HEADLINES

Economy

US: Manufacturing PMI rises to nine-month high, but challenges loom. US manufacturing moved closer to recovery in Dec, with production rebounding and new orders rising further, but the outlook remains uncertain amid the threat of higher tariffs that could raise prices of imported raw materials. Despite the increase in the Institute for Supply Management's (ISM) Purchasing Managers Index (PMI) to a nine-month high last month, the tone of the survey was less upbeat, with phrases such as volume decreases and significant slowdown appearing in some of the comments from respondents. None of the six largest manufacturing industries grew last month. (Reuters)

US: Weekly jobless claims hit eight-month low as labor market remains resilient. The number of Americans filing new applications for unemployment benefits dropped to an eight-month low last week, pointing to low layoffs at the end of 2024 and consistent with a healthy labor market. The report from the Labor Department added to a recent raft of upbeat economic data, including consumer spending, in reinforcing the Federal Reserve's projections for fewer interest rate cuts this year. (Reuters)

EU: German unemployment increases less than forecast. Unemployment in Germany increased in Dec albeit at a slower-than-expected pace with the onset of the winter break, official data showed. The number of jobless increased by 10,000 in Dec, a bigger increased compared to the 6,000 in Nov, the Federal Employment Agency reported. Unemployment was forecast to rise by 15,000. The unemployment rate held steady at 6.1% in Dec, while it was expected to rise to 6.2%. (RTT)

EU: Iceland jobless rate falls to 2.8%. Iceland's jobless rate declined for the second straight month in Nov, figures from Statistics Iceland showed. The jobless rate dropped to a seasonally adjusted 2.8% in Nov from 3.2% in Oct. In the same month last year, the unemployment rate was 3.3%. The number of unemployed persons decreased to 6,400 in Nov from 7,500 in the preceding month. (RTT)

UK: Mortgage and consumer credit data disappoint as economy slows. British consumer lending grew at the weakest pace since mid-2022 in Nov and lenders approved fewer mortgages than expected, according to BoE data released which chimes with other indications of a slowing economy. The annual growth rate of consumer credit cooled in Nov to 6.6% from 7.3%, its slowest pace of expansion since June 2022, the BoE data showed. (Reuters)

UK: Business morale hits two-year low after tax rises, survey shows. British companies are the gloomiest since former Prime Minister Liz Truss' Sept 2022 "mini-budget", following unexpectedly large tax increases in the new Labour government's Oct. 30 budget, a business survey showed. The British Chambers of Commerce, who conduct the largest private-sector survey of British firms, said businesses were the least happy about taxation since they started asking about this in 2017, while confidence about sales over the next 12 months was the lowest since late 2022. Reuters)

China: Will sharply increase funding from treasury bonds to spur growth in 2025. China will sharply increase funding from ultra-long treasury bonds in 2025 to spur business investment and consumer-boosting initiatives, a state planner official said, as Beijing cranks up fiscal stimulus to revitalise the faltering economy. Special treasury bonds will be used to fund large-scale equipment upgrades and consumer goods trade-ins. (Reuters)

Singapore: Retail sales fall 0.7% in Nov. Singapore's retail sales decreased for the first time in five months in Nov, preliminary data from the Department of Statistics showed. Retail sales dropped 0.7% annually in Nov, reversing a 2.4% increase in Oct. Sales excluding motor vehicles declined 1.4% versus a 0.5% increase in the previous month. There was an 11.0% plunge in sales of computer and telecommunications equipment, and the demand for wearing apparel and footwear was 3.8% lower. Meanwhile, sales of food and alcohol showed an increase of 5.6%. (RTT)

Markets

VS Industry (Trading Buy, TP:RM1.18): Allocates RM150m capex for FY25. VS Industry has allocated RM150m in capex for FY2025 with the bulk of it earmarked for a facility in the Philippines, acquisition of a new factory in Indonesia and maintenance capex for Malaysia's operations. Group managing director Datuk S.Y. Gan said in a statement that these investments would enable VS to strengthen its foundation as the group advances towards new horizons for the group. "We are upbeat on our prospects as we move into FY2025. This is underpinned by the healthy demand outlook from our existing customers and our new manufacturing facility in the Philippines." (StarBiz)

Petra Energy: Gets four pan-Malaysia services contracts. Petra Energy has secured four contracts to provide pan-Malaysia offshore services to the national oil-and-gas company Petronas and its production sharing contractors. The jobs for undisclosed contract values involve offshore maintenance, construction, and modification (MCM) as well as hook-up and commissioning (HUC) services in Sarawak, Petra Energy said. The contracts will last five years, with extension options of three plus two years, it noted. The contract with Petronas began on Sept 27, 2024 while its services to both JX Nippon Oil & Gas Exploration as well as ROC Oil was effective in Oct. The contract with SapuraOMV Upstream started on Jan 1, 2025. (The Edge)

Cuscapi: Asia Internet, private vehicle of MyEG's TS Wong, ceases to be substantial shareholder. Asia Internet Holdings has ceased to be a substantial shareholder in Cuscapi after paring 5.29% stake in the point-of-sale systems provider. Asia Internet is a private vehicle of Wong Thean Soon, the MD MyEG Services. Also known as TS Wong, he still personally holds 21.96% in Cuscapi, making him the biggest shareholder of Cuscapi. The disposal on Dec 26 involved 50m Cuscapi shares. The value of the transaction was not disclosed though the block of shares would be worth RM10.25m based on Cuscapi's closing price of 20.5 sen on Dec 26. (The Edge)

MFM: JV granted leave for judicial review of MyCC decision. Malayan Flour Mills' JV, Dindings Poultry Development Centre SB (DPDC), has been granted leave by the High Court on Jan 2, 2025, to judicially review the Malaysia Competition Commission's decision. The review concerns the Competition Appeal Tribunal's (CAT) ruling on a stay. "The High Court has also granted an ad interim stay pending the determination of the stay application. The inter parte hearing of the stay application has been fixed on April 8, 2025," MFM said. The judicial review follows DPDC's challenge to CAT's decision, which rejected its request for a stay on a RM70m penalty imposed by the MyCC for alleged price-fixing cartel activities. (StarBiz)

Velocity Capital: New largest shareholder Fam Chee Way joins its board as ED Tan Yip Jiun resigns. Velocity Capital Partner has made its new largest shareholder Datuk Fam Chee Way its non-independent and non-executive director. On the same day, executive director Tan Yip Jiun resigned from his post "to pursue other interests", according to the hauling and money lending firm's bourse filings. His resignation comes a day after he disposed of his entire 12.17% stake in the company to Fam. Fam, who has acquired another 16.61% stake in Velocity Capital from Datuk Liu Han Ming, now holds a 28.79% stake in the group. (The Edge)

MARKET UPDATE

The KLCI might open higher today after Wall Street snapped out of its holiday-season funk on Friday. The S&P 500 rallied 1.3% for its first gain since Christmas and its best day in nearly two months. Strength for Big Tech stocks helped it break a five-day losing streak, its longest since April, and trim its loss for the week to 0.5%. The Dow Jones Industrial Average rose 339 points, or 0.8%, and the Nasdaq composite leaped 1.8%. Nvidia was the strongest force lifting the market after dashing 4.5% higher. Other companies caught up in the craze around artificial-intelligence technology also rose, despite criticism that their stock prices have already vaulted too high. Super Micro Computer, which sells servers for AI and other uses, jumped 10.9%, and Palantir Technologies climbed 6.3%. The threat of Trump's tariffs has also hurt stock markets overseas. For China, it's compounded worries about the world's second-largest economy, which is already contending with a struggling property market and other challenges. Stocks dropped 1.6% in Shanghai to bring their loss for the week to 5.6%, though they climbed 0.7% in Hong Kong to trim their weekly loss to 1.6%. European stock indices also fell. South Korea's Kospi index jumped 1.8% after the acting president and finance minister, Choi Sang-mok, promised to do more to stabilize the economy. The country is in the midst of a political crisis that has seen two heads of state impeached in under a month. Back home, the KLCI dropped 3.41 points or 0.21% to 1629.46.

Source: PublicInvest Research - 6 Jan 2025