Economy

US: Weekly jobless claims fall below 300,000 in boost to labor market recovery. The number of Americans filing new claims for unemployment benefits dropped below 300,000 last week for the first time in 19 months, further evidence that a shortage of workers was behind slower job growth rather than weakening demand for labor. With the second straight weekly decline reported by the Labor Department, initial claims are now in the zone that is generally associated with healthy labor market conditions. (Reuters)

US: Fed, nearing bond-buying 'taper,' remains divided on inflation. Despite a broadly shared view that the US labor market has healed enough to allow the Fed to start reducing its monthly bond purchases as soon as next month, policymakers are sharply divided over inflation and what they should do about it. Views expressed just in the last 24 hours ranged from worried to sanguine. Some policymakers are convinced that once pandemic-disrupted supply chains get back up and running, price rises will calm back down on their own. (Reuters)

US: Fed's Barkin says more data needed before rate hikes are appropriate. Richmond Fed President Tom Barkin said the US central bank has cleared a path for what he hopes to be a “seamless” start to a reduction in its support for the economy, but that it will take more time to determine when interest rate hikes will be appropriate. Fed policymakers feel that labor markets have healed enough to start reducing their crisis-era support for the US economy soon. (Reuters)

EU: German economic institutes cut 2021 GDP forecast. Germany’s top economic institutes cut their joint forecast for 2021 growth in Europe’s largest economy to 2.4% as supply bottlenecks hamper manufacturing, but they raised their prediction for next year. The five institutes - the RWI in Essen, the DIW in Berlin, the Ifo in Munich, the IfW in Kiel and Halle’s IWH - raised their 2022 forecast to 4.8% from 3.9%. (Reuters)

UK: BoE hike expectations push sterling to two-week high. Sterling hit a two-week high, adding to the previous session’s gains, as traders focused on hopes that a post-Brexit trade war with the EU will be avoided and on expectations the BOE will raise rates this year. The pound was also helped by the dollar’s weakness as upbeat sentiment lifted stock markets and risk-oriented currencies such as sterling. (Reuters)

China: Economic growth slowed in Q3; government confident of achieving full-year goals – premier. China’s economic growth slowed in the Q3 due to a combination of reasons, but the government is confident of achieving full year development goals, Premier Li Keqiang said. China’s economic recovery is still uneven but we have ample tools to deal with the challenges, said Li at the opening ceremony of the Canton Fair in Guangzhou. (Reuters)

China: Cold keeps China coal prices high, power crunch stokes factory inflation. China coal prices held near record highs as cold weather swept into the country’s north and power plants stocked up on the fuel to ease an energy crunch that is fuelling unprecedented factory gate inflation. A widening power crisis in China has halted production at numerous factories including many supplying big global brands such as Apple Inc. (Reuters)

Japan: Industrial production falls less than estimated. Japan's industrial production declined less than initially estimated in Aug, data from the Ministry of Economy, Trade and Industry said. Industrial production fell a seasonally adjusted 3.6% monthly in Aug. In the initial estimate, output declined 4.3%. Shipments decreased 4.4% on month in Aug and inventories fell 0.1%. (RTT)

India: Sept WPI inflation eases to 10.66% YoY. India’s annual wholesale price-based inflation in Sept eased to 10.66% from the previous month’s 11.39%, remaining in double digits for the sixth month in a row, government data showed. Fuel and power prices rose 24.81% in Sept YoY compared with 26.09% in Aug, while manufactured product prices rose 11.41% compared with 11.39% in the previous month. (Reuters)

Singapore: Central bank tightens monetary policy. Singapore central bank unexpectedly tightened its monetary policy as the economy is expected to sustain strong growth underpinned by foreign demand and domestic spending. The Monetary Authority of Singapore decided to raise slightly the slope of the policy band, from zero percent previously. The width of the policy band and the level at which it is centered will be unchanged. (RTT)

Markets

TM (Outperform, TP: RM6.90): MMEA inks AMHS communication line lease agreement with Telekom Malaysia. The Malaysian Maritime Enforcement Agency (MMEA) has signed the Aeronautical Message Handling Services (AMHS) communication line lease agreement with Telekom Malaysia for Cospas-Sarsat, a satellite-aided search and rescue initiative. The Cospas-Sarsat system AMHS communication line rental contract worth RM515,160 is for a period of three years from Aug 1 to July 31, 2024. (The Edge)

AirAsia (Neutral, TP: RM0.86): Airline holding company renamed to create clear airline vs digital distinction. AirAsia Group has renamed the holding company of its airline operations to AirAsia Aviation Ltd as the low cost carrier undertakes a rapid transformation from an airline into a digital travel and lifestyle services. AirAsia Group, said Bo Lingam would take over as group chief executive officer of AirAsia Aviation, overseeing its four airlines (AirAsia Malaysia, AirAsia Philippines, AirAsia Thailand and AirAsia Indonesia). (BTimes)

Kerjaya Prospek: Accepts RM258m building contract in Johor . Kerjaya Prospek Group’s unit has accepted a letter of award for a RM258m residential project in Plentong, Johor from Teguh Harian Build-Tech SB. Kerjaya Prospek (M) SB secured the contract for the main building works for the project which covers the construction of main building works for three blocks of apartment. The project includes common area and mechanical & electrical facilities, and a 12-storey podium carpark consisting of carpark and M&E facilities. (StarBiz)

Sedania: Unit inks deal to bid for digital Islamic bank licence . Sedania Innovator unit Sedania As Salam Capital SB has inked a MoU with FCA Capital SB in its bid for a digital Islamic bank licence from Bank Negara Malaysia. Sedania said FCA acted as the financial advisor for a consortium that submitted a bid for approval of a digital Islamic bank licence from the central bank. It said the decision for the digital Islamic bank licence is expected to be announced by the first quarter of 2022. (The Edge)

Advancecon: Bags another ECRL subcontract job for RM17m. Advancecon Holdings said it has been appointed a subcontractor for the proposed construction and completion of ground treatment work of Section 4 of the East Coast Rail Link (ECRL) project for RM16.97m. It has accepted the letter of acceptance from China Communications Construction (ECRL) SB for the appointment. (The Edge)

Binasat: Plans private placement to raise up to RM23m . Binasat Communications has proposed a private placement to raise as much as RM23.3m to fund its working capital, mainly for the group's fibre optic telecommunications network supporting services. (The Edge)

MISC: Unit AET completes first ever LNG bunkering in US . MISC’s unit, AET has completed its first-ever liquefied natural gas (LNG) bunkering in the US, working in coordination with Shell to refuel the LNG dual-fuel Aframax tanker Pacific Ruby outside Port Canaveral in Florida. The transfer of 600 tonnes of marine LNG onto the 113,305 DWT petroleum tanker from the Q-LNG 4000 bunker barge was safely completed within three hours. (The Edge)

Market Update

The FBM KLCI might nudge higher today after the US stock market had its best day since March on Thursday, as investors’ worries about inflation and potential interest rate increases were tempered by upbeat corporate earnings reports. The S&P 500 closed 1.7% higher, its biggest one-day rise in seven months, though the blue-chip index remains about 2.4% below its all-time high hit in early September. The technology-focused Nasdaq Composite also added 1.7%, its best day since May. Europe’s Stoxx 600 equity benchmark closed up 1.2%. The moves came after Taiwan Semiconductor Manufacturing Company, whose chips are used in everything from iPhones to cars, posted a better than expected 14% rise in profits for the third quarter from the same period last year. Citigroup and Bank of America also posted quarterly earnings that beat analysts’ estimates as both US companies released funds from bad loan reserves in a sign of growing confidence in borrowers’ abilities to repay. The luxury goods group LVMH said earlier in the week that Chinese demand had held up through a manufacturing slowdown and government crackdown on property speculation.

Back home, Bursa Malaysia closed lower on Thursday, with its key index declining 0.49% due to profit-taking activities after seven days of gains. The market was dragged down mainly by banking, plantation, and oil and gas heavyweights and at the closing bell, the FBM KLCI shrank 7.86 points to 1,592.52 from 1,600.38 at Wednesday’s closing. In the region, China’s CSI 300 share index closed 0.5% lower. Japan’s Nikkei 225 rose 1.5% as exporters were boosted by the weak yen, which is close to its lowest level against the dollar since November 2018.

Source: PublicInvest Research - 15 Oct 2021