HEADLINES

Economy

Global: IMF chief sees steady world growth in 2025, continuing disinflation. The International Monetary Fund (IMF) will forecast steady global growth and continuing disinflation when it releases an updated World Economic Outlook on Jan 17, IMF Managing Director Kristalina Georgieva told reporters. Georgieva said the US economy was doing "quite a bit better" than expected, although there was high uncertainty around the trade policies of the administration of President-elect Donald Trump that was adding to headwinds facing the global economy and driving long-term interest rates higher. (Reuters)

US: Inflation set to back Fed pause after robust jobs data. Underlying US inflation probably cooled only a touch at the close of 2024 against a backdrop of a resilient job market and steadfast economy, supporting the Federal Reserve's go-slow approach to further rate cuts. The consumer price index excluding food and energy is seen rising 0.2% in Dec after four straight months of 0.3% increases, according to the median projection in a Bloomberg survey of economists. The core CPI, a better snapshot of underlying inflation, is forecast to have risen 3.3% from a year earlier, matching readings from the prior three months. The annual figure suggests progress toward tamer inflation has essentially stalled, at a time when the labour market and demand show scant signs of distress. (Bloomberg)

US: Gensler cautions against weakening guardrails for retail traders. Outgoing SEC chair Gary Gensler has a word of caution for the next administration: be careful about messing with the guardrails that protect mom-and-pop traders. Going too far in rolling back disclosure requirements or broadening the definition of who qualifies as an "accredited investor" could harm the public, Gensler said. Critics have contended the accredited investor rule, which seeks to protect retail traders from potential risks in private investments, stifles growth. Project 2025, an initiative intended as a policy blueprint for the incoming Trump administration, calls for financial regulators to broaden the definition of an accredited investor or eliminate restrictions altogether. (Bloomberg)

US: Consumer inflation expectations jump to highest since 2008, says survey. US consumers' long-term inflation expectations jumped to the highest since 2008 on concerns about potential tariffs from the incoming Trump administration. Americans expect prices will climb at an annual rate of 3.3% over the next five to 10 years, up from the 3% expected last month, according to the University of Michigan's preliminary Jan survey released. They also see costs rising 3.3% over the next year, up 0.5 percentage point from Dec. As a result, the preliminary Jan sentiment index slipped to 73.2 from 74. The survey period includes responses from Dec 17 to Jan 6. "Nearly one-third of consumers spontaneously mentioned tariffs, up from 24% in Dec and less than 2% prior to the election," Joanne Hsu, director of the survey, said. (Bloomberg)

EU: Spain industrial output falls for first time in 4 months. Spain's industrial production declined for the first time in four months in November, the statistical office INE said. Industrial production logged an adjusted annual decline of 0.4% in Nov, following a 1.5% growth in Oct. This was the first decrease since July and also marked the biggest fall since March 2024. Among components of industrial output, capital goods and energy production plunged 2.8% and 1.9%, respectively. Meanwhile, consumer goods production grew 1.1% and intermediate goods output moved up 0.3%. On an unadjusted basis, industrial production fell 3.4%, reversing October's 6.5% expansion. (RTT)

Japan: Leading index declines in Nov. Japan's leading index as well as coincident index declined in November, preliminary data from the Cabinet Office showed. The leading index, which measures future economic activity, dropped to 107.0 in Nov from 109.1 in Oct. A similar lower reading was last seen in Aug. The score was forecast to drop less markedly to 107.2. Likewise, the coincident index that measures the current economic situation registered 115.3, down from 116.8 in the previous month. On the other hand, the lagging index improved to 108.7 in November from 107.5 a month ago. (RTT)

Markets

TNB (Outperform, TP: RM16.00): Unit to challenge RM291.55m tax bill for 2018. Tenaga Nasional's (TNB) subsidiary, TNB Western Energy (TNB WE), is challenging a RM291.55m tax assessment for 2018 issued by the Inland Revenue Board (IRB). TNB WE filed for a judicial review of the tax bill on Dec 31, 2024 upon receipt of the assessment notice dated Dec 10, 2024. The High Court granted an interim stay on the enforcement of the notice of assessment on Jan 9, 2025, while the judicial review process is ongoing. The leave hearing is set for April 14, 2025. (BTimes)

Sime Darby Property (Neutral, TP: RM1.45): Fully acquires Bandar Bukit Raja warehouses for RM232m. Sime Darby Property said it has fully acquired two modern double-storey logistics warehouses in Bandar Bukit Raja, Selangor for RM232m. The assets, previously owned by a 50:50 joint venture with a Japanese consortium, consolidates Sime Darby Property's ownership of the logistics assets, the company said in a statement. The warehouses have a combined net lettable area of about 700,000 square feet. (The Edge)

Metronic: Bags RM31m job to supply instrumentation systems for Sg Rasau Water Supply Scheme project. Metronic Global, which provides system integration services and integrated management systems, announced that its subsidiary, MAT JV SB, has been awarded a RM31m contract by Gamuda M&E SB to supply instrumentation systems for the Sungai Rasau Water Supply Scheme project. Under the agreement, MAT JV will undertake the supply, installation, testing, commissioning and maintenance of instrumentation systems. This is part of Metronic's expansion into the field of extra low voltage, industrial and building automation services. (The Edge)

Key Alliance: Proposes capital reduction to erase RM101.5m in losses. Key Alliance Group has proposed to consolidate its shares on a 30-to-one basis. The proposed share consolidation is part of its capital management plan to improve its capital structure and aims to reduce the volatility of the trading price for its shares, the company said. Based on its closing price of 0.5 sen on Jan 3, according to the filing, the shares could theoretically adjust to 15 sen post-consolidation. Upon completion, the group's share base would shrink to 122.61m shares from 3.68bn, with a share capital of RM193.39m. (The Edge)

Ame REIT: Unit to launch RM1bn sukuk wakalah programme. AME Real Estate Investment Trust (Ame REIT), through its special purpose vehicle, Ame REIT Sukuk SB, has announced the proposed establishment of an Islamic Medium Term Notes (Sukuk Wakalah) Programme of RM1.0bn in nominal value. The Sukuk Wakalah is based on the Shariah principle of Wakalah Bi Al-Istithmar. (StarBiz)

Uzma: Gets RM100m contract extension from PETRONAS Carigali. Uzma's subsidiary, Setegap Ventures Petroleum SB (SVP), has received a RM100m contract extension from PETRONAS Carigali SB (PCSB). Uzma announced that the contract extension is for the provision of coiled tubing and related services to PCSB, East Region. Uzma said the duration of the contract extension became effective on Dec 1, 2024, and remained valid for one year until Nov 30, 2025. The contract was originally awarded on Nov 2, 2015. The first and second extensions were granted on Nov 24, 2020, and Dec 7, 2022, respectively. (StarBiz)

MARKET UPDATE

The KLCI might open lower today after US stocks fell Friday on worries that good news on the job market may be too good and prove to be bad for Wall Street by keeping inflation and interest rates high. The S&P 500 tumbled 1.5% to close its fourth losing week in the last five. The Dow Jones Industrial Average dropped 696 points, or 1.6%, and the Nasdaq composite sank 1.6%. Stocks took their cue from the bond market, where yields leaped to crank up the pressure after a report said US employers added many more jobs to their payrolls last month than economists expected. Such strength in hiring is of course good news for workers looking for jobs. But it could also keep upward pressure on inflation by keeping the overall economy humming. That in turn could dissuade the Federal Reserve from delivering the cuts to interest rates that Wall Street loves. Lower rates can not only goose the economy but also boost prices for investments. MSCI's gauge of stocks across the globe fell 1.39% to 833.86. The Pan-European STOXX 600 finished down 0.84%, dragged down by utilities, consumer non-cyclical, and real estate stocks. Back home, the KLCI added 1.6 points or 0.1% to 1602.41.

Source: PublicInvest Research - 13 Jan 2025