The Role Of Reits In Reshaping Kuala Lumpur

Economic

Summary:

Malaysia should capitalise on its multicultural milieus and multilingual professional workforce as well as its non-aligned geopolitical positioning, and make a concerted effort to make Kuala Lumpur a preferred choice for global and regional businesses to select as a hub.

The Malaysian real estate investment trust (M-REIT) industry kicked off almost two decades ago. Since then, the market capitalisation has quadrupled from RM9 billion in 2010 to RM41 billion as of Dec 31, 2023.

When I think about investment, I don’t subscribe to the idea that investment’s sole purpose is to make profit. Milton Friedman’s idea that a company’s sole purpose is making profits for its shareholders has produced disastrous societal outcomes and resulted in very divided societies in the US and many parts of Europe.

The core idea of a REIT is that real estate development does not have to be transacted through the format of the individual ownership model.

In response, many businesses now talk about stakeholder economy; environmental, social and governance (ESG); and impact investing. I hope the REIT community will be ambitious and imaginative in utilising REITs as a mechanism to create a better Malaysia for all.

The world has entered into a new phase. From the time of China's entry into the World Trade Organization in 2001 to the Covid-19 pandemic in 2020, China was the factory of the world and many other countries experienced premature deindustrialisation, including Malaysia.

This has changed due to two major factors:

The disruptions of various forms, including the pandemic, wars and geopolitical tension such as the Red Sea crisis, as well as the impact of climate change, such as floods and typhoons, have forced manufacturers to move from a “just-in-time” logic to a “just-in-case” mindset. Corporations are now thinking about de-risking through a shorter and more secured supply chain.

Those who are involved in industrial parks would know that there are many new interests in industrial land. The REIT community should do more and quickly devise new ways of group ownership so that industrial land development does not have to be through the model of single-owners.

The key to the next phase of industrial success is not through many individual firms exporting vertically to a global supply chain but to form a very strong cluster and a robust supply chain.

I also hope property developers will take the new-found opportunity to transition from selling land to building supply chains to becoming investors in technology themselves. REITs can be of help here.

The new global setting gives Malaysia a second chance to be a high-end manufacturing and services provider, hopefully emerging as an innovative nation.

For the Malaysian economy to grow, we should not be competing with Vietnam to become a cheap manufacturing hub but we should aspire to be a centre of innovation and a hub for regional and global businesses.

Malaysia is not a “Vietnam+” but a “Singapore at a discount”. With such framing and a different value proposition, Malaysia will be the appropriate meeting place and launch pad for regional and global businesses, as well as regional research and development activities.

Costs in Singapore have risen significantly over the past several years, thus justifying a “Singapore at a discount approach” for corporations. A recent Knight Frank report showed that rents for office buildings in Kuala Lumpur are 15% of Singapore's.

As many of Singapore’s establishments are populated with Malaysian workers, a rule of thumb is that if a Malaysian is paid two-thirds of Singapore’s pay, he or she would likely be ready to work in Malaysia instead of Singapore.

Yet the relationship between Malaysia and Singapore is more of a complimentary one as the relocation of the supply chain into Southeast Asia is huge for any country to take all.

The global economy is now seeing “the rise of the rest” and is no longer dominated by just Western money. Kuala Lumpur is well-poised to be a great meeting point and regional headquarters for businesses from China, India, Arab countries, Southeast Asia and even South American countries such as Brazil.

However, Kuala Lumpur is not without its challenges.

First, after nearly 50 years of urban sprawling, Kuala Lumpur’s suburbs have reached Shah Alam or even Klang to the west and Seremban to the south, basically in all directions. Yet, the Kuala Lumpur inner city has hollowed out.

Second, the sprawling and financialisation of housing (the government-linked investment companies [GLICs] and government-linked companies [GLCs] have a hand in exacerbating both trends) have resulted in younger workers residing in faraway suburbs while leaving the abundant space and buildings in the Kuala Lumpur inner city empty. The newly built TRX and Merdeka 118 will exacerbate the situation.

Since many of those vacant buildings are owned by GLICs and GLCs, they need to repopulate the Kuala Lumpur inner city to generate sufficient yield for these buildings and also to prevent these buildings from rotting away.

Third, due to the lack of bus-based public transport, aggravated by urban sprawl, most commutes are done by privately owned single-passenger cars, which is a huge financial burden on the working population. It is also bad in terms of carbon emissions.

However, we have an extensive network of public transport infrastructure within a 3km radius of Kuala Lumpur's inner city. The inner city is also walkable. This makes a convincing case for the working population to move back into Kuala Lumpur inner city, nearer to their workplaces.

Fourth, at some point the government will have to remove petrol subsidies, which will make travelling from the sprawled suburbs with private cars a lot more expensive than it is now.

Fifth, wages for the general population are still low in Malaysia, and one of the ways to raise disposable income quickly is to reduce the burden of the cost of living, especially housing and transport costs that usually make up a big part of their expenditure.

The Kuala Lumpur inner city should be given a lot of attention by the government so that the city plays the following roles:

•The new regional headquarters for corporations from the developed world and, importantly, the Global South;

• The new centre of research and development;

•Creation of rental housing stock through repurposing older buildings, especially those owned by GLICs and GLCs; and

•A city where the population can work, live, learn and play.

To achieve all these, a major paradigm shift is needed. Just like Melbourne was hollowed out until the 1990s, it took the city around 30 years to repopulate the inner city. It is time for Kuala Lumpur to bring the people back to the inner city and make Kuala Lumpur a major regional city.

A rejuvenated inner city powered by REITs will also allow current building owners — many of the buildings are owned by GLICs and GLCs — to generate income from their old assets and create new asset classes for the GLICs and other funds to invest in, while solving the problems of housing the young, climate, and the current hollow state of our city.

Source: Theedgemarkets

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Warren Takunda

Economic

Having all but tamed inflation, the Federal Reserve is poised to do something Wednesday it hasn’t done in more than four years: Cut its benchmark interest rate, a step that should lead to lower borrowing costs for consumers and businesses just weeks before the presidential election.

And yet an unusual air of uncertainty overhangs this week’s meeting: It’s unclear just how large the Fed’s rate cut will be. Wall Street traders and some economists foresee a growing likelihood that the central bank will announce a larger-than-usual half-point cut. Many analysts foresee a more typical quarter-point rate cut.

With inflation barely above their target level, Fed officials have been shifting their focus toward supporting a weakening job market and achieving a rare “soft landing,” whereby it curbs inflation without causing a sharp recession. A half-point rate cut would signal that the Fed is as determined to sustain healthy economic growth as it is to conquer high inflation. This week’s move is expected to be only the first in a series of Fed rate cuts that will extend into 2025.

High interest rates and elevated prices for everything from groceries to gas to rent have fanned widespread public disillusionment with the economy and provided a line of attack for former President Donald Trump’s campaign. Vice President Kamala Harris, in turn, has charged that Trump’s promise to slap tariffs on all imports would raise prices for consumers much further.

Over time, Fed rate cuts should lower borrowing costs for mortgages, auto loans and credit cards, as well as for business loans. Business spending could grow, and so could stock prices. Companies and consumers could refinance loans into lower-rate debt.

Chair Jerome Powell made clear last month in a high-profile speech in Jackson Hole, Wyoming, that Fed officials feel confident that inflation has largely been defeated. It has plummeted from a peak of 9.1% in June 2022 to 2.5% last month, not far above the Fed’s 2% target. Central bank officials fought against spiking prices by raising their key interest rate 11 times in 2022 and 2023 to a two-decade high of 5.3% to try to slow borrowing and spending, ultimately cooling the economy.

Wage growth has since slowed, removing a potential source of inflationary pressure. And oil and gas prices are falling, a sign that inflation should continue to cool in the months ahead. Consumers are also pushing back against high prices, forcing such companies as Target and McDonald’s to dangle deals and discounts.

Yet after several years of strong job growth, employers have slowed hiring, and the unemployment rate has risen nearly a full percentage point from its half-century low in April 2023 to a still-low 4.2%. Once unemployment rises that much, it tends to keep climbing. But Fed officials and many economists note that the rise in unemployment largely reflects an increase in new workers seeking jobs — notably new immigrants and recent college graduates — rather than layoffs.

Still, Powell said in Jackson Hole that “we will do everything we can to support a strong labor market.” He added that any “further weakening” in the job market would be “unwelcome.”

Some analysts have said that such a sweeping declaration suggests that Powell would favor a half-point rate cut. Other economists still think a quarter-point reduction is more likely.

At issue is how fast the Fed wants to lower interest rates to a point where they’re no longer acting as a brake on the economy — nor as an accelerant. Where that so-called “neutral” level falls isn’t clear, though many analysts peg it at 3% to 3.5%. Economists who favor a half-point reduction argue that the Fed’s key rate is much higher than necessary now that inflation is in retreat.

But others note that the Fed typically cuts its rate by a half-point or more only in an emergency. The last time it made an equivalent cut was in March 2020, when the pandemic paralyzed the economy. With consumers still spending and the economy likely to grow at a healthy pace in the July-September quarter, more cautious Fed officials can argue that there’s no rush to cut.

One hopeful sign is that as Powell and other Fed officials have signaled that rate cuts are coming, many borrowing rates have already fallen in anticipation. The average 30-year mortgage rate, for example, dropped to 6.2% last week — the lowest level in about 18 months and down from a peak of nearly 7.8%, according to the mortgage giant Freddie Mac. Other rates, like the yield on the five-year Treasury note, which influences auto loan rates, have also tumbled.

Source: AP

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Cohen

Stocks

US Bancorp (NYSE: USB), the nation’s fifth largest bank, has one of the best dividends in the banking industry and it just got a little better.

Last week, U.S. Bancorp., the holding company for U.S. Bank, boosted its quarterly dividend by 2% to 50 cents per share. For the full year, U.S. Bancorp pays out $2.00 per share. This marks the 13th consecutive year that the bank has raised its dividend payout.

In addition, the bank launched a $5 billion share repurchase program that will begin in 2025.

Best dividend among big banks

The dividend increase gives U.S. Bancorp one of the best dividends in the banking industry, with a yield of 4.48%. That is higher than the 3.21% average dividend yield in the banking industry, according to Seeking Alpha.

Among the 12 largest U.S. banks, only Truist Financial (NYSE: TFC) at 4.94% and TD Bank (NYSE: TD) at 4.70% have higher yields.

However, U.S. Bancorp, at 13 years, has a longer streak of raising its annual payout, so it could be argued that its stability and consistency, along with its high yield, make it the best large bank dividend stock.

One concern about U.S. Bancorp’s dividend is its payout ratio, which sits at 61.9%. That means that the company pays out nearly 62% of its quarterly earnings to fund the dividend. That is higher than the average banking industry payout ratio of 41%.

Typically, a payout ratio over 60% is considered on the high side, because it could mean that the company is paying out too much of its earnings, at the expense of other investments, to its dividend. It also could mean that the company may not be able to keep raising its dividend if the payout ratio gets too high.

U.S. Bancorp’s 61.9% is not too bad, and nothing to be too worried about, but it bears watching.

Is US Bancorp stock a buy?

In addition to the dividend increase, U.S. Bancorp announced plans to buy back $5 billion of the company’s outstanding common stock.

Typically, when companies buy back stock, it increases the value of existing shares and has the effect of raising the stock price.

U.S. Bancorp stock has struggled this year, up just 1.7% in this high-interest-rate environment, which has raised the costs of deposits and eaten into its interest income. With rates expected to move lower, the bank should be better positioned to increase earnings.

The stock currently has a median price target of $49 per share, which represents about 10% growth over its current price.

But the real value of U.S. Bancorp stock is its dividend. If you are an income investor looking for a solid dividend payout, this stock would be a decent choice.

Otherwise, if you are looking for a good dividend and capital appreciation, you’ll find better options elsewhere.

Source: FXSTREET

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SAXO

Economic

Political

US Election Countdown: A Very Divided America_1

This week: Election outcome as uncertain as ever, pivotal FOMC meeting dead ahead, and America: the land of inequality.

A steady performance from Harris at last week’s first (and likely only!) presidential debate moved the oddsmakers’ assessment of the situation back to a virtual 50-50 tie after they had tilted up to 6-7 points in favour of Trump the previous week. This keeps election outcome uncertainty at maximum. This week, markets are awaiting the critical first rate cut of a new cycle from the US Federal Reserve and whether it will be large or small, as we discuss below.If the polls and odds are still this close on Election Day, the market reaction to the outcome will likely be quite powerful. You can find our thoughts on how various election outcomes can shape markets and specific stock sectors at our US Election hub.

US Election Countdown: A Very Divided America_2

The chart above is inspired by a similar one produced by Bloomberg and Bank of America. It shows the stock price of Dollar General, a low-end US grocery- and general merchandise retailer and the Italian sports- and super-car maker Ferrari, whose largest market is the US. The latter has gone from strength to strength, more than doubling its revenues in the last eight years as the wealthy snap up its pricey cars. Dollar General, on the other hand, has stumbled since early 2023, with its top-line revenues far slower than the nominal growth in the US economy.

This is perhaps as lower-income US consumers began to run dry of the extra income from Covid-era stimulus checks and have seen their incomes struggling to keep up with inflation. The company’s stock dropped a massive 32% two weeks ago on its latest earnings report. It noted in the earnings call that, while the number of customers remained steady at its stores, those customers showed signs of distress: ”The majority of them state that they feel worse off financially than they were six months ago as higher prices, softer employment levels and increased borrowing costs have negatively impacted low-income consumer sentiment.” This according to the company’s CEO, who also reported a rise in shoplifting and weak sales at month-end, when customers run short of cash before their paychecks are due. Of course, no story has a single dimension, and Walmart may be stealing some of Dollar General’s market share, but the point remains: America is extremely inequal and getting more so.

Theme of the week: America is the land of inequality

We all know that the US is plagued by high levels of inequality, but a look at the numbers is truly staggering. According to the US’ St. Louis Fed, the wealthiest 10% of the country’s population has 67% of the country’s wealth, while the bottom half of American has a mere 2.5%. And even within the top 1%, the inequality is incredible: as the average household wealth of the top 0.1% tops USD 1.5 billion.

These numbers have generally only gone in one direction since the point of maximum American equality in the 60’s and 70’s. This is certainly one of the chief drivers of a very politically divided America, with the two political sides finding very different targets for their dissatisfaction with the status quo. The incredible wealth at the very top is also behind Democratic candidate Kamala Harris’proposal to tax unrealised capital gains among those with USD 100 million or more in wealth. Historians will argue that widening inequality drives social unrest, so with the US society at is most out-of-balance since just before the Great Depression, what path does it take from here? Will policies move the US into more balance by lifting the poor and lower middle class or by taking down the ultra-rich?

The two presidential candidates differ on how they would address the needs of Dollar General’s customers, generally those that make less than USD 35,000 per year and at the bottom fifth of incomes. Trump’s tax cut proposals are irrelevant for the poorest Americans, as he focuses mostly on cutting corporate tax rates further. Harris has proposed that the federal minimum wage be hiked from USD 7.25 to USD 15 per hour, and would like to abolish the “sub-minimum wage” for tipped workers, like restaurant waiters, who are paid virtually nothing by employers and must earn from customer tips. The old minimum wage level is so low that only about a million Americans are paid at this level and many states have far higher minimum wages. A better proposal would be to index the minimum wage to inflation. A higher minimum wage, especially for tipped service workers would certainly be inflationary.

Key to watch this week: The Fed will cut rates this week – but by how much?

Last week, a prominent WSJ reporter, Nick Timiraos wrote a column suggesting it was highly uncertain whether the Fed would cut the interest rate by 0.25% or a larger 0.50% increment at this Wednesday’s FOMC meeting. Timiraos is the designated, if completely unofficial “Fed whisperer”, seen as the journalist the Fed would most likely leak information to if it was afraid that the market was reading its intentions wrongly. The article helped support sentiment in the stock market and shocked the US dollar lower, while gold rose to all-time highs.

Before this article and a similar one from the Financial Times published the same day, the market was nearly certain that, after recent mixed labor market data, the Fed would take things slowly this week with a smaller rate cut. Now markets are leaning in favour of the Fed cutting by a half-percent, but more important will be the Fed’s thoughts on how it sees the likely path of interest rates at future meetings. This meeting will also see the Fed refreshing its quarterly projections on where the US economy and its own policy rate is likely to head in the coming years. This sets up an intense interest in every future US economic data release and whether it agrees or disagrees with the market consensus on where the economy and Fed policy are headed.

Key to watch in the election this week: can anything really shift the odds?

This past weekend we had another apparent assassination attempt on former President Trump foiled by Secret Service agents during a round of golf, fortunately before any active shooting from the would-be assassin. This is unlikely to shift sentiment, and in general, the polls are extraordinarily tight and relatively stable. We are at a loss on what either candidate can do with seven weeks to go to shift voter sentiment.

To stay updated on all economic events of today, please check out our Economic calendar

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Kevin Du

Economic

Japan’s export growth slowed while posting a ninth straight advance, in an outcome underscoring the uneven state of the economic recovery.

Exports increased 5.6 per cent in August from a year ago, decelerating from 10.2 per cent in the previous month, the Ministry of Finance reported on Sep 18. The result, which missed the 10.6 per cent consensus estimate from economists, was driven by a 9.9 per cent decline in auto exports, with shipments of construction and mining machinery also falling.

Imports climbed 2.3 per cent, falling short of the 15 per cent gain forecast by economists. The trade deficit widened to ¥695.3 billion (S$6.35 billion).

The weaker-than-expected data may give officials at the Bank of Japan (BOJ) another reason to hold policy steady when the board gathers this week. Economists responding to a Bloomberg survey were unanimous in forecasting a hold for Sep 20’s decision, with many expecting a rate increase in the fourth quarter.

The data were at odds with the BOJ’s assessment in July. In the outlook report released after the board meeting that month, the bank said, “exports and production are likely to return to an uptrend, mainly due to a pick-up in global demand for IT-related goods, as overseas economies continue to grow moderately.”

Sep 18’s data were also inconsistent with wider trends for trade. The World Trade Organisation said earlier this month that its goods barometer, a gauge for global trade activity, rose to 103 compared with a reading of 100.6 in March, with components of the barometer such as autos, shipping containers and air freight showing at or above-trend levels.

Among products supporting Japan’s export performance in August were semiconductor manufacturing equipment, which posted a 55.2 per cent gain. Japan’s tech sector has benefited from a wave of global demand for artificial intelligence development, which has generated high demand for advanced semiconductors and related machinery in the US and other developed nations.

On a regional basis, exports to the US fell for the first time in almost three years, edging 0.7 per cent lower, and those to Europe fell by 8.1 per cent, while shipments to China rose 5.2 per cent.

Source: Straitstimes

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Warren Takunda

Stocks

September S&P 500 E-Mini futures are up +0.10%, and September Nasdaq 100 E-Mini futures are up +0.09% this morning as caution prevailed ahead of the Federal Reserve’s interest rate decision, with investors split on the size of a potential rate cut.

In yesterday’s trading session, Wall Street’s major averages closed little changed. Moderna advanced over +4% and was the top percentage gainer on the Nasdaq 100 after announcing that Health Canada approved its updated COVID-19 vaccine, SPIKEVAX KP.2 variant, for preventing COVID-19 in individuals six months of age and older. Also, Intel rose more than +2% and was the top percentage gainer on the Dow after the chipmaker announced a multibillion-dollar agreement to make custom artificial intelligence chips for Amazon’s cloud computing division while also revealing plans to turn its Intel Foundry into a separate subsidiary. In addition, Hewlett Packard Enterprise climbed over +5% after BofA upgraded the stock to Buy from Neutral with a price target of $24. On the bearish side, Accenture fell more than -4% and was the top percentage loser on the S&P 500 after Bloomberg News reported that the IT and consulting services provider plans to push back most of its staff promotions by six months.

Economic data released on Tuesday showed that U.S. retail sales edged up +0.1% m/m in August, defying expectations for a -0.2% m/m decline. At the same time, U.S. August core retail sales, which exclude motor vehicles and parts, crept up +0.1% m/m, weaker than expectations of +0.2% m/m. In addition, U.S. industrial production climbed +0.8% m/m in August, stronger than expectations of +0.2% m/m.

“Another Goldilocks number,” said David Russell at TradeStation. “Retail sales are strong enough to keep us out of recession, but not strong enough to stop rate cuts.”

Today, all eyes are focused on the Federal Reserve’s monetary policy decision later in the day. While the Fed is widely expected to implement its first interest rate cut since 2020, market participants are debating whether a quarter-point reduction will be deemed sufficient for an economy showing signs of slowing or if policymakers will opt for a half-point cut instead. Investor attention will also be on the central bank’s quarterly “dot plot” in its Summary of Economic Projections and Chair Jerome Powell’s post-decision press conference.

Meanwhile, U.S. rate futures have priced in a 37.0% chance of a 25 basis point rate cut and a 63.0% chance of a 50 basis point rate cut later today.

A survey conducted by 22V Research revealed that market reaction expectations to the Fed decision hinge on the bets regarding the size of the cut. Investors who expect a 25 basis point reduction are divided on whether that cut would trigger a “risk-on” or “risk-off” reaction. At the same time, those wagering on a 50 basis point cut believe a smaller Fed move would be “risk-off.”

On the economic data front, investors will focus on the U.S. Building Permits (preliminary) and Housing Starts figures, scheduled for release in a couple of hours. Economists forecast August Building Permits to be 1.410M and August Housing Starts to be 1.310M, compared to the previous numbers of 1.406M and 1.238M, respectively.

U.S. Crude Oil Inventories data will be reported today as well. Economists estimate this figure to be -0.100M, compared to last week’s value of 0.833M.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 3.667%, up +0.64%.

The Euro Stoxx 50 futures are down -0.25% this morning as investors digested key economic data from the region and cautiously awaited the Fed’s monetary policy decision. Technology and healthcare stocks led the declines on Wednesday. The Office for National Statistics reported Wednesday that the U.K.’s annual inflation rate remained steady in August despite an acceleration in service prices, bolstering expectations that the Bank of England will keep its key interest rate unchanged on Thursday. Separately, final data from Eurostat released on Wednesday confirmed that the Eurozone’s annual inflation rate stood at 2.2% in August, down from 2.6% in July. Meanwhile, attention is now focused on the U.S. central bank, which is widely anticipated to deliver its first rate cut in four years later today. In corporate news, Novo Nordisk A/S fell nearly -2% after reports surfaced about a price reduction for its Ozempic drug.

U.K.’s CPI, U.K.’s Core CPI, Eurozone’s CPI, and Eurozone’s Core CPI data were released today.

U.K. August CPI arrived at +0.3% m/m and +2.2% y/y, in line with expectations.

U.K. August Core CPI came in at +0.4% m/m and +3.6% y/y, in line with expectations.

Eurozone August CPI has been reported at +0.1% m/m and +2.2% y/y, compared to expectations of +0.2% m/m and +2.2% y/y.

Eurozone August Core CPI stood at +0.3% m/m and +2.8% y/y, in line with expectations.

Asian stock markets today settled in the green. China’s Shanghai Composite Index (SHCOMP) closed up +0.49%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.49%.

China’s Shanghai Composite Index closed higher today as trading resumed after the Mid-Autumn Festival holiday. Real estate and insurance stocks led the gains on Wednesday. Also, chip-related stocks surged following the country’s announcement of a breakthrough in the development of homegrown chip-making equipment. Data released over the weekend showed that industrial output, retail sales, and fixed asset investments all slowed more than expected in August, while the jobless rate unexpectedly hit a six-month high. Meanwhile, several brokerages lowered their 2024 GDP growth projections for China following the release of the monthly data. Daiwa analysts said in a note that China’s 2024 GDP growth is likely to be under 5% as the third-quarter reading may be weaker than anticipated, attributing this to a sluggish recovery in domestic demand. In other news, the People’s Bank of China announced on Wednesday that it would renew the medium-term lending facility funds maturing on September 18th later this month. In corporate news, Henan Lingrui Pharmaceutical climbed over +5% after announcing plans to invest an additional 50 million yuan in the Xiamen Jinyixing Equity Investment Fund. Investors are now turning their attention to the PBoC’s loan prime rate decisions scheduled for later this week.

Japan’s Nikkei 225 Stock Index ended higher today, snapping a two-day losing streak as investors geared up for an anticipated rate cut from the Fed. Automobile and energy stocks led the gains on Wednesday. Data released by the Ministry of Finance on Wednesday showed that Japan’s exports grew at a slower-than-anticipated rate in August due to a decline in shipments to the U.S. for the first time in three years, while imports increased at the smallest pace in five months. Separately, data from the Cabinet Office indicated that core machinery orders unexpectedly fell in July from the previous month, marking the first decline since May. Meanwhile, the yen regained some of Tuesday’s losses as investors awaited the Fed decision and also a Bank of Japan meeting later this week. BOJ Governor Kazuo Ueda and his colleagues are expected to keep their benchmark rate unchanged on Friday and discuss whether conditions are aligning for another hike later this year. In corporate news, Nippon Steel gained nearly +2% after Bloomberg reported that the company secured an extension in the security review of its takeover bid for U.S. Steel. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down -2.41% to 27.14.

The Japanese July Core Machinery Orders came in at -0.1% m/m, weaker than expectations of +0.4% m/m.

The Japanese August Trade Balance has been reported at -695.3B yen, stronger than expectations of -1,380.0B yen.

The Japanese August Exports stood at +5.6% y/y, weaker than expectations of +10.0% y/y.

The Japanese August Imports came in at +2.3% y/y, weaker than expectations of +13.4% y/y.

Pre-Market U.S. Stock Movers

Intuitive Machines soared about +46% in pre-market trading after announcing it was awarded a NASA contract worth up to $4.82 billion for providing communication and navigation services for near-space missions.

VF Corporation gained over +2% in pre-market trading after Barclays upgraded the stock to Overweight from Equal Weight with a price target of $22.

ResMed fell more than -2% in pre-market trading after Wolfe Research downgraded the stock to Underperform from Peer Perform with a $180 price target.

Edwards Lifesciences dropped about -1% in pre-market trading after Jefferies downgraded the stock to Hold from Buy.

Source: Barchart

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Alex

The Reserve Bank of Australia (RBA) said it will focus on the possible use cases for a wholesale central bank digital currency given the modest likely benefits and potential complications from a retail variant.

A retail central bank digital currency (CBDC) would create “non-trivial challenges” for financial stability and monetary policy implementation, RBA assistant governor Brad Jones said in the text of a speech due to be delivered in Melbourne on Sept 18.

As an immediate priority, the central bank will start a new project with the industry on wholesale CBDC and tokenised commercial bank deposits, Mr Jones said. A wholesale CBDC “would represent more an evolution than revolution in our monetary arrangements”, he added.

Central banks around the world are assessing blockchain technology, with potential gains in the speed and cost of real-time interbank payments a key area of interest.

Some 134 countries and currency unions – representing 98 per cent of global gross domestic product – are exploring a CBDC, and three nations have fully launched one, according to the Atlantic Council.

Some critics argue modern digital payments are already efficient and that CBDCs bring potential privacy concerns as transactions can be tracked.

Mr Jones said that if a public policy case were to ever emerge in favour of a retail CBDC, the Australian government would be the ultimate decision authority and it would almost certainly require legislative change. For a wholesale CBDC, the decision making and legislative implications would depend on the new arrangement, Mr Jones added.

The assistant governor laid out a road map for a three-year digital money work plan.

An assessment of how wholesale digital money and new settlement methods could support tokenised markets runs from 2024 to the first half of 2025. An evaluation of the merits of and design issues for a retail CBDC is due to begin in 2026 and conclude in 2027.

The Australian government will publish a joint paper with the RBA on CBDC and the future of digital money on Sept 18. ANZ Group Holdings and Commonwealth Bank of Australia are among the local institutions that have already participated in pilot CBDC projects. BLOOMBERG

Source: Straitstimes

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The Role Of Reits In Reshaping Kuala Lumpur

Source: Theedgemarkets

The Fed Is Set to Cut Interest Rates for the First Time in 4 Years

Source: AP

This Bank Stock Just Raised Its Dividend for The 13th Straight Year

Best dividend among big banks

Is US Bancorp stock a buy?

Source: FXSTREET

US Election Countdown: A Very Divided America

Theme of the week: America is the land of inequality

Key to watch this week: The Fed will cut rates this week – but by how much?

Key to watch in the election this week: can anything really shift the odds?

Japan’s Export Growth Slows as External Demand Moderates

Source: Straitstimes

Stock Index Futures Tread Water With Fed Rate Decision in Focus

Pre-Market U.S. Stock Movers

Source: Barchart

Australia Central Bank to Focus on Wholesale Digital Currency Rather Than Retail

Source: Straitstimes

Risk Disclosure