In today’s briefing:
- Malaysia Economics – Is 2025 Budget’s Gradualism Good Enough?
- China Big Corporate Debt Deleveraging
- [IO Technicals Weekly 2024/42] Iron Ore Price Reversal Continues
- Fenix Resources (FEX AU): Small Cap Iron Ore Miner With Great Upside
- Actinver Research – Macro Daily: Inflation 1h-Oct (Estimate)
Malaysia Economics – Is 2025 Budget’s Gradualism Good Enough?
- Malaysia’s budget saw the government continue to make minor tweaks to tax and spending, even as the data show that fiscal consolidation is slowing down.
- The proposed tax-raising measures are too narrowly targeted, limiting their scope to expanding the tax base and raising substantial revenues.
- Without more decisive action, the government risks missing its deficit and debt targets, which it set under the Medium-Term Fiscal Framework.
China Big Corporate Debt Deleveraging
- Private companies ex property developers have seen a small pay down of debt, but the largest remaining portion of non-financial debt ex LGFV is central and local SOE’s.
- They have low profitability and have shown few signs of increased leverage. This leaves the onus on fiscal policy.
- Reports suggests that the LGFV debt swap for local and central government bonds could be Yuan6trn through end 2027, but what is happening to other non-property developer corporate debt?
[IO Technicals Weekly 2024/42] Iron Ore Price Reversal Continues
- SGX IO Futures fell for the second consecutive week, closing USD 4.15/ton lower at USD 101.70/ton on 18/Oct, with a trading range of USD 9.75/ton.
- Short-Term moving averages signaled a bearish reversal, with a downward 9-day moving average and failure to break above key pivot points.
- Heavy selling pressure and expanded China stimulus measures disappointed market expectations, signaling continued bearish trends with a potential test of USD 97.5/ton support.
Fenix Resources (FEX AU): Small Cap Iron Ore Miner With Great Upside
- Fenix Resources (FEX AU) is a small-cap iron ore miner/logistics provider with massive upside based on an increasing sales profile from 1.3 to 4 million tons over FY25/26.
- The company is also positioning itself as a logistics provider with the potential to transport 10 million tons of material through the Geraldton Port with its infrastructure in place.
- Trading at 5.4x FY25e PE with a 1.8 EV-EBITDA, >38% of the market cap in cash, this is a stock worth exploring.
Actinver Research – Macro Daily: Inflation 1h-Oct (Estimate)
- As agricultural prices have completed their correction, we do not expect more downward surprises in inflation.
- Meanwhile, we estimate energy prices to rise this fortnight because of the withdrawal of summer electricity subsidies.
- As a result, we estimate headline inflation at 0.41% bw, consistent with its historical average.
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