Economy

EU: Germany industrial output rises for first time in 4 months . Despite supply chain problems, Germany's industrial output grew for the first time in four months in July, underpinned by higher production of capital and consumer goods, Destatis said. Industrial production grew 1% MoM in July, offsetting a revised 1% fall in June. Economists had forecast a monthly growth of 0.9%. The economy ministry said the outlook for the industrial economy as a whole remains positive in the view of continued high demand and production. (RTT)

EU: Eurozone GDP growth exceeds initial estimate in 2Q . The euro area recovered at a faster-than-estimated pace in the 2Q from the Covid-driven downturn, revised data from Eurostat showed. GDP grew 2.2% sequentially in the 2Q, bigger than the initial estimate of 2.0%. The growth reversed the 0.3% fall in the 1Q and the 0.4% drop in the 4Q of 2020. YoY, GDP expanded 14.3% instead of the prior estimate of 13.6%. This follows a 1.2% decline in the 1Q. With revised data showing that the euro-zone economy performed even better than previously thought in the 2Q, the ECB is sure to revise up its GDP forecasts, Capital Economics' economist Jack Allen-Reynolds, said. (RTT)

UK: House prices jump as market strength persists: Halifax . British house prices rose sharply last month in a further sign of strong momentum in the market even after the partial withdrawal of tax breaks on property purchases, a survey from mortgage lender Halifax showed. House prices rose by 0.7% in Aug, the biggest MoM rise for three months and following a 0.4% rise in July, Halifax said. In annual terms, house price growth cooled to 7.1% from 7.6% in July, the weakest reading for five months. (Reuters)

China: Aug exports growth unexpectedly picks up speed in boost to economy . China's exports unexpectedly grew at a faster pace in Aug thanks to solid global demand, helping take some of the pressure off the world's second-biggest economy as it navigates its way through headwinds from several fronts. China staged an impressive recovery from a coronavirus-battered slump, but economic momentum has weakened recently due to the Delta variant-driven Covid-19 outbreaks, high raw material prices, slowing exports, tighter measures to tame hot property prices and a campaign to reduce carbon emissions. (Reuters)

Taiwan: Aug exports leap, 'cautious' optimism on outlook . Taiwan's exports rose for a 14th straight month in Aug, with the stronger-than-expected pace setting a new record, as the island's manufacturers faced sustained demand amid a global shortage of computer chips and for consumer electronics. Exports rose 26.9% from a year earlier to USD39.55bn last month, the Ministry of Finance said, the highest monthly figure on record. The ministry attributed the growth to "robust" demand for chips, a shortage of which has shuttered car plants globally and is affecting consumer electronics and the gradual re-opening of economies around the world, even with the Covid-19 pandemic not abating in many countries. (Reuters)

Australia: Central bank holds rate at record low; confirms tapering . Australia's central bank decided to keep its key interest rate unchanged at a record low and confirmed to taper its bond purchases. The policy board of the Reserve Bank of Australia headed by Governor Philip Lowe decided to leave its cash rate unchanged at a record low of 0.10%. The board maintained the target of 10 basis points for the April 2024 Australian Government bond. The RBA pressed ahead with tapering its asset purchases. (RTT)

Japan: Leading index falls in July . Japan's leading index decreased in July after rising in the previous month, preliminary data from the Cabinet Office showed. The leading index, which measures the future economic activity, fell to 104.1 in July from 104.6 in June. In May, the index was 103.1. The coincident index decreased to 94.5 in July from 94.6 in the previous month. In July, the index was 92.5. The lagging index declined to 93.8 in July from 94.0 in the prior month. In July, the index was 93.0. (RTT)

Markets

Hartalega (Outperform, TP: RM7.80): Glove factories not running at full capacity on ‘disruptive’ fortnightly Covid-19 screening for workers. Hartalega Holdings said its rubber glove factories are not running at full capacity but at about 70% currently as the company abides by the Malaysian government’s Covid-19-driven 60% workforce requirement for manufacturers which are also required to commit themselves to a fortnightly health screening for their entire factory workforce to curb the spread of the pandemic. (The Edge)

Kelington: Bags contract worth RM49m in Singapore. Kelington Group has secured a contract worth approximately RM49m to undertake the bulk gas system distribution works for a global leading semiconductor manufacturer’s new fab in Singapore. Inclusive of this new contract win, Kelington has so far clinched approximately RM344m of new orders in 2021 and boosted its current outstanding orderbook to RM482m. (StarBiz)

Microlink: To raise RM58.22m via private placement. Microlink Solutions is expected to raise gross proceeds of up to RM58.22m via a proposed private placement of up to 10% of the total number of issued shares in the company. The proceeds would be used for its working capital and future working capital. (The Edge)

Reservoir Link: Bags maiden solar PV job. Reservoir Link Energy's 51%-owned unit Founder Energy SB has bagged an RM8.42m purchase order from Solar Bina Engineering SB. It would undertake subcontracting works of installation, testing and communication of photovoltaic modules, inverter, DC cables and associated works for a 100MWac large scale solar photovoltaic project in Marang, Terengganu. (BTimes)

K-One: Inks matching grant agreement with MIDA for ventilator manufacturing. K-One Technology has entered into an agreement with the MIDA for a matching grant of up to RM12.26m for the purpose of developing ventilators. This comes more than a year after K-One's announcement that it had secured a licence to manufacture and distribute low-cost ventilators developed by NASA JPL. (The Edge)

Scope Industries: Proposes 3-for-10 free warrants. Scope Industries has proposed a bonus issue of free warrants on the basis of three warrants for every 10 shares held. The proposal entails the issuance of up to 346.1m warrants. The tentative exercise price is 30 sen per warrant, compared with the counter’s last closing price of 34 sen. (The Edge)

Sand Nisko Capital: Undertakes 1-into-2 share split with free warrants to reward shareholders. Sand Nisko Capital will undertake a share split exercise involving the subdivision of every one existing ordinary share into two shares and bonus issue of up to 115.83m free warrants based on one warrant for every two shares. (BTimes)

Bintai: Healthcare inks agreement with NGT Solutions. Bintai Healthcare had entered into a business collaboration agreement with NGT Solutions (M) SB (NGTS), an appointed healthcare organiser of Duopharma Biotech to jointly distribute Sinopharm’s Covid-19 vaccine to the private sector in Malaysia. (StarBiz)

Market Update

The FBM KLCI might open flat today after government bond prices fell in the US and Europe and the dollar strengthened ahead of central bank meetings that could mark the beginning of the end of crisis-era monetary stimulus. In equity markets, Wall Street’s S&P 500 index closed down 0.3%, while the technology-focused Nasdaq Composite was roughly flat on the day. Jay Powell, the Fed chair, signalled in a speech at the Jackson Hole summit of central bankers last month that investors could expect a slow reduction in bond purchases to begin later this year. Markets at first reacted calmly, although weekly data from the Commodities and Futures Trading Commission showed that traders were buying more contracts that bet on a rise in Treasury yields than those that would profit from them falling. The Fed’s gestures towards tapering come even as the spread of the Delta variant of the coronavirus is hitting economic growth expectations. In Europe, the regional Stoxx 600 equity gauge closed down 0.5%, remaining just shy of its all-time high reached last month. London’s FTSE 100 was also 0.5% lower at the bell.

Back home, Bursa Malaysia ended slightly higher in range-bound trading, supported by buying in selected heavyweight stocks. At 5pm, the benchmark FBM KLCI was up 1.89 points to 1,583.48 from Monday’s close of 1,581.59. The regional markets also ended mostly higher as investors awaited decisions from central banks in Europe and elsewhere on clues on economic stimulus and measures to be taken to curb the Covid-19 pandemic. Singapore’s Straits Times Index gained 0.14% to 3,105.44, Hong Kong’s Hang Seng Index increased 0.73% to 26,353.63, Japan’s Nikkei 225 rose 0.86% to 29,916.14 while South Korea’s Kospi shed 0.5% to 3,187.42.

Source: PublicInvest Research - 8 Sept 2021