HEADLINES

Economy

US: New jobless claims slip, but people are remaining unemployed for longer. The number of Americans filing new applications for jobless benefits dipped to the lowest in a month last week, consistent with a cooling but still-healthy US labor market that is likely to keep Federal Reserve officials from cutting interest rates any further in the near term. Initial claims for state unemployment benefits fell by 1,000 to a seasonally adjusted 219,000 for the week ended Dec. 21, the Labor Department said. Economists polled by Reuters had forecast 224,000 claims for the latest week. (Reuters)

EU: Turkey begins cutting rates after inflation-fighting drive. Turkey's central bank cut its key interest rate by 250 bps to 47.5%, a bit more than expected, launching an easing cycle meant to leave behind protracted economic turmoil and a cost-of-living crisis. It trimmed the one-week repo rate after an 18-month tightening effort that reversed years of unorthodox economic policies and easy money championed by President Tayyip Erdogan, who has since changed tack to back the programme. The rate, last cut in early 2023, had been held at 50% since March. Annual inflation, dipped to 47% last month in what the central bank believes is a sustained fall toward a 5% target over a few more years. Having launched the easing cycle, the bank's policy committee said it will set policy "prudently on a meeting-by-meeting basis with a focus on the inflation outlook," and respond to any expected "significant and persistent deterioration". (Reuters)

China: Revises up 2023 GDP, sees little impact on 2024 growth. China revised upwards on Thursday the size of its economy by 2.7%, but said the change would have little impact on growth this year, as policymakers pledged more stimulus to spur expansion in 2025. Policy support late this year has set the world's second-largest economy on track for a growth target of "around 5%" as activity warmed slightly, but challenges such as potential US tariff hikes still weigh on prospects for next year. GDP in 2023 was raised by CNY3.4tr yuan to CNY129.4tr (USD17.73tr), Kang Yi, the head of the National Bureau of Statistics, told a presss conference, while releasing the fifth national economic census. In previous five-yearly economic censuses, China revised up the size of the economy for 2018 by 2.1% and for 2013 by 3.4%. (Reuters)

China: World Bank raises GDP forecast for 2024, 2025. The World Bank raised its forecast for China's economic growth in 2024 and 2025, but warned that subdued household and business confidence, along with headwinds in the property sector, would keep weighing it down next year. The economy has struggled this year, mainly due to a property crisis and tepid domestic demand. An expected hike in U.S. tariffs on its goods when US President-elect Donald Trump takes office in January may also hit growth "Addressing challenges in the property sector, strengthening social safety nets, and improving local government finances will be essential to unlocking a sustained recovery," Mara Warwick, the World Bank's country director for China, said. "It is important to balance short-term support to growth with long-term structural reforms," she added in a statement. Thanks to the effect of recent policy easing and near-term export strength, the World Bank sees China's gross domestic product growth at 4.9% this year, up from its June forecast of 4.8%. (Reuters)

Japan: Tokyo inflation accelerates as subsidies phased out for now. Inflation in Tokyo accelerated for a second month in Dec, as the government temporarily phased out utility subsidies, a result that will likely support expectations of an interest rate hike next year. Consumer prices excluding fresh food rose 2.4% in the capital, quickening from growth of 2.2% the previous month, the Ministry of Internal Affairs reported. The reading was the strongest since Aug, though a shade softer than economists' consensus for a 2.5% gain. The acceleration was largely driven by higher energy prices, following the phasing out of subsidies for gas and electricity bills. The measure had shaved 0.3 ppt from the overall price index a month earlier. (Bloomberg)

India: Economy to grow at around 6.5% in FY25, government says India's economy is expected to grow at around 6.5% in fiscal year 2024/25, closer to the lower end of its 6.5%-7% projection, as global uncertainties pose a dampening threat, the government said. The growth outlook for Oct to Dec appears bright, with rural demand remaining resilient and urban demand picking up in the first two months of the quarter, according to the finance ministry's monthly economic report for Nov. Growth slowed more than expected in July to Sept, hampered by weaker expansion in manufacturing and consumption. India has maintained that its economy will grow at a world-beating pace of 6.5%-7% despite a challenging environment. The outlook is expected to be better in Oct-to-March than in the first six months of the financial year, it said. (Reuters)

India: Considers cutting personal income tax to lift consumption. India is considering cutting income tax for individuals making up to INR1.5m rupees (USD17,590) a year in Feb's budget to provide relief to the middle class and boost consumption as the economy slows, two government sources told Reuters. The move could benefit tens of millions of taxpayers, especially city dwellers burdened by high living costs, if they opt for a 2020 tax system that strips exemptions like housing rentals. Under that system, annual income of 300,000 rupees to 1.5 million rupees is taxed at between 5% to 20%. Higher income draws 30%. Indian taxpayers can choose between two tax systems - a legacy plan that allows exemptions on housing rentals and insurance, and a newer one introduced in 2020 that offers slightly lower rates, but does not allow major exemptions. (Reuters)

Markets

TNB (Outperform, TP: RM16.00): Announces higher base electricity tariff for 2025-2027, raises capex to ensure reliable supply. Peninsular Malaysia's base electricity tariff has been set at 45.62 sen per kilowatt hour (kWh) in the three-year regulatory period 2025-2027 (RP4), said TNB. This marks a 14.2% increase from 39.95 sen/kWh set in RP3 (2022-2024). The increase will be effective July 1, the utility giant said. The rates in the 1H2025 have been maintained at current levels, according to a separate statement by the Ministry of Energy Transition and Water Transformation (Petra) earlier this month. (The Edge) Comments: Given the limited disclosure from TNB, we maintain a neutral stance on the 5.67 sen tariff increase, assuming it stems from the generation cost component. The Imbalance Cost Pass-Through (ICPT) review, conducted every six months, already accounts for fuel cost volatility throughout the regulatory period (RP). The 7.3% rate remains unchanged from RP3, and the RM42.821bn CAPE aligns with expectations. We are still awaiting further details on forecasted base sales and the tariff breakdown to assess the impact on TNB. However, we anticipate a significant increase in forecasted base sales as TNB recently raised its demand outlook to 5.8%-6.3% from 3.0%-4.0% for 2024. We maintain Outperform call and TP of RM16.

MYMBN: Suspends bird's nest exports to China after DVS directive. Bird's nest processor MYMBN has received a notice from Malaysia's Department of Veterinary Services (DVS) regarding the temporary suspension of bird's nest product exports to China, effective Dec 25, 2024. In a filing with Bursa Malaysia, the company stated that the suspension was prompted by the occurrence of the Newcastle Disease Virus in Malaysia, as reported to the World Organisation for Animal Health. (BTimes)

Kawan Renergy: MD Lim Thou Lai trims stake to 67%. Kawan Renergy co-founder and managing director Lim Thou Lai has pared his stake in the ACE Market-listed engineering services firm to 67.03%. Lim disposed of 19.24m shares, equivalent to a 3.5% stake, at 64 sen apiece or RM12.31m on Tuesday, according to Kawan Renergy's bourse filing. The stake disposal trimmed Lim's shareholding in the company to 368.66m shares or a 67.03% stake. Lim is Kawan Renergy's sole substantial shareholder. The disposal comes after the end of the six-month moratorium on his shares post-IPO. (The Edge)

Lebtech: Unit to participate in water projects in Selangor. Lebtech's unit Lebtech Construction SB has been selected by Affizal Resources (M) SB to collaborate on various water works in Selangor worth RM10.8m. The works are expected to commence in the first quarter of 2025. In a filing with Bursa Malaysia, the company said the projects are expected to contribute to its financial year end 2025. (BTimes)

Taghill: Unit faces adjudication claim from subcontractor. Taghill Holdings, formerly known as Siab Holdings, said that its wholly owned unit has received an adjudication claim from its subcontractor, seeking to recover an outstanding amount of RM2.59m. The claim was served to Siab (M) SB by Landasan Angkasa SB on Nov 13, concerning a warehouse development project that was completed in 2023, according to a filing with the stock exchange. (The Edge)

MARKET UPDATE

Stocks turned in a mixed performance as the rally that kicked off the holiday-abbreviated trading week lost momentum. The Dow Jones Industrial Average added less than 0.1%, closing higher for the fifth consecutive session, while the S&P 500 and Nasdaq Composite each fell less than 0.1% to snap three-day winning streaks. Shares of bitcoin-related companies slid as the digital currency slumped. The European markets remained closed for Boxing Day holiday. Meanwhile, Asian markets were mostly higher with Nikkei 225 rising 1.1%, driven by gains in retail and tourism stocks following Japan's decision to relax visa requirements for Chinese tourists. The Shanghai Composite edged 0.1% higher. Hong Kong, Australia and Indonesia were closed. KLCI jumped 10.71 points to close at 1,613.70. Tenaga announced Peninsular Malaysia's electricity base tariff that has been set to 45.62 sen per KWh in the 3-year regulatory period 2025-2027 (RP4), a 14.2% increase from RP3 (2022-2024).

Source: PublicInvest Research - 27 Dec 2024