MY CLOSING BELL REVIEWS | REGIONAL SLUMP, KLCI DROP 1.62 POINTS

The war in the Middle East continued to heat up, global capital was further withdrawn from the Chinese stock market, and Asian stocks fell across the board throughout the day.

When the market closed at 5 p.m., the Composite Index closed at 1441.04 points, a slight decrease of 1.62 points, or 0.11%.

The full-day trading volume was 3.5 billion shares, with a transaction value of RM1.9 billion.

There were 315 rising stocks, 558 falling stocks, 464 had no ups or downs, and 1,020 had no transactions.

Meanwhile, USD 5.1 was cashed out in ringgit at the level of 4.7675 in the afternoon.

The Bank of China announced that China's foreign exchange reserves as of October 13 reached 108.9 billion US dollars (about RM518.3 billion), a decrease of 1.2 billion US dollars (about RM5.6 billion) compared to September 1.

According to a statement issued by the Bank of China on Friday, Malaysia's current foreign exchange reserves are sufficient to cover 5.1 months of imports of goods and services and 1.0 times short-term foreign debt.

In September, China's foreign exchange reserves were reported at US$110.1 billion (the exchange rate was equivalent to RM519.2 billion at the time).

Influenced by the loss of the latest export data and the widening interest rate spread between Malaysia and the US, the exchange rate of the ringgit to SGD 1 once fell to RM3.4826 in today's intraday session, hitting a record low.

In any case, the ringgit recovered somewhat. As of 5:40 p.m., the exchange rate of the ringgit to SGD was RM3.4747, or 0.08% depreciated.

Bloomberg reports that the reason why the ringgit weakened to a record low against the Singapore dollar was that Singapore had previously raised its exchange rate to support the currency, yet the Bank of China kept the overnight policy interest rate (OPR) unchanged during the July meeting.

Bloomberg pointed out that compared to the top of the US benchmark interest rate, the interest rate difference between Malaysia and the US has reached a record high.

Meanwhile, Malaysia's export data has been declining for 7 consecutive months, falling 13.7% year-on-year in September, which also hit the ringgit. Bloomberg said that part of the reason for the weakening of exports is the economic slowdown in China, Malaysia's largest trading partner.

Furthermore, Bloomberg said that the withdrawal of foreign capital worth 324 million US dollars (about RM1.54 billion) from Malaysian stocks since entering October is the first time in the past four months that it has been lost, hurting market sentiment.

At the same time, the Malaysian bond market also experienced the withdrawal of foreign capital for two consecutive months.

On Thursday morning, the exchange rate of the ringgit against the US dollar fell to a 25-year low since the Asian financial turmoil; fortunately, the ringgit had stabilized its footing in the afternoon. As of 5:40 p.m., the time report showed a slight increase of 0.04% of RM4.7677 to the US dollar compared to yesterday's RM4.7695.

Malaysia's exports fell 13.7% year-on-year in September, falling in double digits for 4 consecutive months. Despite this, economists are still optimistic that Malaysia's export decline will soon reach its end, and it is estimated that it will rebound at the bottom of the first quarter of 2024 as soon as possible.

Research economists at CIMB pointed out in a report today that although it is a bit difficult for Malaysian exports to decline to rise within this year, it is estimated that the decline will gradually narrow to the number of units.

“This is mainly due to the dissipation of the high base effect and the support of stable Chinese demand.”

With improvements in the consumer and industrial sectors, China's recent economic data has also performed well. As Malaysia's largest trading partner, China's economic recovery will undoubtedly boost Malaysia's export performance.

As of September this year, China accounted for 13.4% of Malaysia's total exports.

The World Trade Organization (WTO) also reiterated its view on improving global trade growth. The organization predicts that global trade is expected to grow by 3.3% year-on-year in 2024, and believes that economic growth will stabilize.

Meanwhile, economists researched by Societe Generale Investment Bank also agree with the above statement and believe that Malaysia's trade data will improve in the final quarter of this year.

The rise in food and hotel prices slowed, further slowing Malaysia's inflation growth rate to 1.9% in September, down from 2% in August.

According to the latest data from the Bureau of Statistics, the increase in food and non-alcoholic beverages in September slowed from 4.1% in August to 3.9%; restaurant and hotel expenses also fell from 4.7% to 4.4%.

As for core inflation, the year-on-year increase in September was 2.5%, the same as in August.

The growth drivers for inflation are mainly due to 2.5% year-on-year increase in expenses for groceries and services, 2.2% year-on-year for medical expenses, 2.0% year-on-year for education, 1.6% for housing, water, electricity, gas and other fuels, and 1.5% for furniture, household equipment and daily maintenance.

On the other hand, in the sub-mix of food and non-alcoholic beverages, the increase in self-cooking costs at home slowed to 2.5%, mainly rice, bread, and other grains rising 4.1% year-on-year (4% in August), meat increasing 3.4% year-on-year (5.8% in August), and milk, cheese, and eggs rising 3.4% year-on-year (4% in August).

Although the inflation rate in September was below 2%, given the depreciation of the ringgit, analysts believe there is still a risk that food prices will rise in the second half of the year.

MIDF Investment Research indicates in its latest report that Malaysia's inflation rate in September, which has just been released, increased by 1.9% year-on-year, the lowest level since March 2021.

Looking at the first 9 months of this year, the average food inflation rate was 5.5% year-on-year, compared with 5.7% in the same period last year.

Analysts believe that under the challenging environment, especially in terms of global agricultural output, the food inflation rate is expected to remain in the 5.5% to 6.0% range in the second half of the year.

“Furthermore, the long-term depreciation of the ringgit exchange rate will lead to an increase in import inflation, which will be reflected in food prices in particular, because China is a net importer of most food products.”

Revenue for the first quarter was reported at RM22.367,000, up 15.60% year-on-year.

“The increase in net profit is mainly due to three industrial industries and high retail leasing contributions. The retail and industrial sectors contributed 94.3% and 5.7% to revenue, respectively.”

In the retail sector, South Malaysia contributed the most. 3 shopping malls already contributed nearly half of the revenue, while the 3 shopping malls in China and Malaysia contributed RM6.2 million, accounting for 29.3% of total revenue. The rest of the revenue was contributed by the North Malaysian industry.

CEO Weng Peishan said that most KIP shopping malls have a rental rate of over 90%, indicating that KIP Real Estate has the ability to attract all kinds of tenants and customers.

The company reported to the Malaysian Stock Exchange on Friday that the wholly-owned Mestron Engineering Private Limited has obtained the procurement of equipment and materials related to this large-scale solar energy (LSS) project from Fabulous Sunview Private Limited.

This includes procuring basic equipment such as photovoltaic modules, installation structures, inverters for medium voltage power plants, monitoring and data acquisition systems (SCADA), wiring, and lightning protection to form a complete system.

In addition, the company also needs to manage logistics, conduct equipment tests, ensure equipment maintenance and safety during construction, and perform equipment installation.