MY MIDDAY INSIGHTS | BANKING STOCKS LEAD THE DROPS, KLCI DROP 11.20 POINTS

US stocks closed higher overnight, leading to a rebound in Asian stock markets that opened today; while East Asian markets in China, Taiwan, South Korea, and many other places were closed due to the Mid-Autumn Festival.

However, Malaysian stocks are once again lagging behind the market; after being closed on Mohammed's birthday yesterday, market sentiment was sluggish today, and it weakened as soon as the market opened.

As of the closing of the market at 12:30 p.m., the Composite Index closed at 1428.91 points, down 11.20 points, or 0.77%.

The half-day trading volume was 1,701,47,800 shares, with a transaction value of RM1,061,011,066.

The FTSE Malaysia All Stock Index closed at 10603.63 points, down 59.51 points.

There were 252 rising stocks, 541 falling stocks, 435 had no ups or downs, and 1,157 had no transactions.

However, the Malaysian dollar rebounded slightly today. As of 12:30 noon, the Malaysian ringgit exchange rate was 4.6885 to 1 US dollar.

Extended production cuts in Saudi Arabia and Russia and steady growth in global demand will keep the market in a state of supply shortages. Analysts expect international oil prices to rise to 92 US dollars per barrel in the final quarter.

Societe Generale Investment Bank research pointed out in its latest report that the recent rebound in oil prices was largely driven by Saudi Arabia and Russia extending voluntary production cuts until the end of this year, and the decline in global crude oil inventories.

Analysts expect that if the two countries extend production reduction measures until March of next year, the market should continue to experience a supply gap. The average oil price in the final quarter of this year will reach 92 US dollars per barrel and remain at the level of 85 US dollars next year.

Despite tight supply, analysts note that US oil production has risen to a record high of 12.9 million barrels per day. The US Energy Information Administration (EIA) predicts that the country's crude oil production will remain at this level and grow to 13.2 million tons per day next year.

On the other hand, most international agencies such as the International Energy Agency (IEA), EIA, and Organization of Petroleum Exporting Countries (OPEC) are bullish on demand, and crude oil demand is expected to increase by 1 million barrels per day at the end of this year.

Analysts estimate that global demand will increase by 2.4 million barrels per day to 102 million barrels per day this year; next year, demand will increase by 1.9 million barrels per day, reaching 13.9 million barrels per day.

“On the premise of maintaining a tight supply situation in the oil union and Russia, plus the demand growth forecast above, the supply gap in the final quarter will reach 3.1 million barrels per day, and the average gap for next year is expected to be 1.4 million barrels per day.”

In view of this, analysts raised the average international oil price forecast for 2023 and 2024 from $81 and $80 per barrel to $84 and $85, respectively, and maintained the forecast of $80 per barrel for 2025.

Bloomberg think tank believes that due to the high base effect of 8.7% economic growth last year, and the weakening of both household consumption and export momentum, even if China reopens, Malaysia's economic growth rate is expected to slow sharply to 3.7% this year.

Tamara, an economist at Bloomberg think tank, believes that after the Malaysian economy achieved a high growth rate of 8.7% last year, the growth rate will slow sharply this year and maintain a tepid pace of growth in 2024.

“We predict that Malaysia's gross domestic product (GDP) growth will fall to 3.7% this year and slow further to 3% in 2024.”

Tamara pointed out that this year's growth rate is mainly due to the high base effect formed by strong growth last year, but the Malaysian economy is also facing some real challenges, such as the rebound momentum brought about by the reopening of the economy after the pandemic on household consumption and exports, which is currently disappearing.

At the same time, she said that the Malaysian government's efforts to consolidate its finances will limit the aid provided by the government to the community.

“If global market demand falls more than expected, further reducing Malaysia's oil and gas revenue, then the government's fiscal space will be smaller, and it will be more difficult to provide social assistance.”

She added that rising interest rates are leading to higher borrowing costs, which will also hurt investment activity.

Tamara said that after considering factors such as last year's high base effect, weakening global demand and loss of momentum created by economic restart, her baseline forecast for Malaysia's economic growth this year is 3.7%, but if the two major peripheral risks are implemented, this growth may be further reduced.

“If the Chinese government's fiscal pressure has a greater impact on the real sector in the economy, or if the aggressive interest rate hike by the Federal Reserve triggers a hard landing in the US economy, then the 3.7% forecast for Malaysian economic growth is probably still too optimistic.”

Tamara pointed out that if any of the above two major risks occur, it will cut commodity revenue, reduce Malaysian exports on a wider scale, and scare away investment.

“The current political polarization in Malaysia may also cause difficulties in attracting foreign investment (FDI).”

Furthermore, Tamara pointed out that the Malaysian government has set a fiscal deficit target of 5% of GDP this year, which is lower than 5.6% in 2022, but this is probably difficult to achieve.

“The 5% fiscal deficit means that Malaysia needs to achieve real economic growth of 4.5% this year, and this seems difficult to complete.”

The unity government led by Prime Minister Dato' Seri Anwar plans to further reduce the fiscal deficit to 3.2% of GDP by 2025 and introduce laws relating to responsible finance to ensure that the government spends in a sustainable manner in the future.

According to the 2022/23 annual report issued by GRA, the Asian gaming industry magazine “IAG” (IAG), Sentosa Genting World first violated Singapore's 2009 Casino Control Regulations and faced S$20,000 (approximately RM68,777) without a thorough review of customers.

Genting World Sentosa was also fined S$75,000 (approximately RM250,914) for another offense of “failing to conduct enhanced and precise screening of guests”.

According to Asia Expo, since GRA was established in August 2022, a total of 3 tickets have been issued, and Genting World Sentosa accounts for 2 of them.

Another fine issued by GRA during the same period was issued to Ceylon Sports Club (Ceylon Sports Club), which resulted in the latter's license being revoked for one month.

When GRA was established last year, it replaced Singapore's original Casino Supervisory Authority and other relevant agencies to become the country's leading gaming regulator.

National Energy President and CEO Dato' Baharindin said at the next quarterly results briefing a few days ago that the three major projects are: large-scale solar power plants (LSSP), mixed hydro floating solar energy (HHFS), and hydrogen-ammonia combined combustion projects.

He also revealed that China Energy plans to produce a total of 3,000 megawatts of renewable energy within the NETR project by 2040, including 2,500 megawatts of electricity produced through HHFS technology and 500 megawatts of electricity through five LSSP projects.

At the same time, he also revealed the details of each project. The HHFS project will be carried out in 4 stages at Guoneng's dam.

According to the statement, the contract was received by Sasbadi Private Limited (SSB), a subsidiary of Wenyu Holdings. The contract period is from September 27 to December 26 this year.

SSB expects the contract to be executed in the first quarter of fiscal year 2024 (ending the end of August), and it is expected that Wenyu Holdings' net profit and net assets will have a positive impact.

According to the statement, the above loan consists of 3 core components, each of which is a commodity worth RM12 million