MY MARKET WATCHTOWER | OPENS MARGALLY LOWER, KLCI DROP 0.87 POINTS

●US stocks fell overnight on Tuesday

●KPMG: Creating a favorable investment environment requires strong policies for the energy transition

●Focus on individual stocks: RANHILL, Heineken Malaysia, UCREST

US stocks closed down due to concerns about the global economy, particularly China, and the decline in Bank of America stocks, which together put pressure on Wall Street.

The Dow Jones Industrial Average fell 361.24 points, or 1.02%, to close 34,96.39 points.

The S&P 500 index fell 51.86 points or 1.16% to close at 4437.86 points, falling below the 50-day moving average, which may indicate the beginning of a downtrend.

The Nasdaq Composite Index fell 157.28 points, or 1.14%, to 13,631.05 points.

US financial stocks weakened. J.P. Morgan Chase and Wells Fargo fell 2.3%, and Bank of America fell 3.2%. Fitch warned that dozens of banks, including J.P. Morgan Chase, might have to downgrade their credit ratings. Moody's downgraded 10 US banks last week while adding other large institutions to the watch list for possible downgrades.

“The risk is that if inflation is not fully controlled, we have to raise interest rates further to lower them, and the banking sector may face more losses than it currently does. These pressures are likely to erupt again in the future.”

Global investor confidence also weakened after China released disappointing economic data and an unexpected interest rate cut by the People's Bank of China.

In July, China's industrial production grew 3.7% year on year, falling short of expectations. Retail sales growth also fell short of expectations, and the People's Bank of China cut interest rates by 15 basis points from 2.65% to 2.5%. But this has not allayed investors' concerns; on the contrary, it has heightened concerns about China's troubled real estate market.

Bursa Malaysia opened slightly lower on Wednesday as some weighted stocks settled modestly, in line with the weakness of regional exchanges.

At 9:15 a.m., the FTSE Malaysia Composite Index (FBM KLCI) fell 0.87 points to 1459.41 from Tuesday's close of 1460.28.

There were 155 rising stocks, 224 falling stocks, 298 had no ups or downs, and 1,663 had no transactions.

The turnover reached 362.1 million shares, worth RM129.38 million.

Although the state election results maintain the current political situation as expected and will have a positive incentive for the future of the ringgit, analysts believe that the future trend of the ringgit will still depend on the performance and policy execution of the unity government.

On Tuesday, the ringgit weakened against the US dollar and once reached the level of RM4.6340.

Delta Securities is optimistic about the trend of the ringgit in the second half of the year. It is expected that it will gradually rise against the US dollar and close at the level of 4.30 to 4.40 by the end of the year.

The main reason is that the implementation of government policies and measures has brought optimism, Changming Malaysia provides good prospects for investors to return to Malaysian stocks, the Fed's tight monetary policy is expected to end, crude oil prices have the potential to rise, and the increase in demand for ringgit.

Abisikokuma, head of infrastructure, strategy and operations at KPMG Malaysia, believes that the government needs a strong policy and regulatory framework to implement the National Energy Transition Roadmap (NETR) and create a favorable investment environment.

In an interview with the Malaysian News Agency, he said that the NETR issued by the Ministry of Economy is the strongest sign that the Malaysian government has promised to achieve the 2050 net zero emissions vision so far.

“More and more governments and regulators are participating in the development of this road map, which is a major step forward in gradual cooperation.”

He suggested that for the road map to make real progress, the government needs to carry out infrastructure and legislative reforms across the country.

“The government needs to introduce a strong policy and regulatory framework to level the playing field and create a favorable investment environment for financing and implementing initiatives.”

Fitch Ratings analysts warn that the US banking industry is close to another source of turmoil, and dozens of US bank ratings are at risk of being completely downgraded, which may even include banks such as J.P. Morgan Chase.

According to comprehensive media reports, Fitch analyst Chris Wolfe (Chris Wolfe) said in an exclusive interview with CNBC that if the banking industry rating were to be downgraded one level from AA- again, that is, from AA- to A+, it would force Fitch to re-evaluate the ratings of each of the more than 70 US banks.

The recent behavior of credit rating companies that bond investors rely on has disrupted the market.

Last week, Moody's downgraded the ratings of 10 small to medium banks and warned that 17 other banks could be downgraded, including large institutions such as Truist and Bank of America.

Following Fitch downgrading the US banking environment rating to AA- in June, if downgraded to A+ again, then Fitch will be forced to re-evaluate the ratings of the more than 70 US banks it covers. In this case, the ratings of the two banks with the largest assets in the US — J.P. Morgan Chase and Bank of America — may be downgraded from AA- to A+ because the bank's rating cannot be higher than that of its operating environment.

The two sides have signed a cooperation agreement. The 3D printing product will use the uCrest brand, while Hangsu will be responsible for product marketing, materials and services in China, and Lianfeng will develop markets outside of China.

According to information, Aerosplast Technology is a leading 3D printing company in China. It can print plastic, metal, sand materials, and biomaterials into products. The product range includes souvenirs, household items, auto parts, medical devices, and housing modules.

Bai Lauren, managing director of Heineken Malaysia, said during the quarterly results report that the company will continue to make important contributions to the country in terms of education, ESG, etc., and that even if conservative forces take power one day in the future, the company will strengthen communication with the government.

Beloren also said that in addition to ESG, the company pays 100% dividends all year round and also pays high taxes to the government.

At the same time, he also said that the League of Nations also used to be the government. At the time, Heineken Malaysia was operating normally.

Furthermore, in the 2023 fiscal quarter (ending June 1), Heineken Malaysia maintained steady performance, with net profit rising 5.11% year-on-year to RM90.47 million, and announced a dividend of 40 cents per share.

Heineken Malaysia's first-quarter turnover was RM569.24 million, down 11.69% year-on-year.

In the first half of the year, Heineken Malaysia made a total net profit of RM204 million, a slight increase of 0.47% year-on-year, while revenue fell slightly by 2.49% year-on-year to RM1,3946 million.

In addition, Heineken Malaysia also announced an interim dividend of 40 cents per share, excluding October 19 and November 10.

When asked if price cuts would stimulate sales, Beloren indicated that the highly competitive market is unpredictable, and Heineken Malaysia will follow the market's reaction and adjust its price strategy.

As for how to adjust it? He is a sell-off.

Additionally, Heineken Malaysia's financial director Carsten added that although sales performance in the first half of this year was not as high as the peak in the same period last year, revenue fell only slightly by about 2%, and sales performance is still steady.

For the second quarter ending June 1st, the turnover recorded RM5093.665,000, an increase of nearly 30% year-on-year.

In the first half of the year, net profit recorded RM23.177,000, an annual increase of 61%; while turnover recorded RM1,113.71,000, an annual increase of nearly 31%

According to the statement, the increase in turnover is mainly due to the increase in water charges of its water company Lianxi SAJ, which has led to an increase in water bill revenue.

Looking ahead, the group is actively expanding its water supply business to other states in Malaysia through the “asset-light” model stipulated in the Water Supply Industry Act 2006.

“Any state government seeking cooperation with the private sector to operate the water supply business in the relevant state may consider this group as a partner.”