Economy

US: Existing home sales spike much more than expected in Sept. After reporting a decrease in US existing home sales in the previous month, the National Association of Realtors released a report showing existing home sales rebounded by much more than expected in the month of Sept. NAR said existing home sales spiked by 7.0% to an annual rate of 6.29m in Sept after slumping by 2.0% to a rate of 5.88m in Aug. Economists had expected existing home sales to jump by 3.6% to a rate of 6.09m. (RTT)

US: Leading economic index rises less than expected in Sept . Suggesting the US economy remains on a more moderate growth trajectory compared to the first half of the year, the Conference Board released a report showing a modest increase by its index of leading economic indicators in the month of Sept. The Conference Board said its leading economic index edged up by 0.2% in Sept after advancing by 0.8% in Aug and 0.9% in July. Economists had expected the index to rise by 0.5%. "The Delta variant, rising inflation fears, and supply chain disruptions are all creating headwinds for the US economy," said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. "Despite the LEI's slower growth in recent months, the strengths among the components remain widespread," he added. "Indeed, The Conference Board continues to forecast strong growth ahead: 5.7% YoY for 2021 and 3.8% for 2022." (RTT)

EU: Eurozone consumer confidence weakens less than expected. Euro area consumer confidence deteriorated less than expected in Oct, after improving in the previous month, preliminary data from the European Commission showed. The flash consumer confidence index dropped to -4.8 from -4.0 in Sept. Economists had forecast a score of -5.0. In August, the reading was -5.3. The corresponding index for the EU shed 0.9 points to -6.1 in Oct. In Aug, the score was -6.3%. The indicator remains close to or above its pre pandemic level in both regions, the commission said. The survey data was collected from October 1 to 20. (RTT)

UK: Factory orders growth falls to six-month low – CBI . British industrial orders growth slowed sharply in Oct to its weakest in six months, against a backdrop of sharply rising raw materials prices and widespread labour shortages, figures from the Confederation of British Industry showed. The CBI’s monthly manufacturers’ order book balance fell to +9 in Oct from +22 in Sept, its lowest since April and well below the average forecast of +18 in a Reuters poll of economists. Quarterly CBI survey data showed domestic prices in Oct rose at the fastest pace since April 1980, while stocks of raw materials were the lowest on record. The survey’s gauge of expected average unit costs - which add in wage bills - rose to its highest since April 1977. (Reuters)

Japan: BOJ says Japan's banking system stable, warns of risks . Japan’s banking system remains broadly stable but financial institutions could face risks including from a possible increase in credit costs caused by a delay in the economic recovery, the Bank of Japan (BOJ) said in a report. Financial institutions also risk incurring losses on their securities investment portfolios in the event of a rapid market adjustment, the BOJ said, adding the central bank must remain vigilant. “Credit risk of overseas loans is generally contained as overseas economies recover on the whole. (Reuters)

Australia: Manufacturing PMI climbs to 57.3 in Oct – Markit. The manufacturing sector in Australia continued to expand in Oct, and at a faster pace, the latest survey from Markit Economics showed with a manufacturing PMI score of 57.3. That's up from 56.8 in Sept, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Output and new order growth accelerated in their second consecutive months of expansion amid reports of better economic conditions and confidence by survey respondents. As a result, employment levels and buying activity continued to expand. The survey also showed that the services PMI climbed to 52.0 in October from 45.5 in September, while the composite rose to 52.2 from 46.0 a month earlier. (RTT)

Korea: Oct 1-20 exports surge 36.1% YoY - customs agency . South Korea’s exports for the first 20 days of the month soared 36.1% from a year earlier, customs agency data showed, while imports surged 48.0%, resulting in a provisional trade deficit of USD2.49bn. Breakdown of the data showed outbound shipments of semiconductors, petroleum products and vessels jumped 23.9%, 128.7% and 93.5%, respectively. Exports to China, the US and EU, during the period, rose 30.9%, 37.1% and 42.1% respectively, the data showed. (Reuters)

Markets

KLK (Outperform, TP: RM25.51): Extends IJM Plantations MGO to Nov 18. Kuala Lumpur Kepong (KLK) has extended the deadline for minority shareholders in IJM Plantations Bhd to accept its takeover offer to Nov 18. The RM3.10 a share buyout offer was originally supposed to expire on Oct 25. KLK in September completed the purchase of a 56.2% stake in IJM Plantations from IJM Corp for RM1.53bn, triggering a mandatory general offer to buyout the remaining shareholders in IJM Plantations. (StarBiz)

KPS: Unit bags RM92m contract from Air Selangor. Kumpulan Perangsang Selangor Bhd's (KPS) 51%-owned subsidiary Aqua Flo SB has clinched an RM91.6m contract from Pengurusan Air Selangor SB (Air Selangor) to supply water chemicals to water treatment locations specified by Air Selangor or its subsidiary and associated companies. The contract will run for 14 months from Nov 1, 2021 to Dec 31, 2022. (The Edge)

Willowglen: Bags RM5.84m contract for installation of security, communications systems. Willowglen MSC has been awarded a RM5.84m contract for works relating to the installation of a public address emergency system and other security and communication systems for a fire station at Singapore Changi Airport. The contract is expected to contribute positively to the group’s earnings and net assets per share for the financial years ending Dec 31, 2021 and 2022. (The Edge)

Jaycorp: Announces 1-for-1 bonus issue. Jaycorp has proposed to undertake a bonus issue of 137.25m new shares on the basis of one bonus share for every one share held. Jaycorp said the entitlement dates will be determined later. The bonus issue could encourage greater participation in the equity of the company and potentially result in improved trading liquidity of Jaycorp shares. (The Edge)

Lotte Chemical Titan: To proceed with Indonesian project as economies open up. Lotte Chemical Titan Holding (LCT) has decided to proceed with the construction of an RM18bn integrated petrochemical project in Indonesia, in view of the increase in worldwide Covid-19 vaccinations and opening up of global economies. The construction of the Lotte Chemical Indonesia New Ethylene (LINE) project is expected to commence in 2022 and be completed by 2025. (The Edge)

Ageson: To sell portion of industrial land in Perak for RM279m. Ageson Bhd is selling a piece of industrial land measuring approximately 168 acres in Batang Padang, Perak for a purchase consideration of RM278.78m. Ageson’s indirect 75%- owned subsidiary Ageson Holdings SB (AHSB) had entered into a sale and development agreement with China’s Zhejiang Guorong Digital Economy Group Ltd (ZGDEG). (The Edge)

Supermax: US Customs issues seize order on Supermax products on forced labour finding. Supermax Corporation units Maxter Glove Manufacturing SB, Maxwell Glove Manufacturing, and Supermax Glove Manufacturing will be detained at all US ports of entry effective Thursday (Oct 21). US Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) against Supermax Corp and its subsidiaries based on information that reasonably alleged their use of forced labor in manufacturing operations. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks staked out a record high on Thursday, with the S&P 500 index surpassing a previous peak reached seven weeks ago as strong corporate earnings bolstered the mood on Wall Street. The US blue-chip S&P closed up 0.3%, led by stocks such as Microsoft, Tesla, Netflix and Amazon. The stock price of electric vehicle maker Tesla rose to a record high after beating earnings late on Wednesday. Thursday marks the seventh consecutive day of gains for the index, the longest winning streak since June 2021. The S&P 500 ended the longest period without a new record since November 2020. The technology-focused Nasdaq Composite added 0.6%. In Europe, the Stoxx 600 index ended the session flat, remaining just over 1% below its August high. Strengthening global equities performance comes as large consumer-facing businesses said they had passed higher input prices on to customers, adding more fuel to a debate about prolonged inflation leading to interest rate rises. On Thursday, household goods group Unilever warned about inflation, but said it had managed to raise product prices in response. The consumer goods groups Nestlé and Procter & Gamble also said this week they had lifted prices to counteract higher input costs. London’s FTSE 100 slipped 0.5% as shares in miners exposed to China’s slowing economy dropped.

Back home, the FBM KLCI on Thursday retraced gains over the last three sessions on profit taking, with investor sentiment also hit by news of the US crackdown on glove maker Supermax Corp Bhd. The benchmark index closed 14.7 points or 0.92% lower at 1,591.62, after moving between 1,590.34 and 1,608.92. Hong Kong’s Hang Seng index fell 0.5% after the distressed Chinese homebuilder Evergrande said a planned sale of its property services division had collapsed. Elsewhere, Japan’s Nikkei 225 lost 1.9% and China’s Shanghai Composite Index ticked up 0.2%

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Source: PublicInvest Research - 22 Oct 2021