Market Review

The FBMKLCI slipped to close at 1,609.0 (-0.2%) in subdued trading, with volume dr pping below three billion shares. The decline mirrored Wall Street's overnight weakness, as investors remained cautious h ad of this we k's key US inflation data, which is expected t play a pivotal role in shaping the Federal Reserve's rate cut decision on December 18. Among the index co stituents, PETGAS (-1.7%), QL (-1.6%) and MRDIY (-1.6%) are the top 3 unde performers. Sector-wise, the negative performance was l d by Utilities (-0.7%), Telecommunications & Media (-0.5%) and REIT (-0.4%). Nonetheless, the overall market breadth turned slight positive, with 534 gainers outweighing 513 losers.

Economics

Japan: Megabanks are flush with cash and hunting overseas deals

Japan's megabanks are awash in cash and eager to invest. Mitsubishi UFJ Financial Group Inc (MUFG), Sumitomo Mitsui Financial Group Inc and Mizuho Financial Group Inc are enjoying record earnings. Selling off cross-shareholdings is bringing in even more money. Even as they reward shareholders with buybacks and higher dividends, they are determined to fund overseas expansion. Their primary focuses are on the US and India, respectively the world's largest economy and the fastest-growing. While the banks have had a presence in the two countries for decades, this year has seen a fresh push in investment and hiring. Buying stakes in local companies also puts their excess funds to work as the banks are under pressure from the Tokyo Stock Exchange to boost their valuations. (Bloomberg)

China: Signals bolder stimulus for next year as Trump returns

China's top leaders signalled bolder economic support next year using their most direct language on stimulus in years, as Beijing braces for a trade war when Donald Trump takes office. President Xi Jinping's decision-making Politburo vowed to embrace a "moderately loose" monetary policy in 2025, signalling more rate cuts ahead and shifting from a "prudent" strategy that's held for 14 years. The 24-man body also vowed "more proactive" fiscal policy at its monthly huddle, according to the official Xinhua News Agency, raising expectations for Beijing to widen the fiscal deficit from 3% at the annual parliamentary session in March. That would open the door to more central government borrowing to shore up the faltering economy. (Bloomberg)

China: Exports slow sharply, imports shrink ahead of Trump tariffs

China's exports slowed sharply and imports unexpectedly shrank in November, in a worrying sign for the world's No 2 economy as Donald Trump's imminent return to the White House brings fresh trade risks. The disappointing trade figures follow other indicators showing patchy growth in November, suggesting Beijing needs to do more to shore up a faltering economy that is only likely to face further challenges next year. Outbound shipments grew 6.7% last month, customs data showed on Tuesday, missing a forecast 8.5% increase and down from a 12.7% rise in October. Of more concern for authorities, imports shrank 3.9%, their worst performance in nine months and dashing expectations for a 0.3% increase, keeping alive calls for more policy support to prop up domestic demand. Top leaders on Monday vowed to ramp up stimulus in 2025, shifting the language around China's monetary and fiscal settings to more accommodative wording in a bid to rev up demand and entice consumers back into spending. (Reuters)

Australia: Growing confidence on inflation sees jump in rate-cut bets

The Reserve Bank of Australia (RBA) held its cash rate at 4.35%, expressing growing confidence that inflation is moving towards its target, though risks remain. This shift in tone led traders to increase bets on interest rate cuts, with markets anticipating reductions starting in February and two cuts by May. Governor Michele Bullock noted mixed economic data, with signs of private sector weakness but improvements in supply-demand balance, and a slight rise in unemployment is expected. The RBA is also preparing to establish a new monetary policy committee in March, following amendments to the RBA Act. (Bloomberg)

Companies

Feytech: Partners Chinese firm to make car seats for Chery cars

Feytech Holdings Bhd on Tuesday said it is partnering a Chinese state-owned firm to design and manufacture automotive seats catering to Chery vehicles in Malaysia and abroad. Under a joint venture agreement, a new company will be set up with Feytech holding a 51% stake and Wuhu Ruitai Auto Parts Co Ltd the remaining 49%, according to a statement. The joint venture (JV) will be capitalised with RM6m initially, with an injection of RM7.7m a year later, it noted. "Through this JV, we will establish a new company dedicated to designing, manufacturing, and assembling automotive seats and components for both local production and export markets," Feytech chief executive officer Connie Go said at the signing ceremony on Tuesday. (The Edge)

Tropicana: Partners Banyan Group to develop first branded residences in Johor

Property developer Tropicana Corp Bhd on Tuesday signed an agreement with Singapore-based Banyan Group to develop the first branded residential development in Johor named Skypark Kepler. The development has a gross development value of RM2.1bn. As part of the RM80bn, 163-acre Lido Waterfront Boulevard township development by Tropicana Corp, the four-acre Skypark Kepler comprises 1,596 fully furnished serviced apartment units housed across two 54-storey buildings. There will be over 40 facilities provided. With layouts of one to three bedrooms, the units will have built-ups ranging from 436 to 807 sq ft. Prices start from RM790,000 or RM1,800 psf, and the residential project is expected to be completed in four to five years. (The Edge)

MN Holdings: Wins data centre project worth RM162.6m

MN Holdings Bhd has won a contract worth RM162.6m for design and building works at a hyperscale data centre in the southern region of Peninsular Malaysia. According to a bourse filing, the contract was awarded to MN Holdings' wholly-owned subsidiary Mutu Nusantara Sdn Bhd to undertake works involving the design, build and construction of a high-voltage main switching station (SSU) and consumer containerised SSU for a data centre. MN Holdings said its customer, whose name it did not disclose, is principally engaged in providing infrastructure for hosting, data processing services and related activities, wholesale of a variety of goods without any particular specialisation, and computer facilities management activities. (The Edge)

JHM: Bags contracts worth RM300m from Proton

Automotive lighting product manufacturer JHM Consolidation Bhd said its 52%-owned subsidiary JHM Dekai Auto Lighting Sdn Bhd has bagged contracts worth RM300m from Perusahaan Otomobil Nasional Sdn Bhd (Proton) to supply parts for specific Proton car models. In a filing with Bursa Malaysia on Tuesday, JHM said the supply of parts is expected to commence in the late third quarter of the financial year ending Dec 31, 2025 (FY2025) and will continue for a duration of five years. "The [contracts are] expected to contribute to the earnings of JHM Group over a period of five years commencing from FY2025," it added. (The Edge)

Power Root: Buys land in Johor for RM20m

Power Root Bhd said it is purchasing 3.5m square feet of agriculture land in Johor for RM20.0m in cash. "The proposed acquisition is expected to strengthen our vertical integration across the entire coffee value chain by enhancing our upstream capabilities, reduce reliance on external suppliers and mitigate the risk of potential raw material price fluctuations," Power Root told Bursa Malaysia on Tuesday. The group, through its wholly-owned subsidiary Power Root Support Services Sdn Bhd, is acquiring the land, located in the Mukim of Sedenak in Kulai district, from Ree Fong Agriculture Sdn Bhd. Power Root said the acquisition will be funded through internally-generated funds or debt financing. The purchase consideration, it said, was determined on a willing-buyer, willing-seller basis, after considering the prevailing market value of land in the area and the location of the land. (The Edge)

Mega First: Secures five-year concession extension for Don Sahong hydropower project

Mega First Corporation Bhd, which has added a fifth turbine generator unit to boost the power generation capacity of its Don Sahong hydropower project in Laos, said on Tuesday that it has secured a five-year extension to its 25-year concession for the project. Instead of ending on Sept 30, 2045, the project will now end on Dec 31, 2049, as the commercial operation date has been moved to Jan 1, 2025 from Oct 1, 2020, according to a statement from Mega First that was filed to Bursa Malaysia on Tuesday. Its 95%-owned unit Don Sahong Power Company Ltd, which owns and operates the project, has inked a supplemental concession agreement with the Government of The Lao People's Democratic Republic to change the commercial operation date of the project, which effectively gives rise to the extension. And instead of paying 5% of the revenue generated from the project as royalty each year throughout the concession period to the Laotian government, Don Sahong Power Company has now agreed to pay US$82.5m (RM365n) upfront, in lieu of the annual royalty. (The Edge)

SP Setia: To launch single-storey terraced homes in Kepala Batas, Penang

S P Setia Bhd is launching the first sub-phase of Setia Suria, the latest terraced homes at its Setia Fontaines township development in Kepala Batas, Penang, this weekend. Setia Suria has a total gross development value of RM280m. The 49.55-acre Setia Suria comprises 333 single-storey terraced homes with built-ups ranging from 1,189 to 1,221 sq ft. Each unit will have three bedrooms and two bathrooms, with indicative prices starting from RM430,000. (The Edge)

Skyworld: Signs agreement to develop Malaysia's largest affordable housing project in Penang

SkyWorld Development Bhd said on Tuesday that it has signed an agreement with the Penang state agencies to jointly develop the country's largest affordable housing project that is valued at RM13bn. Under the joint development agreement signed with the Penang Development Corporation (PDC) and its subsidiary PDC Properties, the project aims to deliver over 38,000 Rumah Mampu Milik Madani (RMM) and Rumah Bakat Baru Madani (RBB) homes priced at between RM225,000 and RM420,000. Targeting the M40 (Middle 40% income) group or those with household income below RM11,800 a month, the first phase will be launched in 2026, and the entire project spans 10 years. (The Edge)

PGF Capital: Indirect unit acquires land in Kulim Hi-Tech for RM12.7m

Main-market listed PGF Capital Bhd's indirect joint venture company Nexel Development KHTP Sdn Bhd has entered into a sale and purchase agreement to acquire two parcels of freehold land in Kulim Hi-Tech Park, Kedah from Kulim Technology Park Corporation Sdn Bhd for RM12.7m. Nexel Development is a wholly-owned subsidiary of Nexel Group Sdn Bhd, a joint venture company in which PGF Capital holds a 50.1 per cent stake, alongside Penang-based property developer Malvest Group Sdn Bhd with a 10.0 per cent stake, and three individuals affiliated with Malvest holding the remaining shares. (The Star)

Sapura Energy: Unit completes divestment of 50% stake in SapuraOMV

Sapura Energy Bhd has announced that its wholly-owned subsidiary Sapura Upstream Assets Sdn Bhd has completed the sale of its 50% equity interest in SapuraOMV Upstream Sdn Bhd to TotalEnergy Holdings SAS. "The completion of this divestment marks a key milestone in the company's broader reset plan for the long-term sustainable and viable future of Sapura Energy Group," said Sapura Energy Interim chairman Shahin Farouque Jammal Ahmad in a statement. (The Star)

Sunview: Unit bags two PV solar contracts worth RM196.1m

Sunview Group Bhd via its wholly-owned subsidiary Fabulous Sunview Sdn Bhd has secured two contracts for two ground-mounted photovoltaic (PV) solar generation facilities in Sungai Petani in Kuala Muda, Kedah, for a combined RM196.1m. In a statement the group said the contracts, awarded by Dayasinar Energy Sdn Bhd and Solarscape Energy Sdn Bhd are valued at RM98.3mil and RM97.8m, respectively. (The Star)

Source: Mercury Securities Research - 11 Dec 2024