HEADLINES

Economy

EU: Dutch economy grows as estimated in Q3. The Dutch economy expanded for the second straight quarter as initially estimated in the three months ending in Sept, the latest data from the Central Bureau of Statistics showed. GDP rose 0.8% sequentially in the 3Q, though slightly slower than the revised 1.0% rebound in the 2Q. That was in line with the flash data published on Nov 14. The overall growth in the third quarter was mainly driven by increased household consumption and government expenditure. The expenditure breakdown showed that household consumption grew 0.9% over the quarter as they spent more on clothing, home furnishings, and energy. Government spending also rose 0.8%, which was more evident in healthcare and public administration. Considering other demand components, gross fixed capital formation rose 0.4%. (RTT)

China: Conducts medium-term loan operation, leaves rate unchanged. China's central bank conducted a medium-term loan operation on Wednesday while keeping the interest rate unchanged. The People's Bank of China (PBOC) issued CNY300 bn yuan (USD41.10 bn) worth of one-year medium-term lending facility (MLF) loans to some financial institutions at 2.00%, unchanged from the previous rate, according to an online statement from the bank. The bid rates in Wednesday's operation ranged from 1.90% to 2.30%, the central bank said. A batch of CNY1.45tr yuan worth of MLF loans was due to expire this month. (Reuters)

China: To ramp up fiscal support for consumption next year. China will ramp up fiscal support for consumption next year by raising pensions and medical insurance subsidies for residents as well as expanding consumer goods trade-ins, its finance ministry said. The country will boost the basic pension for retirees and for urban and rural residents and raise financial subsidy standards for urban and rural residents' medical insurance to help "vigorously" boost consumption, the ministry said after concluding a two-day national fiscal work conference. China will also intensify support for consumer goods trade-ins and expand effective investment and drive more social investment through government investment, the ministry said. The measures will improve people's livelihoods and the policy system to support population growth as well as strengthen the social security network and health care system, it said. (Reuters)

Japan: Budget to hit record, but with reduced new bond issuance, draft shows. Japan's government is set to compile a record USD735bn budget for the fiscal year from April due to larger social security and debt-servicing costs, adding to the industrial world's heaviest debt, a draft seen by Reuters showed. The JPY115.5trn draft budget is being compiled as the BoJ shifts away from its decade-long stimulus programme, putting more burden on the government to stimulate the economy. In an attempt to improve public finances, however, the government plans to trim new bond issuance next fiscal year to JPY28.6trn yen from this fiscal year's initially planned JPY35.4trn yen, helped by tax revenue growth, the draft showed. It is the first time in 17 years that new bond issuance will drop below JPY30trn. Decades of stop-start fiscal spending and reform have left Japan with the industrial world's heaviest public debt burden, more than double the size of its annual economic output. (Reuters)

Japan: BOJ's Ueda avoids giving clear hint on chances of January hike. Bank of Japan (BOJ) Governor Kazuo Ueda reiterated his view that the bank needs to carefully watch various risks without signalling the likelihood of an interest rate hike next month. "The timing and pace of adjusting the degree of monetary accommodation will depend on developments in economic activity and prices as well as financial conditions going forward," Ueda said in a speech at a business conference in Tokyo. "The bank needs to pay due attention to various risk factors at home and abroad, and to examine how these factors will affect the outlook and risks for Japan's economic activity and prices and the likelihood of realising the outlook," he said. The speech comes after his dovish message last week surprised BOJ watchers, sending the yen down by sowing doubt in expectations that the central bank would raise rates in Jan if it didn't act at its Dec meeting. (Bloomberg)

India: Growth trajectory poised to pick up in Oct-March, cenbank bulletin says. India's growth trajectory is expected to pick up in the second half of 2024-25, driven by domestic private consumption and a sustained revival of rural demand, the central bank said in its monthly bulletin released. "High frequency indicators for the third quarter of 2024-25 indicate that the Indian economy is recovering from the slowdown in momentum witnessed in Q2, driven by strong festival activity and a sustained upswing in rural demand," the Reserve Bank of India said in an article titled 'State of the Economy'. Additionally, the prospects for agriculture and rural consumption are looking up due to "brisk" expansion of rabi sowing, it said. India's GDP growth rate fell unexpectedly to 5.4% in the July-Sept quarter, its slowest pace in seven quarters, while inflation in Nov was well over the RBI's medium-term target of 4%. (Reuters)

Thailand: Cabinet endorses keeping 1%-3% inflation target for 2025. Thailand's cabinet endorsed a deal to keep the official inflation target unchanged in 2025, a victory for the BoT after it resisted calls for a higher goal that would have paved the way for more rate cuts. The cabinet endorsed an agreement between the central bank and the Ministry of Finance to keep the inflation target in a range of 1% to 3%, Deputy Finance Minister Julapun Amornvivat said after a cabinet meeting chaired by Prime Minister Paetongtarn Shinawatra in Bangkok. Thai authorities have now agreed for a fifth straight year to keep the target range, even though actual inflation often undershoots as high household debt weighs on consumer spending and product prices. (Bloomberg)

Markets

Boustead Heavy Industries: Shareholders approve RM54m sale of 51% stake in LCS subcontractor. Boustead Heavy Industries Corp's shareholders have approved the disposal of the fabrication and engineering company's 51% equity stake in littoral combat ship subcontractor Contraves Advanced Devices SB (CAD) to German defence firm Rheinmetall AG for RM54m. The disposal will result in a loss of RM14.8m for BHIC, which has already been recognised in its Sept quarter. (The Edge)

Nestcon: Wins bids to develop 18.99 MWac LSS power plant projects in Sabah. Nestcon has secured two contracts to develop a total of 18.99 megawatts (MWac) of large-scale solar photovoltaic (LSSPV) plants in Sabah. The group will develop a 4MWac plant in Sri Tanjong, Tawau, on Sabah's southeast coast, and a 14.99MWac plant in Bongawan, Kimanis, on the west coast of the state. (The Edge)

Pharmaniaga: East Navigators' direct stake in Pharmaniaga falls below 5% after selling shares at discount. East Navigators Capital Ltd is no longer a substantial shareholder in Pharmaniaga after disposing of 25.35m shares or a 1.76% stake for RM5.3m. The identity of the buyer was not disclosed. A check with Bloomberg showed that the shares were traded in a single block at 21 sen per share, a discount of 41.7% or 15 sen to Pharmaniaga's last closing price of 36 sen. (The Edge)

Parlo: Undertakes share capital reduction. Parlo has proposed to reduce its share capital by RM42m to eliminate its accumulated losses. The corporate exercise is expected to put the travel management company in an accumulated earnings position of RM19.9m. Parlo also plans to undertake share consolidation, whereby every three existing ordinary shares will be consolidated into one share. This is intended to raise its share price ahead of the issuance of rights shares, which was also proposed yesterday. Renounceable rights issue of up to 300.58 million Parlo shares will be done on the basis of one rights share for every one consolidated share. (StarBiz)

Classita: To diversify in bid to boost profit. Classita Holdings has proposed a diversification of its business to include property investment and trading as a move to improve its financial performance in the long run. The lingerie maker said the proposed diversification will provide the group with an additional stream of income and is expected to augur well in its overall structure moving forward. The diversification involves acquiring 18 retail units in Kajang for RM17m, which is expected to yield a 4% to 6% annual rental return. These units are part of the "Louvre," a premium commercial project slated for completion in the first quarter of 2025. (StarBiz)

KKB Engineering: Sues glove factory project contractor over unpaid claims. KKB Engineering has initiated adjudication proceedings under the Construction Industry Payment and Adjudication Act against a contractor over outstanding claims amounting to RM10.1m. The Sarawak-based steel fabrication company, in which Cahya Mata Sarawak holds a 17.9% stake, said the claims are related to a RM17m sub-contract awarded by Fook Lai Construction & Development Sdn Bhd in 2012. The project involves a glove factory at Petchem Industrial Park in Tanjung Kidurong, Bintulu. (The Edge)

MARKET UPDATE

The US and European markets were closed for Christmas. On Christmas Eve, The Dow and S&P 500 closed 0.9% and 1.1% higher while Nasdaq jumped 1.4%, lifted by Tesla, Amazon and Meta shares. This marked the start of the seasonal Santa Claus rally which happens in the last five trading days of the year and the first two in January. European markets were also higher on the eve with the FTSE and CAC rising 0.4% and 0.1% respectively but the DAX fell marginally by 0.2%. Meanwhile, Asian markets were mostly flat, with Tokyo and Shanghai being two of the few world markets open on Christmas day. Tokyo's Nikkei 225 rose 0.2%, the Shanghai Composite ended flat, and the Hong Kong market was closed for Christmas. Back home, the KLCI closed 0.4% higher on Tuesday to settle at 1,602.99.

Source: PublicInvest Research - 26 Dec 2024