HEADLINES

Economy

US: Fed's Kashkari, sees more modest rate cuts ahead for US economy. US Fed Bank of Minneapolis President Neel Kashkari said more rate cuts likely lie ahead for the central bank as the 2% inflation target looms into sight. "As of right now, it appears likely that further modest reductions in our policy rate will be appropriate in the coming quarters to achieve both sides of our mandate," Kashkari said in a speech delivered before a conference held by the Central Bank of the Argentine Republic. He added, "ultimately, the path ahead for policy will be driven by the actual economic, inflation and labour market data." Kashkari said that the current stance of monetary policy, with the federal funds rate range between 4.75% and 5.00%, remains restrictive of growth, although by how much is unclear. He said the Fed is "in the final stages of bringing inflation down to our 2% target," while noting recent strong job market data shows the labor sector remains strong and is not on the verge of a rapid slowdown. (Reuters)

EU: German economy likely still weak in Q3, says econ ministry. Current economic indicators point to continued weakness in the German economy in the past quarter, the economy ministry said in its monthly report. "The weak economic phase is likely to continue in the second half of 2024 before growth momentum gradually picks up again in the coming year," said the report. The federal statistics office is scheduled to release preliminary data for 3Q GDP at the end of this month. Recovery in Europe's largest economy will be initially driven by private consumption picking up again, before exports increase over the course of the year as foreign demand picks up and there is a trend reversal in investment growth, it added. (Reuters)

EU: Eurozone’s cooling jobs market feeds calls for faster ECB cuts. Cracks are finally appearing in the eurozone’s labour market after years of unexpected resilience, spurring the ECB to lower interest rates more speedily. Despite still record-low joblessness following the inflation shock and a struggling economy, policymakers see signs of a shift that’s helped persuade them to back another reduction in borrowing costs this week. While lacking the dual mandate through which the Fed targets both price stability and full employment, a jolt to Europe’s jobs market can nevertheless have a significant impact on the ECB’s inflation outlook. For now, data only point to a gentle cooling rather than a rapid downturn. But employment growth slowed to just 0.2% in the Q2 and the share of vacant jobs dropped to 2.6% in the same period from a peak that topped 3%. (Bloomberg)

Singapore: Keeps monetary policy steady as Q3 growth picks up; analysts bet on Jan easing. Singapore's central bank left its monetary settings unchanged, as expected, as data showed the economy perked up in the 3Q though analysts are betting on a loosening in policy early next year to guard against external risks. The Monetary Authority of Singapore (MAS) said it will maintain the prevailing rate of appreciation of its exchange rate based policy band known as the Nominal Effective Exchange Rate, or S$NEER. The width and the level at which the band is centred would also be maintained, the MAS said. "The risks to Singapore's inflation outlook are more balanced compared to three months ago," MAS said in a statement, adding that growth momentum has picked up. Separately, advance trade ministry data earlier showed GDP grew 4.1% YoY in the 3Q underpinned by a boost in manufacturing, accelerating from 2.9% in the 2Q, and policymakers expressed optimism about the 2025 outlook. (Reuters)

India: Wholesale prices rise 1.84% in Sept. India's wholesale price index, opens new tab based inflation rose to 1.84% in Sept on the back of higher food prices. The Sept print was lower than the 1.92% increase projected by economists in a Reuters poll and up from 1.31% in Aug, according to government data released. Food prices rose 9.5% YoY in Sept, compared to a 3.26% rise in Aug. Vegetable prices rose 48.7%, compared to a drop of 10% in Aug. Cereal prices rose 8.1% over last year from an 8.4% increase a month ago. Prices of manufactured products rose 1% against a 1.2% rise in the previous month. Fuel and power prices dropped 4.0% from a 0.7% drop in Aug.RBI left key interest rates unchanged but tweaked its stance to "neutral", opening the door for rate cuts amid early signs of a growth slowdown in the economy. (Reuters)

India: Inflation at nine-month high keeps RBI on guard. India’s inflation accelerated at a faster pace than expected in Sept, justifying the central bank’s caution as calls grow to cut interest rates. The CPI rose 5.49% in Sept from a year earlier, the fastest pace in nine months, data from the Statistics Ministry. That compares with a reading of 3.65% in Aug and a 5.1% median forecast in a Bloomberg survey of economists. RBI predicted inflation would accelerate in Sept, largely due to statistical reasons, as it left its benchmark interest rate unchanged at 6.5%. It also eased its policy stance, opening the door to an interest rate cut in coming months. However, Governor Shaktikanta Das has repeatedly said he wants to bring inflation down to the 4% target level on a durable basis before he considers easing. (Bloomberg)

Markets

Genting Malaysia (Outperform, TP: RM3.00): US unit sued by JV partner for alleged fraud. Genting Malaysia’s unit in the US has been named in a complaint filed by RAV Bahamas Ltd in the US District Court Southern District of Florida. (The Edge)

Comment: Genting Malaysia's (GENM) JV partner in the Bahamas, RAV Bahamas, is suing its wholly-owned subsidiary (Genting Americas) for alleged fraud, seeking damages of >USD600m. Genting Americas is involved in the operations of Resorts World Bimini of which RAV Bahamas effectively owned 22% while the remaining 78% is held by Genting Americas. RAV Bahamas is accusing its partner for using its majority ownership and management control to hide the transfer of hundreds of millions dollar in liabilities incurred elsewhere onto Resorts World Bimini’s books. According to news portal The Tribune, Resorts World Bimini has been consistently incurring losses since the JV partnership started in 2012. GENM has refuted the claim and said the complaint was baseless. The group is expected to make further announcements as and when there are material developments.

Critical Holdings: Bags RM62.5m contract from IJM Corp. Critical Holdings has been awarded a RM62.5 m contract by IJM Corp. The contract involves the supply, delivery, installation, testing, commissioning, and maintenance of mechanical and electrical services for a new semiconductor plant located at Batu Kawan Bandar Cassia Technology Park in Prai, Penang. The facility is owned by a prominent US-based multinational corporation. (The Malaysian Reserve)

Fajarbaru: To develop Medi-City project in Batu Kawan, covering 235.8 acres. Fajarbaru Builder Group has accepted a letter of offer from Penang Development Corporation for the proposed development of Medi-City in Batu Kawan, covering approximately 235.8 acres. The development project will be divided into two parcels with Fajarbaru set to purchase Parcel 1, which spans 51.2 acres, in 2025. (StarBiz)

BCB: Buys land in Johor for RM31m, plans RM245m development. BCB has acquired 54.7 acres of freehold land in Kluang, Johor, for RM31m. The company plans to develop residential units and retail shops on the site, with an expected GDV of RM245m. Construction is set to begin in 2027 and will take five years to complete. (The Malaysian Reserve)

Pan Malaysia: Gets RM47m office development job. Pan Malaysia Holdings has accepted a LOA from Discovery Media SB through its wholly owned subsidiary, Exsim Concepto SB, for the development of four office levels and other facilities in Damansara Perdana, Petaling Jaya. The contract sum worth RM47.4m, will entail supplying, fabricating, delivering and the installation of interior design fit-out works for guest rooms. (StarBiz)

Ho Hup: 52.5% indirect unit served with winding-up petition over payment dispute. Ho Hup Construction Company announced that its 52.5% indirect subsidiary, Golden Wave SB, has been served with a winding-up petition by Eko Bina SB over a payment dispute tied to a serviced apartment and retail units project in Kota Kinabalu, Sabah. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after Wall Street rolled to more records Monday as US stocks added to their all-time highs. The S&P 500 climbed 0.8% to build on its record set on Friday. It’s coming off its fifth straight winning week and is on track for its longest weekly winning streak of the year. The Dow Jones Industrial Average rose 0.5% and added 201 points to its own record, while the Nasdaq composite gained 0.9%. The gains followed relatively quiet trading in Europe, while the US bond market remained closed for the day because of a holiday. The strongest action in global markets came from China, where the finance minister gave a highly anticipated update on Saturday about plans for the world’s second-largest economy. Lan Fo’an said the government is looking at additional ways to boost the economy, but he stopped short of unveiling a major new stimulus plan that investors were hoping for. The lack of detail sent markets spinning. Stocks in Shanghai jumped 2.1%, but the Hang Seng index in Hong Kong fell 0.7%. Crude oil prices, meanwhile, sank roughly 2% on worries about demand from China’s slowing economy. Stocks have broadly rallied to records on relief that interest rates are finally heading back down, now that the Federal Reserve has widened its focus to include keeping the economy humming instead of just fighting high inflation. Recent reports showing the US economy remains stronger than expected have also raised optimism that the Fed can pull off a perfect landing where it gets inflation down to 2% without causing a recession that many had thought would be necessary. Back home, the FBM KLCI added 2.99 or 0.18% to end at 1636.54. 54 yesterday. Market breadth remained negative as decliners outnumbered ipated to trend sideways around the 1636 horizon in the near term. Support stance levels stand at 1652, 1664 and 1680.

Source: PublicInvest Research - 15 Oct 2024