Market Review

The FBM KLCI cooled off by -0.1% to 1,590.38 by following two days of gains as investors remained cautious amid mixed regional market performance. Among the index constituents, the top-performing stocks include AXIATA (+2.6%), SIME (+1.2%), PETD (+1.0%), and PCHEM (+0.9%). All sectors ended slightly in the red with minimal losses, except Telecommunication (+0.5%), Transportation (+0.4%) and Consumer (+0.3%). Overall, the broader market breadth turned negative with 444 gainers against 652 losers.

Economics

US: Biden approves US$567m in defence support for Taiwan, White House says

US President Joe Biden approved US$567m (RM2.3bn) in defence support for Taiwan on Sunday, the White House said, the latest move by the United States to boost the island’s military in the face of rising tensions with China. In a statement, the White House said Biden had delegated the Secretary of State, the authority "to direct the drawdown of up to US$567m in defence articles and services of the Department of Defense, and military education and training, to provide assistance to Taiwan”. (Reuters)

China: To cut existing mortgage rates by end of October

China's central bank said on Sunday it would tell banks to lower mortgage rates for existing home loans before Oct 31, as part of sweeping policies to support the country's beleaguered property market as the economy slows. Commercial banks should, in batches, reduce interest rates on existing mortgages to no less than 30 basis points (bps) below the Loan Prime Rate (LPR), the central bank's benchmark rate for mortgages, according to a statement released by the People's Bank of China (PBOC). It is expected to cut existing mortgage rates by about 50 bps on average. Across China, a slew of policies including reductions in down-payment ratios and mortgage rates have been introduced this year to support China's crisis-hit property market. (Reuters)

Malaysia: National Climate Change Policy 2.0 launched for transition towards low-carbon economy

The Ministry of National Resources and Environmental Sustainability on Monday launched the National Climate Change Policy (NCCP) 2.0, an updated policy that introduces a new framework for Malaysia’s transition towards a low-carbon economy. Minister Nik Nazmi Nik Ahmad said the NCCP 2.0 is an umbrella policy that ties together all climate initiatives, provides a clear pathway for governance, low carbon development, adaptation, climate financing and partnerships, as well as serves as the backbone for the drafting of Malaysia's very own Climate Change Act, which is expected to be completed early next year. Meanwhile, Nik Nazmi said Malaysia would prioritise several key global climate initiatives that are crucial to its participation in the broader United Nations Framework Convention on Climate Change negotiations during the 29th Conference of Parties (COP29) in Baku, Azerbaijan, from Nov 11 to 22. He said these include the New Collective Quantified Goal, implementation of Article 6 of the Paris Agreement on carbon market mechanism, the Global Goal on Adaptation, and the operationalisation of the Loss and Damage Fund. (Bernama)

Japan: Factory output falls, casting doubts about pace of economic recovery

Japan's factory output tumbled last month driven by typhoon-led disruptions in motor vehicle production and weak US sales, with the government and analysts cautioning about a subdued outlook that raises the hurdle for a solid economic recovery. Industrial output fell 3.3% in August from the previous month, data released by the Ministry of Economy, Trade and Industry (METI) on Monday showed, worse than a median market forecast for a 0.9% drop. "Taking into account overseas factors, it is difficult to expect a significant increase in production in the near future, and the pace of recovery will remain moderate," said Shungo Akimoto, market economist at Mizuho Securities. (Reuters)

US: Unveil first of two decisions on more solar tariffs on four SE Asian nations including Malaysia

US trade officials may this week impose new tariffs on solar panels from four Southeast Asian nations that American manufacturers have complained employ unfair subsidies that make US products uncompetitive. The announcement, due on Tuesday (Oct 1), is the first of two preliminary decisions the Commerce Department will make this year, in a trade case brought by Korea’s Hanwha Qcells, Arizona-based First Solar, and several smaller companies seeking to protect billions of dollars in investments in US solar manufacturing. The domestic producers argue that competition from cheap imports by Chinese companies operating in Malaysia, Vietnam, Thailand and Cambodia threatens US President Joe Biden’s goal to boost domestic manufacturing of clean energy technologies needed to combat climate change. Commerce’s decision will for the first time consider the impact of cross-border subsidies, for instance the Chinese government subsidising a manufacturer in Vietnam or elsewhere. (Reuters)

Companies

Aizo: Secures RM14.6m contract for infrastructure work

Aizo Group Bhd, formerly known as Minetech Resources Bhd has secured a RM14.6m contract to undertake external infrastructure works for a project in Serendah, Hulu Selangor, Selangor. In a statement, Aizo said the project will involve the execution and completion of external infrastructure works for the development. The contract is expected to commence on Aug 26, 2024 with completion date set on Aug 25, 2025, with Aizo overseeing all external infrastructure work to ensure timely completion to the highest standards. (The Star)

Jati Tinggi: Secures RM50.9m underground cable installation job in Cyberjaya

Jati Tinggi Group Bhd has secured a sub-contract worth RM50.9m for 132kV underground single circuit cable installation in Cyberjaya, Selangor. Jati Tinggi said the scope of work includes the supply and erection of power cables, fibre optic cables, jointing and termination, testing, commissioning and other ancillary activities. The project is expected to span over 22 months. (The Edge)

Critical Holdings: Wins RM82m contract from US-based multinational company

Critical Holdings Bhd's wholly owned subsidiary Critical M&E Engineering Sdn Bhd has been awarded an RM82m contract from a multinational company (MNC) headquartered in the US. In a filing with Bursa Malaysia, the mechanical, electrical and engineering solutions company said the contract is to undertake mechanical and electrical-related fit-out, cleanroom and interior design works for a three-storey office building, and a one-storey production and warehouse at Pasir Gudang, Johor Bahru. The contract works are expected to be completed over 16 weeks on project commencement, the filing read. (The Edge)

TCS: Secures RM117m construction contract from S P Setia

TCS Group Holdings Bhd has secured a contract worth RM116.6m from a subsidiary of S P Setia Bhd. It involves building and related infrastructure works for 561 units of affordable housing as part of the Setia Bayuemas project in Klang, Selangor. The building and infrastructure construction company said its wholly owned subsidiary, TCS Construction Sdn Bhd, had accepted the letter of award from I & P Kota Bayuemas Sdn Bhd for the project, according to its filing with Bursa Malaysia on Monday. (The Edge)

Samaiden: Secures RM52m solar PV power plant job

Samaiden Group Bhd has accepted a letter of award from Legasi Green Power Sdn Bhd to undertake, amongst others, the main contract works in relation to the development of a 14-megawatt alternating current large scale solar photovoltaic power plant in Sungai Petani, Kedah, worth RM52m. Samaiden said the scope of the main contract works includes the design, supply, delivery, installation, testing and commissioning in connection with the project. (The Star)

Plenitude: CEO resigns after 19 months at helm

Plenitude Bhd announced that its chief executive officer Lee Wee Kee has stepped down from his position effective immediately. In a bourse filing, the group said Lee's resignation was due to personal reasons. (The Edge)

Cape EMS: Executive director Lim Chue Wan resigns

Cape EMS Bhd said on Monday that its executive director Lim Chue Wan had resigned due to health reasons. Lim, 57, joined Cape EMS' board as the director of corporate, finance, and accounts in 2020, before taking on the role of an executive director in March 2022, the Johor-based electronics manufacturing services provider said in a bourse filing. (The Edge)

Kawan Food: Close China plant due to US tariff impact, limited room for expansion

Kawan Food Bhd said it is closing its manufacturing facility in China, due to the impact of US tariffs and limited room for expansion. In a filing with Bursa Malaysia on Monday, Kawan Food said the imposition of US tariffs on Chinese imports since 2018 had made it more competitive and efficient to export from the Pulau Indah factory. Apart from that, rapid urbanisation in the region surrounding the KFN factory has limited opportunities for future expansion, according to the group. “The closure of KFN will not have significant financial impact on the company, as its sales contribution was less than 5% of the company's [total], and the manufacturing operations have been underutilised since the imposition of US tariffs in 2018,” the group added. Following the closure of KFN in China, Kawan Food plans to expand the Pulau Indah factory by using equipment and machinery from the KFN facility, supplemented by investments in newer technology. Additionally, Kawan Food said it plans to realise the value of its land and buildings at the KFN site in China at a later date. (The Edge)

Source: Mercury Securities Research - 1 Oct 2024