Economy

US: Job growth takes giant step back as Delta variant hits restaurants . The US economy created the fewest jobs in seven  months in Aug as hiring in the leisure and hospitality sector stalled amid a resurgence in COVID-19 infections, which weighed on demand at restaurants and hotels. But other details of the Labor Department's closely watched employment report were fairly strong, with the unemployment rate falling to a 17-month low of 5.2% and July job growth revised sharply higher. Wages increased a solid 0.6% and fewer people were experiencing long spells of unemployment. (Reuters)

US: Services index indicates slower growth in Aug . A report released by the Institute for Supply Management showed US service sector growth slowed from a record pace in the month of Aug. The ISM said its services PMI fell to 61.7 in Aug after reaching an all-time high of 64.1 in July, although a reading above 50 still indicates growth in the sector. Economists had expected the index to drop to 61.5. (RTT)

EU: Euro zone business activity strong in Aug but supply issues weighed — PMI. Euro zone business activity remained strong last month, despite fears about the Delta variant of the coronavirus and widespread supply chain issues, according to a survey which suggested the bloc's economy could be back to pre-Covid-19 levels by year-end. IHS Markit's final composite Purchasing Managers' Index (PMI), seen as a good guide to economic health, dropped to 59.0 last month from July's 15-year high of 60.2, still well above the 50 mark separating growth from contraction but below a 59.5 "flash" estimate. (Reuters)

EU: Eurozone private sector growth moderates in Aug . Eurozone private sector logged another robust growth in Aug but the momentum faded slightly from July's 15-year peak, final data from IHS Markit showed. The final composite output index fell to 59.0 in August from 60.2 in July, which was the highest since June 2006. The reading stood below the flash 59.5. Nonetheless, a reading above 50.0 indicates expansion in the sector. The score indicated one of the fastest rates of growth seen in the past 15 years. (RTT)

UK: Service sector growth slows in Aug . The UK service sector growth weakened in Aug largely due to supply chain disruptions and the normalization of customer demand after the initial loosening of pandemic restrictions, final survey data from IHS Markit showed. The Chartered Institute of Procurement & Supply final services Purchasing Managers' Index dropped to 55.0 from 59.6 in the previous month. The flash reading was 55.5 The index has posted above the 50.0 no change value in each of the past six months, but the rate of expansion was the slowest since the service sector returned to growth after lockdown. (RTT)

China: Aug services activity slumps into contraction - Caixin PMI . Activity in China's services sector slumped into sharp contraction in Aug, a private survey showed, as restrictions to curb the COVID-19 Delta variant threatened to derail the recovery in the world's second biggest economy. The Caixin/Markit services Purchasing Managers' Index (PMI) fell to 46.7 in Aug from 54.9 in July, plunging to the lowest level since the pandemic's first wave in April 2020. The 50-point mark separates growth from contraction on a monthly basis. (Reuters)

Singapore: Retail sales growth slows in July. Singapore retail sales increased at a softer pace in July, data from the Department of Statistics showed. Retail sales grew 0.2% year-on-year in July, after a 26.0% rise in June. Motor vehicle sales declined 9.8% annually in July, after an 80.6% growth in the previous month. Excluding motor vehicles, retail sales gained 2.0% in June, after a 19.2% rise in the preceding month. Sales of petrol service stations gained 33.0% yearly in July and those of watches and jewelry grew 10.4%. (RTT)

Markets

IGB Commercial REIT: Prices institutional offering at 71 sen per unit. IGB Commercial REIT has fixed 71 sen as the price for the institutional portion of its IPO, notably lower than the indicative price of 83 sen apiece set for its book-building exercise. The institutional price was set following the completion of the book-building process on Sept 2. (The Edge)

Seni Jaya: Proposes bonus issue. Seni Jaya Corp (SJC) has proposed a bonus issue of up to 24.27m warrants on the basis of one warrant for every two existing shares on an entitlement date to be determined later. For illustrative purposes, the exercise price of the warrants is assumed to be RM1.971 each, which is a discount of 10% to the five-day volume weighted average market price of SJC shares up to and including the latest practicable date of RM2.19 per share. (StarBiz)

MAA, KNM: MAA becomes a substantial shareholder of KNM Group. MAA Group has acquired over 233m shares of KNM Group at an average price of 22.7 sen per share from the open market between Aug 3 and Sept 1. MAA said the RM52.89m acquisition represented 7.01% of the total issued share capital of KNM, making it a substantial shareholder of the latter. (BTimes)

Mestron: To acquire Liziz Biogas for RM3m. Mestron Holdings (MHB) is acquiring the entire stake in Liziz Biogas SB (Liziz) from Maxcom Engineering SB for RM3m cash. The company said the acquisition represents MHB's second effort to venture into the green technology business to enhance recurring income for the company. Liziz is principally involved in generating biogas electric energy. The company has also recently ventured into solar power systems for the telecommunication industry. (BTimes)

XL: Diversifies into plantation business with RM40m Ergobumi acquisition. XL Holdings has proposed to acquire a 100% stake in Ergobumi SB for RM40m. XL said the proposed acquisition, comprising 500,000 ordinary shares from Lee Kok Soon and Edmund Chan Seng Kee, represents an opportunity for the edible bird nest and arowana breeding company to pursue its diversification strategy. (The Edge)

Handal: Wins 1-year contract extension from SEA Hibiscus. Handel Energy has bagged an extended contract from SEA Hibiscus SB for the provision of offshore crane maintenance services. The new agreement extends Handal Cranes’ contract from Oct 31, 2021 to Oct 30, 2022. (StarBiz)

Bioalpha: Cancels Covid-19 vaccine deal with Sinopharm unit. Bioalpha Holdings has called off a deal it entered into in Jan to distribute Covid-19 vaccines in Malaysia. The group said it has mutually agreed to terminate the agreement with Shanghai Bukun Trading Co Ltd with immediate effect. Bioalpha said its directors and management are of the opinion that the deal is not viable for the group. (The Edge)

NetX: Pays RM20 for Sungei Wang Plaza retail units that come with RM32.8m court settlement liabilities. NetX Holdings is acquiring the holding companies of six retail units in Sungei Wang Plaza that have court settlement liabilities for a nominal sum of RM20. (The Edge)

Market Update

The FBM KLCI might open flat today after Treasuries weakened while stocks on Wall Street were little changed on Friday as investors grappled with the implications of a much weaker than expected US jobs report for the world’s largest economy. Employers in the US added 235,000 jobs in August, the government’s monthly non-farm payrolls survey showed, about one-third of economists’ predictions of more than 728,000 new hires. Wages rose more than expected, however, while the participation rate was unchanged at 61.7%. Wall Street’s blue-chip S&P 500 share index ended the day marginally lower, falling short of the record high set the day before. However, the decline was not enough to blunt the market’s advance over the week, with the S&P 500 notching its second consecutive weekly gain. The technology focused Nasdaq Composite rose 0.2%, setting a new closing high. Meanwhile, Europe’s Stoxx 600 share index fell 0.6%. 

Back home, late buying in selected telecommunications and media as well as financial service counters has pushed Bursa Malaysia to end at its intra-day high last Friday amid mixed sentiments on the regional markets. At 5pm, the benchmark FBM KLCI was up seven points at 1,589.19 from Thursday’s close of 1,582.19. In the region, Japan’s Nikkei 225 jumped almost 2.1% after Japanese Prime Minister Yoshihide Suga said he wouldn’t seek re-election as ruling-party leader. Investors cheered comments from potential successors who proposed big economic-stimulus programs to lift Japan out of sluggishness caused by repeated Covid-19 waves. Other Asian indices closed with mixed performances. China’s Shanghai Composite fell 0.4%, and Hong Kong’s Hang Seng contracted 0.7%.

Source: PublicInvest Research - 6 Sept 2021