said the euro zone was getting "very close" to reaching the central bank's medium-term inflation goal, according to an interview published by the Financial Times. Earlier in Dec, Lagarde had said the central bank would cut interest rates further if inflation continued to ease towards its 2% target, as curbing growth was no longer necessary. "We're getting very close to that stage when we can declare that we have sustainably brought inflation to our medium-term 2%," Lagarde told the FT, urging continued vigilance on services inflation. (Reuters)

UK: Economy flat-lined in third quarter, in new setback for government. Britain's economy failed to grow during the first three months of Prime Minister Keir Starmer's new government, adding to signs of a slowdown that has cast a shadow over his time in office so far. The Office for National Statistics lowered its estimate for the change in GDP output to 0.0% in the July-to-Sept period from a previous estimate of 0.1% growth. The ONS also cut its estimate for growth in the 2Q to 0.4% from a previous 0.5%. (Reuters)

China: Reverses course on law that hurt shareholders. China's top legislative body stepped in to soften the terms of a controversial law meant to strengthen the hands of creditors by letting them target former shareholders in companies, after a wave of rare protests in 11 cities. The move by the legislative affairs commission of the National People's Congress (NPC), China's parliament, on a recent change to company law followed a spate of 17 shareholder-rights protests in recent weeks. (Reuters)

South Korea: Consumer sentiment weakest since 2022 on political uncertainty. South Korea's consumer sentiment dropped sharply this month to hit the weakest level in more than two years on growing worries about political uncertainty following parliament's impeachment of President Yoon Suk Yeol. The consumer sentiment index fell to 88.4 in Dec from 100.7 in Nov, the lowest since the index hit 86.6 in Nov 2022, when 159 people were killed in a Halloween crowd crush, the BoK's monthly survey of consumers showed. The Composite Consumer Sentiment Index falling below the threshold of 100 means consumers have turned pessimistic over the economy. (Reuters)

Singapore: Nov core inflation at 1.9% YoY, lowest in almost 3 years. Singapore's key consumer price gauge rose 1.9% in November on a yearly basis, lower than economists' forecasts and the smallest rise in nearly three years, official data showed. The core inflation rate, which excludes private road transport and accommodation costs was lower than the 2.1% forecast by a Reuters poll of economists and compared with a 2.1% rise seen in Oct. It was the smallest rise since Nov 2021, when it climbed by 1.6%. Headline inflation was 1.6% in annual terms in November, lower than the 1.8% expected in the poll. (Reuters)

Markets

ECM Libra: Unit pays RM30m to extend hotel concession in KLIA for another 35 years. ECM Libra Group's 50%-owned unit OHG Services SB will pay Malaysia Airports (Sepang) SB RM29.9m to extend its concession agreement to manage and operate a 'limited-service hotel' at the Kuala Lumpur International Airport (KLIA) for another 35 years. Pursuant to the extension via a supplemental agreement with Malaysia Airports (Sepang), the expiry date of the concession will move from Jan 31, 2034, to Feb 11, 2069. (The Edge)

Powerwell: Wins RM27m supply contract. Powerwell Holdings has accepted a supply contract from a leading international contractor for the supply and delivery of electrical low voltage switchboards for a data centre in Malaysia, worth RM27m. The group said the contract was secured by its wholly-owned subsidiary, Kejuruteraan Powerwell SB. (StarBiz)

Tuju Setia: Wins RM389m construction contract. Tuju Setia has secured a contract worth RM389m to build serviced apartments in Wangsa Maju, Setapak. The job was awarded to Tuju Setia's wholly owned Pembinaan Tuju Setia SB by Beverly WM SB. Milla Residence is a joint effort between Beverly, Mapletree Investments Pte Ltd of Singapore, and Lai Sun Group of Hong Kong. Works will start in April 2025 and be completed within 36 months. (The Edge)

Coastal Contracts: Consortium wins bid for Sabah LSS power plant project. Coastal Contracts said a consortium led by the group has secured the bid to develop a 15MWac large-scale solar photovoltaic (PV) plant on Sabah's east coast. Coastal Contracts' wholly owned subsidiary, Coastal Power Holdings SB (CPHSB), holds a 90% stake in the consortium, with the remaining 10% held equally by Pleasant Engineering SB (PESB) and Bina HT SB (BHSB). Coastal Solar SB, another wholly owned subsidiary of the group, will serve as the special purpose vehicle to execute the project. (The Edge)

Esthetics International: Extends distributorship with US- based Dermalogica. Esthetics International Group has renewed its distribution agreement with US-based premium skincare provider Dermalogica Inc. Specifically, the group has extended the distributorships for its Malaysian, Singapore, Indonesian and Brunei operations for another five years, while its distributorships in Thailand and Hong Kong have been extended for another two years. (The Edge)

Malayan Flour Mills: Unit challenges appeal tribunal's rejection of stay of MyCC's penalty. Malayan Flour Mills' said its partially-owned unit, Dindings Poultry Development Centre SB (DPDC), is seeking a judicial review of the Competition Appeal Tribunal's decision to reject its request for a stay on a RM70.0m penalty imposed by the Malaysia Competition Commission (MyCC) over alleged price-fixing cartel activities. (The Edge)

Dnex: Ties up with France-based Conex to streamline EU trade compliance for M'sian exporter. Dagang Nexchange has tied up with Conex SAS to streamline European Union (EU) trade compliance for Malaysian exporters. In a statement, Dnex said the collaboration aims to assist exporters in fulfilling the EU's Import Control System 2 (ICS2) requirements, which mandate pre-notification of goods to Customs authorities before shipment to the EU. (StarBiz)

MARKET UPDATE

US markets closed higher at the start of a holiday-shortened trading week, as continued strength in technology stocks supported the broader market. Trading was thin and it is expected to remain muted during the week. The Dow Jones Industrial Average edged up 0.1%, the S&P 500 rose 0.7%, and the Nasdaq Composite gained 0.9%. Weak economic data seemed to sour the sentiment a bit earlier in the session. The Conference Board's consumer confidence index for December fell to 104.7, its lowest level since September while orders for durable goods - generally big-ticket items such as aircraft, appliances and computers - fell 1.1% in November, the largest month-over-month drop since June. Meanwhile, European markets closed mixed, as a spike in Novo Nordisk shares boosted the healthcare sector and capped losses on the main stock index. Germany's DAX edged lower by 0.1%, France's CAC 40 ended flat, and the FTSE 100 gained 0.2%. Asian markets closed mostly higher after softer US PCE inflation data renewed hopes for policy easing. Tokyo's Nikkei 225 rose 1.1%, the Hang Seng Index gained 0.8%, while the Shanghai Composite slipped 0.5%. Back home, the KLCI was up by 4.79 points to close at 1,596.20. The Energy Commission was to inform winners of the fifth large scale solar bidding round (LSS5) beginning Monday, following nine months of deliberation since it was opened in April this year. In a statement, the EC said the bids have already been reviewed for the projects totalling 2,000 megawatt, which are slated for commercial operations in stages in 2026 and 2027. However, unlike past practices, the commission did not reveal the list of winners in the statement, nor the range of the winning bids.

Source: PublicInvest Research - 24 Dec 2024