Economy

Global: Softness in global economy to extend into 2016 as developing world drags. A relentless deceleration in the economies of the developing world will cause global growth to slow this year and only pick up a bit more pace in 2016, the head of the IMF said. She said growth was picking up in the euro area and Japan and still looked robust in the United States and Britain. (Reuters)

US: Jobs sector gains, Midwest manufacturing stumbles. US companies hired workers at a solid clip in Sept, but data showed factory activity in the US Midwest contracted, muddying the economic picture for the Federal Reserve on whether to raise interest rates later this year. (Reuters)

EU: To ease capital rules for banks, insurers to boost economy. The European Union will ease capital rules it has imposed on banks and insurers since the financial crisis to help markets raise more funds for reviving sluggish economic growth. Early initiatives include making it cheaper for banks to sell high quality securities based on the pooling of loans such as mortgages, known as securitization, to institutional investors. (Reuters)

UK: House price growth picks up in Sept. British house price growth accelerated in Sept and there were signs the market in London is heating up again, mortgage lender Nationwide said. House prices rose 0.5% MoM in Sept, slightly more than expected in a Reuters poll and up from 0.4% in Aug. (Reuters)

China: Premier says able to achieve 2015 economic targets. China will be able to achieve its main economic targets this year, despite increased downward pressure on the economy, Premier Li Keqiang said. China's economic growth remained within "a reasonable range", Li reiterated. The government aims for economic growth of around 7% this year. (Reuters)

Indonesia: Annual inflation rate seen easing in Sept. Indonesia's annual inflation is expected to have eased slightly in Sept as raw food and administered prices cooled. Indonesia's central bank also sees YoY inflation of around 7% in Sept, with prices rising 0.06% on monthly basis. (Reuters)

Markets

Malakoff (Outperform, TP: RM2.18): Says PD Power awaiting EC nod. Independent power producer Malakoff and its indirect unit, Port Dickson Power are still awaiting the Energy Commission’s (EC) decision to renew its power supply deal. Malakoff said that PD Power had on April 13 submitted a bid to the EC to take part in a restricted invitation to bid for the renewal of its operation for short-term generation capacity. “The company wishes to clarify that to date, neither Malakoff nor PD Power has been notified by the EC on the outcome of the bid,” it said. (StarBiz)

Maybank: Completes sale of PNG assets. Malayan Banking (Maybank) has completed its exit from Papua New Guinea (PNG) following the sale of its stakes in Maybank (PNG) Ltd (MPNG) and Mayban Property (PNG) Ltd (MPPNG). Maybank said the assets were disposed of to Kina Ventures Ltd for RM546.8m following the May 18 share sale agreement. (StarBiz)

Taliworks: Awarded RM75.9m reservoir contract. Taliworks Corp has been awarded a RM75.9m project to construct and complete the Hulu Langat balancing reservoir with 92m litres capacity and other ancillary works under a joint-venture agreement (JVA) with LGB Engineering SB. Taliworks said the 27-month project was awarded by Pengurusan Aset Air (PAAB) to the company's 20% associate company LGB Taliworks Consortium SB via a letter of acceptance dated Sept 28, 2015. (SunBiz)

Protasco: Gets RM44m AFC building job in Bukit Jalil. Protasco has bagged a RM44m contract from the Asian Football Confederation to build a four-storey office in Bukit Jalil. It said its unit HCM Engineering SB had received the letter of acceptance from AFC to undertake the project. (StarBiz)

Theta Edge: Secures MoF job worth RM91.9m. Theta Edge has bagged a contract to develop a web service for Accountant General's Department of Malaysia from the Ministry of Finance (MoF) worth RM91.9m. "The project is for a duration of 29 months commencing from Sept 1, 2015 until Jan 31, 2018," Theta Edge said. (Financial Daily)

Southern Steel: Sells off JV stake, ends tie-up with Bekaert Singapore. Southern Steel (SSB) has disposed of its entire 45% stake in loss-making Bekaert Southern Wire Pte Ltd (BSWPL) to its joint venture partner Bekaert Singapore Pte Ltd (Bekaert Singapore) for USD5.7m or RM25.0m, cash. (Financial Daily)

Asia File: Weak ringgit factor a boost to earnings. The weak ringgit factor is a boost to Penang-based filing and stationeries items manufacturer Asia File Corp. Asia File executive chairman Datuk Michael Lim Soon Huat said that currently 90% of its revenue is denominated in currencies other than the ringgit, such as the US dollar, Euro and British Pound. (Financial Daily)

GPA: Expects to return to the black in FY16. Automotive battery firm GPA Holdings, which is shutting down its manufacturing operations by the end of this year, expects to return to the black for the FY16, with the reduction of its working capital and improved cash flow. (SunBiz)

MARKET UPDATE

US markets ended the third calendar quarter of the year on a positive note with the Dow Jones Industrial Average and S&P 500 closing 1.5% and 1.9% higher respectively, pegging back some of the quarter’s losses for both benchmark indices which hit about 7%. Data released on the day showed the country’s private sector adding more jobs than expected in September, lifting expectations of a strong showing in the government’s official numbers due out tomorrow. The US government, meanwhile, dodged another bullet after the US Congress passed a stopgap spending bill hours before a shutdown deadline was set to expire yesterday. European markets also closed higher for the day as investors piled on into equities on bets that the recent quarter being the worst since 2011 is already reflecting most concerns about weaker economic prospects. Both France’s CAC 40 and UK’s FTSE 100 rose 2.6% while Italy’s FTSE MIB and Spain’s IBEX 35 gained 2.7% and 1.8% respectively. Germany’s DAX inched 2.2% higher despite the country’s unemployment rate unexpectedly rising in September. Earlier in the day, Asian equities started (and ended) off the trading session on a positive note, though possibly a combination of a technical rebound following recent days’ drops and “window dressing” activities given the quarter-end. Economic data points continue to be weak. Japan’s industrial output fell 0.5% in August contrary to expectations of a 1% increase while retail sales numbers also missed estimates. The Nikkei 225 ended the day 2.7% higher regardless. China’s statistics bureau will release its official manufacturing index numbers for September later today, one which is expected to be unchanged at 49.7 from a month earlier. The Shanghai Composite Index closed 0.5% higher and will remain closed for the next one week for its National Day holidays. Elsewhere, benchmarks in Hong Kong, Malaysia and Indonesia rose 1.4%, 1.1% and 1.1% respectively. Singapore’s Straits Times Index only managed a 0.1% gain however.

Protasco has secured an RM44m job which will involve the construction of an additional 4-storery building with a basement car park for the Asian Football Confederation. LGB Taliworks Consortium Sdn Bhd, in which Taliworks Corporation Berhad has a 20% stake, has been awarded an RM75.9m contract by the federal government through Pengurusan Aset Air Berhad to construct and complete a 92-litre balancing reservoir for the proposed Langat 2 Water Treatment Plant. Subject to approvals, the consortium will subcontract 70% of the works to Taliwork’s wholly-owned Taliworks Construction Sdn Bhd, a move which will obviously see the company benefitting more significantly from this project. Another to benefit from projects awarded will be Theta Edge which has clinched an RM91.9m contract to develop a web service for the Malaysian Accountant General’s Department. The job will involve the provision of hardware, software, training and implementation of the accruals accounting system for 11 state treasuries.

Source: PublicInvest Research - 1 Oct 2015