HEADLINES

Economy

US: Consumers expect higher inflation in next few years: NY Fed Survey. US consumers' inflation expectations for the next three years increased sharply in Dec, while unemployment concerns were mixed, results of a monthly survey by the Federal Reserve Bank of New York showed. Median inflation expectations for the one-year horizon were unchanged at 3.0% but they increased to 3.0% from 2.6% for the three-year horizon. Price growth expectations for the 5-year horizon declined to 2.7% from 2.9%. The monthly University of Michigan survey showed that the year-ahead inflation expectations soared to 3.3% in Jan from 2.8% in Dec, reaching the highest level since May 2024. The UoM survey also showed that long-run inflation expectations surged to 3.3% in Jan from 3.0% in Dec. (RTT)

EU: More ECB policy easing in cards amid risks, Lane says. The European Central Bank (ECB) is likely to reduce interest rates further, in order to ensure it delivers on its price stability mandate, according to chief economist Philip Lane. "Probably more monetary easing is going to come, in order to make sure the European economy grows," he told a conference in Hong Kong. Without further adjustments to the policy stance, "delivering on our inflation target would be at risk". ECB policymakers are determining how quickly and how far to lower borrowing costs in 2025, after four quarter-point moves last year. While easing is likely to continue in a similar fashion, some officials have said a larger 50 bps cut shouldn't be excluded due to the plethora of risks facing Europe's stuttering economy. (Bloomberg)

EU: Swiss consumer confidence strengthens in Dec. Swiss consumer confidence strengthened notably in Dec from the last year, monthly survey results from the State Secretariat for Economic Affairs, or SECO, showed. The consumer sentiment index rose to -30.3 in Dec from -44.4 last year. All four sub-components of the index improved from the last year's level. The economic outlook indicator advanced moderately to -23.2 from -28.5 a year ago. Meanwhile, the past financial situation sub-index registered a sharp rebound in Dec, to -44.9 from -63.5. Likewise, the financial outlook index hit -25.1, up from -45.7 in the prior year. The indicator measuring the time to make major purchases reached -28.1 compared to -39.8 in the previous year. (RTT)

UK: Spike in UK borrowing costs raises specter of public spending cuts. The march higher in UK government bond yields since the launch of the Labour government's debut budget plan in Oct sparked widespread concern last week, as borrowing costs rose to breach numerous decade highs. The prospect of public spending cuts or further tax rises came into focus last week, as 30-year gilt yields hit their highest level since 1998. Despite initially falling after Labour's election victory in July, 2-year gilt yields have also climbed back above 4.5%, while the 10-year yield reached levels not seen since 2008. Waning investor confidence in the UK was particularly highlighted by a concurrent fall in sterling, which hit its lowest level against the US dollar since Nov 2023. Borrowing costs are also rising in the euro area and the US, and economists point out that the UK is being weighed on by external factors including the return of Donald Trump to the White House and expectations for broadly higher interest rates than previously expected this year. (CNBC)

China: Exports accelerate amid trade risks, imports surprise. China's exports gathered pace in Dec, while imports recovered, closing out the year on a positive note as the world's second-largest economy braces for mounting trade risks with the incoming US administration. US President-elect Donald Trump, set to return to the White House next week, has proposed hefty tariffs on Chinese goods, sparking fears of a renewed trade war between the two superpowers. Adding to the challenges, unresolved disputes with the European Union over tariffs of up to 45.3% on Chinese electric vehicles threaten to hinder China's ambitions to expand its auto exports. "Trade frontloading became more visible in December as a result of both Chinese New Year effects and Donald Trump's inauguration," said Xu Tianchen, senior economist at the Economist Intelligence Unit. The festival runs from Jan 28 to Feb 4 this year. "Import growth could be underpinned by stockpiling of commodities like copper and iron ore, as part of (China's) 'buy low' strategy," he added. (Reuters)

India: Inflation eases to 5.22%, lowest in 4 months. India's inflation eased further in Dec to the lowest level in four months amid a slowdown in food prices, data from the National Statistical Office showed. Consumer price inflation softened slightly to 5.22% in Dec from 5.48% in Nov. Economists had expected inflation to slow to 5.30%. In the same period last year, inflation was 9.53%. Further, consumer price inflation continued to remain within the RBI's medium-term target of 2-6%. Food inflation moderated to 8.39% in Dec from 9.04% in the previous month. The downward trend in food costs was mainly due to a significant decline in the prices of vegetables, pulses and products, sugar and confectionary, personal care, and cereals and products. (RTT)

Markets

Yinson: Nears deal with investors including Abu Dhabi for USD1bn funding. Energy infrastructure firm Yinson Holdings is close to signing up investors for a funding round in its unit that makes equipment used by the offshore oil and gas industry, according to people with knowledge of the matter. Abu Dhabi Investment Authority, British Columbia Investment Management Corp. and RRJ Capital will likely subscribe to USD1bn in redeemable convertible preference shares as soon as this week, the people said, asking not to be identified because the process is private. The trio is also expected to subscribe to another USD500m at a later, unspecified date. (StarBiz)

Solarvest: Buys land for RE projects in Kedah for RM19.9m. Solarvest Holdings is acquiring three plots of land in Kedah for RM19.99m cash to secure strategic land for renewable energy asset development projects. The solar photovoltaic provider's subsidiary Atlantic Blue SB has entered into two separate sale and purchase agreements with Aziho Trading SB to purchase the plots measuring 48.86ha in total in Mukim Gurun in Kuala Muda. (The Edge)

SCIB: RM162m civil servants housing project in Perak falls through after developer fails to meet condition. Sarawak Consolidated Industries announced that the RM162m contract to build civil servants housing project in Perak that it secured from Awana JV Suria Saga SB as part of a debt settlement has fallen through after the developer failed to fulfil a key condition precedent within the stipulated time frame. The condition, as stipulated under a settlement cum appointment of contractor agreement (SA) signed between the parties in April 2024, was for a nominee from SCIB be appointed to Awana's board of directors within the conditional period. (The Edge)

Hextar Healthcare: Disposes of industrial land for RM11.9m. Hextar Healthcare's indirect wholly-owned subsidiary Rubberex Alliance SB is selling two parcels of vacant industrial land in Sungai Terap, Kinta in Perak to Jutanaga SB for RM11.9m. In a filing with Bursa Malaysia, the company said the two parcels, measuring a combined 48,099 sq meters (12,839 sq m and 35,260 sq m), had a net book value of RM11.1m as of Dec 31, 2024. (StarBiz)

Sapura Energy: Gets approval from creditors for extra terms of restructuring scheme. Sapura Energy has obtained approval for additional terms of its proposed restructuring scheme, known as the approval-in-principle (AIP), from MCF Financiers. This follows confirmation from the Corporate Debt Restructuring Committee (CDRC) on Jan 11. MCF Financiers represent at least 75% in value of the multi-currency financing facilities. Sapura Energy and the MCF Financiers have been engaged in CDRC-mediated negotiations since September 2022 to reach an accord on the restructuring scheme. (BTimes)

Kimlun: Disposes of land for RM55m. Kimlun Corp's wholly- owned subsidiary, Kitaran Lintas SB has entered into a sale and purchase agreement with KT Techpark SB for the disposal of 29 freehold land lots measuring 56.51 hectares in Kota Tinggi, Johor. The construction group said the deal was for a cash consideration of RM55m, while the audited net book value of the land was RM34.38m as at December 31, 2023. The land has oil palm trees and they own the right to harvest the fruits to a harvester. It was previously purchased for RM34.38m in May 2015. (StarBiz)

MARKET UPDATE

The KLCI might open flat today after US stock indices were split on Monday as gains for oil-and-gas producers helped offset drops for Nvidia and other Big Tech companies. The S&P 500 rose 0.2% after erasing an earlier fall of 0.9%. The Dow Jones Industrial Average climbed 358 points, or 0.9%, while the weakness for Big Tech stocks dragged the Nasdaq composite to a loss of 0.4%. Stocks have been under pressure the last month, and the S&P 500 is coming off its fourth losing week in the last five as traders cull expectations for how much relief the Federal Reserve may deliver this year through lower interest rates. Such cuts would give the economy a boost, and the US stock market ran to repeated records last year on the assumption that more are coming after the Fed began lowering rates in September. But inflation has remained above the Fed's 2% target, and recent reports have suggested a still-solid US economy doesn't need much help. Questions are growing about whether the Fed will deliver even a single cut in 2025. The strong reports on the US economy have helped push yields higher. So have worries that tariffs and other policies possibly coming from President-elect Donald Trump could boost inflation along with economic growth. A report coming on Wednesday could offer the next spark for the bond market. That's when the government will deliver the latest monthly update on inflation that US consumers are feeling. Economists expect it to show inflation accelerated a touch to 2.8% in December from 2.7% in November. In stock markets elsewhere, indices fell across most of Europe and Asia. Stocks sank 1% in Hong Kong and 0.2% in Shanghai, even though China reported its exports grew at a faster pace in December than expected. Factories were rushing to fill orders to beat higher tariffs that Trump has threatened to impose once he takes office. Back home, the KLCI ended down by 16.82 points or 1.05% to 1585.59.

Source: PublicInvest Research - 14 Jan 2025