Market Review

The FBM KLCI experienced a sharp decline, closing at 1,600.8 (-0.9%). This drop was influenced by bearish sentiments am ng global markets, fueled by growing concer s over rising inflat on related to President-elect Donald Trump's proposed trade tariffs, as highlighted in the recent US Fed meeting minutes. Declines in heavyweights such as YTL (-8.2%), YTLPOWR (-6.9%), and GAMUDA (-3.9%) eighed down heavily on the index. Among he sectors, all the ector closed in red with the negative performance led by Construction (-3.3%), Health Care (-2.2%) and Technology (-2. %). All in all, the broader market turned more bearish, with 900 decliners significantly outpacing 231 gainers.

Economics

Malaysia: Sees GDP growth above 5% despite Trump tariff risks

Malaysia's growth is set to sustain last year's pace and exceed 5% in 2025, driven by foreign investments and government initiatives that can help shield the economy from global risks, two key cabinet ministers said in separate interviews. The country is already on a positive track, with last year's budget deficit likely below the target cap of 4.3% of gross domestic product (GDP), Second Finance Minister Datuk Seri Amir Hamzah Azizan told Bloomberg Television's Haslinda Amin in the administrative capital of Putrajaya late Wednesday. The government plans to narrow the gap further to 3.8% of GDP in 2025. (The Edge)

Malaysia: Aims to be conduit for electricity, talent, and supply chain diversification in 2025, says PM

Malaysia aims to become the region's conduit for electricity, talent, and supply chain diversification, while also strengthening its position in oil and gas, semiconductors, and Islamic finance this year, said Prime Minister Datuk Seri Anwar Ibrahim. "In 2025, we want to double down on our geographical centrality as a conduit for electricity, talent and supply chain diversification. "At the same time, we want to refine our expertise in oil and gas, semiconductor, and Islamic finance, so we can be global market leaders in each field. "It's our neutrality and openness for partnerships that make us a natural hub for all," Anwar said during the keynote address for the Malaysia Economic Forum 2025 on Thursday. Interconnecting power grids in the region is a key strategy in strengthening Southeast Asia's energy security, and Malaysia is poised to play a pivotal role in this endeavour, said Anwar. (The Edge)

US: Fed's Collins favours more patience, fewer rate cuts in 2025

Federal Reserve Bank of Boston president Susan Collins said she favours fewer rate cuts in 2025 than she had anticipated just a few months ago, following strong employment data and lingering inflation. Collins, who emphasised the need for patience, said her outlook for interest rates was consistent with the median projection from officials released after the Fed's December meeting. That pointed to two quarter-point reductions this year, down from four in September forecasts. "Over time, it will be appropriate for some more easing, but perhaps somewhat less than I might have thought back in September," Collins said Wednesday in an interview with Bloomberg News. "Taking the time to really patiently assess the data holistically - to be analytic and patient - seems to me very likely to be appropriate as we think about policy going into 2025." (Bloomberg)

Japan: BOJ sees widening wage hikes, signals chance of near-term rate hike

A wide range of Japanese firms see the need to continue raising wages due to structural labour shortages, the Bank of Japan (BOJ) said on Thursday, suggesting conditions for a near-term interest rate hike were continuing to fall into place. Some firms were already examining by how much they could raise pay this year, the central bank said, signalling a growing confidence that bumper wage hikes seen last year will continue. The BOJ has repeatedly said sustained; broad-based wage hikes are a prerequisite to tighten monetary policy further. (Bloomberg)

China: Consumer prices stall in 2024 on feeble demand

China's consumer prices barely rose in 2024 while factory-gate prices extended into a second straight year of declines, official data showed on Thursday, weighed by persistently weak domestic demand. A combination of job insecurity, a prolonged housing downturn, debt and tariff threats from the incoming administration of US President-elect Donald Trump has hit demand, even as Beijing ramps up stimulus. The full-year consumer price index (CPI) rose 0.2%, data from the National Bureau of Statistics showed, in line with the previous year's pace and well below the official target of around 3% for last year, suggesting inflation missed annual targets for the 13th straight year. (Reuters)

Malaysia: Ringgit on right track, a reflection of country's strong fundamentals, growth prospects

- BNM

Bank Negara Malaysia Governor Datuk Seri Abdul Rasheed Ghaffour expressed confidence in the ringgit's trajectory, citing strong economic fundamentals, narrowing interest rate differentials, and increased investor optimism driven by structural reforms. He noted that the ringgit began recovering in July 2024 as the US Federal Reserve initiated rate cuts, supported by government and central bank measures ensuring healthy two-way market flows, with daily forex volume rising to $18bn. However, he cautioned about potential short-term volatility amid shifting US policies under the incoming president. (Bernama)

US: Consumer borrowing drops on plunge in credit-card balances

In November, US consumer debt unexpectedly declined by $7.5bn, driven by a $13.7bn drop in credit-card balances, the largest since early in the pandemic, while non-revolving credit, such as auto and student loans, rose by $6.2bn. This suggests consumers are paying down high-interest credit-card debt, as borrowing rates remain near record highs, despite the Fed's 2024 rate cuts offering only modest relief. Meanwhile, stronger auto sales, boosted by lower loan rates and manufacturer incentives, contributed to the rise in non-revolving credit. (Bloomberg)

Companies

Public Bank: MGO for LPI Capital closes without fulfilling 50% acceptance level

Public Bank Bhd (PBB) failed to secure more than 50% of voting shares in LPI Capital Bhd, with only 49.57% of shares held by PBB and parties acting in concert as of the offer's closing on Jan 9. Consequently, the mandatory general offer (MGO) for remaining shares at RM9.80 per share lapsed, and all previously accepted shares will be returned to shareholders. The MGO followed PBB's earlier RM1.72bn acquisition of a 44.15% stake in LPI from the late Tan Sri Teh Hong Piow's estate and Consolidated Teh Holdings Sdn Bhd. (The Edge)

T7 Global: Gets a six-month contract from Hibiscus Petroleum

T7 Global Bhd has secured a six-month contract for maintenance, construction, and modification (MCM) services for Hibiscus Petroleum's production asset, with the option for a six-month extension. The work will be conducted offshore in the PM3 Commercial Arrangement Area between Malaysia and Vietnam. This is T7 Global's second MCM contract this week, following a recent award from Carigali Hess Operating Company. (The Edge)

Green Packet: Secures digital lending licence from Housing and Local Govt Ministry

Technology company Green Packet Bhd said its wholly owned Packet Interactive Sdn Bhd (PISB) has obtained a digital lending licence from the Ministry of Housing and Local Government. In a filing with Bursa Malaysia, Green Packet said the licence will enable PISB to expand its range of financial products and services. Same as PISB's existing money-lending licence, the new digital lending licence is valid until Aug 15, 2026. PISB's digital lending solutions are expected to introduce features such as flexible loan options, competitive interest rates, and enhanced security measures, to provide customers with a seamless borrowing experience while improving user satisfaction. (The Edge)

Parkson: Inks 10-year lease deal in Guizhou, China

Parkson Holdings Bhd's subsidiary, Liupanshui Parkson Retail Co Ltd, signed a 10-year tenancy agreement for a department store in Liupanshui, Guizhou province, China, with Guizhou Hanhua Real Estate Development Co Ltd, occupying 26,723 square meters of space. The agreement, valued at 46.3 million yuan (RM28.2m), will begin on January 1, 2027, and end on December 31, 2036. (The Edge)

Dialog: Secures US$235m final investment decision for Baram Junior Cluster Small Field Asset PSC

Dialog Group Bhd secured the final investment decision (FID) for its Baram Junior Cluster Small Field Asset Production Sharing Contract (PSC), valued at US$235m (RM1.02bn). Dialog Resources Sdn Bhd, a wholly-owned subsidiary of Dialog, holds a 70% stake in the PSC, while Petroleum Sarawak Exploration and Production Sdn Bhd holds 30%. The project aims for first gas production within two years, with financing through a mix of internal funds and/or external borrowings, aligning with Dialog's strategy to diversify and expand across various energy sectors. (The Edge)

Yinson: FPSO Atlanta in Brazil hits first oil

Yinson Production, the offshore business arm of Yinson Holdings Bhd, said on Thursday that its floating production storage and offloading (FPSO) vessel, FPSO Atlanta, has achieved first oil in Brazil. Yinson said it has successfully completed a 72-hour test, and final acceptance of the asset has been obtained from Brava Energia SA, one of Latin America's largest independent oil and gas producers, which is formerly known as Enauta Energia SA. The asset has now been officially delivered to Brava, Yinson said in a statement. FPSO Atlanta is the third asset in Yinson Production's fleet to operate in Brazil, following the deployment of FPSO Maria Quitéria in October 2024 and FPSO Anna Nery in May 2023. Yinson Production chief executive officer Flemming Grønnegaard highlighted the accomplishment showcases the group's commitment to delivering "exceptional operational performance" while prioritising sustainability and safety. (The Edge)

Source: Mercury Securities Research - 10 Jan 2025