HEADLINES

Economy

US: Core inflation eases for first time in six months. US consumer prices rose in Dec by less than forecast after months of faster underlying inflation persuaded the Federal Reserve to signal a pause in interest-rate cuts. The so-called core consumer price index (CPI) - which excludes food and energy costs - increased 0.2% after rising 0.3% four straight months, Bureau of Labor Statistics figures showed. Cheaper hotel stays, a smaller advance in medical care services and relatively tame rent increases helped restrain the December figure. While the easing in the CPI is welcome, Fed officials would need to see a series of subdued readings after months of elevated prints to reassure them that inflation progress has resumed. (Bloomberg)

EU: German GDP shrinks for second straight year before election. Germany's economy shrank for a second consecutive year in 2024 and is unlikely to grow much in 2025, laying bare the challenge for the country's new government once snap elections are held in Feb. GDP fell by 0.2% after dropping 0.3% in 2023, the statistics office said. It's only the second time since 1950 that output has contracted for two years in a row. The struggles of the continent's largest economy are an overriding theme of an election that many hope will bring more growth-oriented policies capable of helping drag the 20-nation Eurozone out of its own rut. (Bloomberg)

EU: European hiring slowdown prompts profit warnings from UK recruiters. British recruiters issued profit warnings this week, saying economic and political jitters across Europe slowed permanent and temporary hiring by firms, and warned that conditions would likely remain subdued in the near term. Financial and political upheaval in markets including France, Germany, and the UK has led employers to limit hiring and discouraged people from changing jobs. That, coupled with lower unemployment levels, has led recruiters to put out gloomy forecasts and profit warnings. (Reuters)

EU: Eurozone industrial production grows 0.2%. Eurozone industrial production expanded for the second straight month in Nov, figures from Eurostat revealed. Industrial output posted a monthly increase of 0.2% in Nov, the same pace as in Oct. Economists had expected a slightly higher growth of 0.3%. The overall upward trend was mostly driven by the 1.5% growth in durable consumer goods and the 1.1% increase in the energy goods output. (RTT)

UK: Slowing inflation strengthens calls for BoE rate cuts. The unexpected softening of UK consumer price inflation at the end of 2024 added expectations for more interest rate reductions by the BoE this year. The consumer price index registered an annual increase of 2.5% in Dec, weaker than the 2.6% gain in Nov, the Office for National Statistics said. The rate was expected to remain unchanged at 2.6%. The CPI climbed 0.3% MoM, following a 0.1% rise in Nov. Prices were expected to gain 0.4%. Excluding energy, food, alcohol, and tobacco, core inflation weakened to 3.2% in Dec from 3.5% in Nov. (RTT)

UK: House prices post fastest growth in almost two years. UK house prices increased at the fastest annual pace in almost two years, according to official data, after rising incomes and a rush to beat a tax deadline brought buyers into the market. The average price of home rose 3.3% to EUR289,707 (USD354,510 or RM1.6m) in the year through Nov, the Office for National Statistics (ONS) said. That's up from 3% the month before and the highest rate since Feb 2023. "The annual rate of house price growth once again points to the property market's resilience during a period of significant uncertainty brought on by a change in government and an elevated cost of borrowing," said Tim Parkes, the chief executive officer of RAW Capital Partners. (Bloomberg)

South Korea: Household loans fall, easing debt concerns for BOK. South Korea's bank loans to households fell for the first time in nine months, helping relieve concerns about financial imbalance for the nation's central bank that is facing a tough call on interest rates this week. Loans dropped by KRW400bn (USD274m or RM1.23bn) to KRW1,141trn won in Dec, after they rose by KRW1.9trn won in the previous month, according to data released by the Bank of Korea (BOK). (Reuters)

Indonesia: Central bank delivers surprise rate cut to support growth. Indonesia's central bank unexpectedly cut policy rates, resuming its monetary easing to prop up growth in Southeast Asia's largest economy despite financial market volatility that has sharply weakened the rupiah currency. Bank Indonesia (BI) cut the benchmark seven-day reverse repurchase rate by 25 bps to 5.75%, its first cut since Sept. The benchmark is now at its lowest in over a year. All 30 economists polled by Reuters had expected no change in rates, citing pressure on the rupiah as the US dollar climbs. (Reuters)

Markets

MAHB: Khazanah-EPF consortium extends deadline for MAHB takeover bid again to Jan 24 now. Khazanah-EPF consortium Gateway Development Alliance (GDA) has extended the closing date for its takeover offer for Malaysia Airports Holdings or MAHB to Jan 24 from Jan 17. This is the second time that GDA has extended the deadline, which was initially set as Jan 8. Besides the extended closing date, all other details, terms and conditions of the takeover offer as set out in the initial offer document, including the offer price of RM11 per share, and the acceptance condition of 90% of the total issued MAHB shares, remain unchanged. (The Edge)

SCBUILD: Consortium wins contract to develop 4MW solar project in Perlis. SC Estate Builder announced that its joint venture with Anjung Meriah SB has been shortlisted by the Energy Commission to develop a four-megawatt (MW) large-scale solar photovoltaic project in Arau, Perlis. The JV, in the form of a consortium between Anjung Meriah and SC Estate's wholly owned subsidiary SC Estate Construction SB (SCEC), is 40%-owned by SCEC and 60% owned by Anjung Meriah. SC Estate's deputy chairman Kuay Jeaneve controls Anjung Meriah with a 97.18% stake. (The Edge)

Southern Score: Unit secures RM78m contract. Southern Score Builders' (SSBB) wholly-owned subsidiary, Southern Score SB (SSSB) has bagged a contract from Seribu Megah SB to undertake a proposed upgrading works on a detention pond in Kuala Lumpur worth RM78.0m. The company said the commencement date of the project shall be on Jan 15, 2025, to be completed on Jan 14, 2026. In a separate statement, SSBB executive director and chief executive officer Gan Yee Hin said that this contract will bring the company's outstanding order book to RM1.3bn. (BTimes)

KJTS: Inks JV with Singapore firm to operate cooling and mobile facility maintenance services. Building support services firm KJTS Group is planning to operate two businesses in Singapore, involving cooling services and mobile facility maintenance services. The group's wholly owned unit KJ Technical Services SB signed an agreement with Singapore-based Cyclect Investments Pte Ltd, to set up a 49:51 JV company for the businesses, according to a bourse filing. The cooling services will be the primary business for the JV company, while mobile facility maintenance services will be the secondary business. (BTimes)

Sunview: To explore developing off-grid solar power plant in Chuping. Sunview Group's 60%-owned indirect subsidiary Sirage Energy SB has partnered with Sirage Skyvast Holdings SB to explore collaboration to undertake a solar power generation plant for an off-grid technology park, Perlis Advance Tech Park (PATP) located in Chuping, Perlis. According to the heads of agreement, both parties intend to develop, construct, and operate a solar power generation plant in PATP, and will undertake feasibility and viability studies. (The Edge)

IPO: Colform aims for RM41m from its IPO. Colform Group aims to raise RM41.19m from its IPO on the ACE Market of Bursa Malaysia to expand its steel manufacturing and installation operations. Following the launch of its prospectus, the steel and building material specialist based in Sabah shared its plans for the proceeds it aims to raise via an issuance of 14.42m shares at 36 sen each. (StarBiz)

MARKET UPDATE

A global equities gauge rallied while US Treasury yields fell after data showed core US inflation rose less than expected in December, raising hopes that the Federal Reserve could ease rates further. US Bureau of Labor Statistics data showed the consumer price index rose in line with expectations at an annual rate of 2.9% in December, from November's 2.7%. But core inflation, which excludes food and energy prices, rose by 3.2%, which was below forecasts for 3.3%. Responding to these better-than-expected data, the Dow Jones rose 1.6% while the S&P 500 and Nasdaq surged 1.8% and 2.4% respectively. Meanwhile, oil prices rallied with support from a large draw in US crude stockpiles and potential supply disruptions from new US sanctions on Russia. But oil gains were limited as US and Qatar said negotiators reached a deal to end the war in Gaza between Israel and Hamas, after 15 months of bloodshed. European markets closed higher as well on cooler-than-expected inflation prints from the US. The German DAX, French CAC and UK FTSE advanced 1.5%, 0.6% and 1.2% respectively. In Asia, markets were mixed following Wall Street's performance ahead of the US inflation data. Nikkei 225 and Shanghai Composite edged lower by 0.1% and 0.4% but Hang Seng Index was up 0.3%. KLCI continued its downward trajectory, falling by 14.34 points to 1,562.12, though we expect it to reverse losses and trade higher today following the rallies in the US and European markets.

Source: PublicInvest Research - 16 Jan 2025