HEADLINES

Economy

US: New home sales exceed expectations; rising supply curbs house price growth. Sales of new US single-family homes increased more than expected in Dec, further evidence that housing market activity regained some momentum at the end of 2024, though rising mortgage rates remain a constraint. The report from the Commerce Department also showed the rebound in home sales in Nov was much stronger than initially estimated. It added to data this month that showed single-family housing starts and building permits increased to a 10-month high in Dec, while sales of previously owned houses also rose to the highest level since Feb. "New home sales in Dec wraps up a solid year for newbuild demand in an otherwise stagnant housing market," said Thomas Ryan, North America economist at Capital Economics. "We expect new home sales to continue to grind higher this year. (Reuters)

EU: German business sentiment unexpectedly improves in Jan. German business morale unexpectedly improved in Jan thanks to a more positive assessment of the current economic situation, a survey showed, although analysts said many companies remain pessimistic with uncertainty rife ahead of elections. The Ifo institute said its business climate index increased to 85.1 in Jan from 84.7 in the previous month. Analysts polled by Reuters had forecast a reading of 84.7. The current conditions index rose to 86.1 in Jan from 85.1 in Dec, while the expectations index fell slightly to 84.2 from 84.4. Although the assessment of the current situation had improved, companies remain anxious about an uncertain future. (Reuters)

EU: Eurozone's lacklustre growth set to keep ECB on rate-cut path. The euro-area economy's sub-par performance is convincing the ECB that it can further loosen the shackles on growth by lowering interest rates for a fourth straight meeting this week. Hours before policymakers in Frankfurt announce their decision on borrowing costs, will probably show gross domestic product rose by just 0.1% in the 4Q, down from 0.4% in the third, according to a Bloombergpoll. Business surveys released last week by S&P Global generated some hope that a small revival may be feasible. But officials, increasingly confident that inflation is headed back to 2%, won't be deterred particularly as uncertainty, not least from the return of Donald Trump as the US president, casts a shadow over firms and households. (Bloomberg)

UK: Private sector expects activity to decline, CBI. UK private sector firms forecast another sharp fall in activity over the next three months, latest Growth Indicator from the Confederation of British Industry showed. The pessimism was widespread across the private sector. In the service sector, a net 20 percent of respondents forecast a fall in activity and a 19% of manufacturers expect a decline in output over three months to April. The disappointing outlook came as private sector activity fell again in the three months to Jan. The balance stood at -23% compared to -21% in the three months to Dec. Activity has been flat or falling since Aug 2022, the survey showed. "After a grim lead-up to Christmas, the New Year hasn't brought any sense of renewal, with businesses still expecting a significant fall in activity," CBI Interim Deputy Chief Economist Alpesh Paleja said. (RTT)

China: Jan manufacturing activity unexpectedly contracts, hits five-month low. China's manufacturing activity unexpectedly contracted in Jan, an official factory survey showed, its weakest since Aug, keeping alive calls for stimulus in the world's second-largest economy. The official purchasing managers' index (PMI) contracted to 49.1 in Jan from 50.1 in Dec, below the 50-mark separating growth from contraction and missing a median forecast of 50.1 in a Reuters poll. China's USD18tn economy hit the government's growth target of "around 5%" over 2024 but in a lopsided fashion, with exports and industrial output far outpacing retail sales and unemployment remaining elevated. US President Donald Trump's threat to impose a 10% punitive duty on Chinese imports on 1 Feb to push Beijing to clamp down on trafficking of the chemical precursors of fentanyl risks exposing how reliant its economy is on exports for growth. China's trade surplus reached almost USD1tn last year, as producers looked to shift stocks overseas to counter weak domestic demand. (Reuters)

China: Industrial profits fall 3.3% in 2024, third year in the red. Profits at China's industrial firms fell for a third straight year in 2024, official data showed, underlining the urgency for policymakers to step up support for an economy facing tariff threats from the new Trump administration. Industrial profits grew 11% in Dec from the same month last year, following a 7.3% drop in Nov, according to National Bureau of Statistics (NBS) data. For the whole year, earnings at industrial firms dropped 3.3%, extending a 4.7% decline in the Jan-Nov period, NBS data showed. That compares with a 2.3% decline in 2023. China's GDP grew 5% last year, reaching the official target, following extensive government stimulus measures. But the economy has been beset by a stuttering property market, flagging domestic demand and fragile business confidence. (Reuters)

Thailand: Thai finance chief renews push for rate cuts and weaker baht. Thailand's Finance Minister Pichai Chunhavajira made his latest pitch for the central bank to cut borrowing costs and make the baht "more competitive" to boost the country's key exports and tourism sectors. "Exports rely on foreign exchange rate. Any measures on inflation or rates should ensure we won't lose competitiveness against other currencies," the finance official told a forum in Bangkok. Gross domestic product (GDP) probably expanded 2.6%-2.7% in 2024, he said ahead of data due 17 Feb, with growth last quarter likely hitting 3.5%. While he expects GDP growth this year to quicken to 3%-3.5%, that's still much slower than the target expansion pace of most of its neighbours, especially Vietnam, whose premier is aiming for 8%. (Bloomberg)

Markets

Catcha Digital: to Diversify into IT solutions. Catcha Digital is diversifying its business to include information technology (IT) solutions, following the acquisition of a 51% stake in Nexible Solutions SB for RM11.4m. Nexible specialises in AI-powered sales automation and software development services. The move aims to reduce Catcha Digital's reliance on digital advertising, tapping into the growing global enterprise IT solutions market. (The Malaysian Reserve)

Crescendo: To sell Johor land for RM119.83m. Crescendo Corporation's (CCB) wholly owned subsidiary Panoramic Industrial Development SB has entered into a conditional sale and purchase agreement with Microsoft Payments (Malaysia) SB for the disposal of 9.12 hectares in Johor Bahru worth RM119.83m. The company said that the disposal is expected to be completed by the second quarter of 2027. (Bernama)

Solarvest: To acquire 30% stake in M&E firm for RM15.3m. Solarvest Holdings is acquiring a 30% of the equity interest in mechanical and electrical engineering solutions firm Kee Ming Electrical SB (KMESB) from shareholders Liew Kar Hoe and Liew Kar Wai, for RM15.3m. Solarvest said the proposed acquisition is in line with its five-year strategic roadmap (2022-2026) to maintain its market leader position in the solar engineering, procurement, construction and commissioning (EPCC) segment, through tuck-in acquisition to enhance its technical capabilities and solidifies its reputation for innovation, comprehensive services and market presence. (The Star)

DXN: 3Q profit up 18.4% on higher revenue from overseas markets, declares one sen dividend. DXN Holdings posted a 18.4% increase in net profit for the third quarter on higher revenue from the Latin American and Middle Eastern markets. Net profit for the third quarter ended 30 Nov 2024 (3QFY2025) rose to RM92.78m from RM78.36m in 3QFY2024, on the back of an 8% jump in revenue to RM486.09m versus RM450.29m a year earlier. DXN declared an interim dividend of one sen per share for the quarter, payable on 7 March. (The Edge)

SCIB: Demands RM19.7m from Awana JV over settlement breach. Sarawak Consolidated Industries Bhd's (SCIB) wholly-owned subsidiary, SCIB Properties SB (SCIBP), has issued a demand for RM19.7m in repayment from Awana JV Suria Saga SB. This action follows Awana's failure to fulfil repayment obligations under the Settlement Agreement (SA). The industrialised building systems specialist said this development highlights SCIB's commitment to upholding agreements and recovering the outstanding RM19.7m in the best interest of the company and its stakeholders. (The Star)

Bursa Malaysia: Reports RM310.1m PATAMI for FY2024, up 22.9%. Bursa Malaysia recorded a profit after tax, zakat, and minority interest (PATAMI) of RM310.1m for the financial year ended 31 Dec 2024 (FY2024), reflecting a 22.9% increase from RM252.4m in the previous year. The robust performance was driven by strong growth in the securities and derivatives markets and the data business, which contributed to a 27.8% rise in operating revenue to RM757.7m, up from RM592.8m in FY2023. (Business Times)

MARKET UPDATE

US markets fell sharply amid concerns about an artificial intelligence stock bubble, sparked by the emergence of the Chinese startup DeepSeek, which may have developed a competitive AI model at a fraction of the billions being spent by Silicon Valley. The S&P 500 declined 1.4%, and the Nasdaq Composite dropped 3.0%, and the Dow Jones Industrial Average rose 0.6%. European markets closed slightly lower as investors in the region reacted to a potential artificial intelligence breakthrough from China. The German DAX edged down by 0.5%, the French CAC 40 declined 0.2%, while the FTSE 100 ended virtually unchanged. Meanwhile, Asian markets ended mixed as investors reacted to China's manufacturing and industrial profit data. Tokyo's Nikkei 225 declined by 0.9%, the Hang Seng Index rose by 0.6%, while the Shanghai Composite remained virtually unchanged.

Source: PublicInvest Research - 28 Jan 2025