Economy

US: Business activity accelerates in Oct, shortages hamper factories - IHS Markit survey. US business activity increased solidly in Oct, suggesting economic growth picked up at the start of the 4Q as COVID-19 infections subsided, though labor and raw material shortages held back manufacturing. Data firm IHS Markit said its flash US Composite PMI Output Index, which tracks the manufacturing and services sectors, rebounded to a reading of 57.3 in the first half of this month from 55.0 in Sept. (Reuters)

US: 2021 fiscal year deficit below prior year's record, Treasury says. The US budget deficit totalled USD2.772trn during fiscal 2021, below the prior year's record shortfall but still reflecting a second straight year of massive spending to support households and businesses through the coronavirus pandemic, the Treasury Department said. The US posted a deficit of USD3.132trn in fiscal 2020, when the federal government first started spending frantically in response to the pandemic. (Reuters)

EU: Euro zone business growth slowed in Oct, prices soared – PMIs. Growth in euro zone business activity slowed this month as firms faced soaring costs due to supply-chain constraints, while the bloc's dominant service industry struggled amid ongoing COVID-19 concerns, a survey showed. IHS Markit's Flash Composite Purchasing Managers' Index (PMI), a good gauge of overall economic health, fell to a six-month low of 54.3 in Oct from 56.2 in Sept. That matched the lowest forecast in a poll. (Reuters)

EU: Germany's private sector expansion loses momentum. Germany's private sector growth weakened to an eight-month low in Oct, flash survey results from IHS Markit showed. The headline composite output index fell more-than-expected to 52.0 in Oct from 55.5 in the previous month. The expected level was 54.0. The index has fallen in each month since hitting a record high in July. Oct's flash PMI data point to economic activity in Germany beginning to plateau at the start of the fourth quarter. (RTT)

UK: Recovery regains momentum in Oct . The UK private sector growth accelerated unexpectedly in Oct as the easing of pandemic related restriction boosted business and consumer spending amid cost inflation reaching a record high on shortages of staff and materials, a private survey revealed. The composite output index rose to 56.8, a three-month high, from 54.9 in the previous month, flash survey results from IHS Markit and the Chartered Institute of Procurement & Supply showed. (RTT)

Japan: Private-sector activity grows for first time in 6 months – PMI. Japan's factory activity growth in Oct picked up from the previous month, while that of the services sector expanded for the first time in 21 months after an easing of coronavirus pandemic restrictions at home. Manufacturers struggled with supply chain disruptions and surging raw material demand that fuelled the sharpest rise in input prices in more than 13 years, as the health crisis continues to impact the global economy. (Reuters)

Markets

Petronas Dagangan: Divest 100% stake in indirect subsidiary. Petronas Dagangan (PDB) plans to divest 100% of its indirect equity interest in PETRONAS International Marketing (Thailand) Co Ltd (PIMTCL) via PDB companies to PETRONAS Lubricants International (PLISB) for a sale consideration of THB105.73m (RM14.2m). (The Edge)

Gagasan Nadi Cergas: To develop RM1bn GDV affordable housing project in Selangor. Gagasan Nadi Cergas has secured a contract from the Employees Provident Fund’s wholly-owned subsidiary Kwasa Land to develop an affordable housing project in Selangor with a gross development value of RM1bn. The development land is located within the vicinity of the future city centre of Kwasa Damansara. (The Edge)

AME Elite: Secures RM359m contract from Ye Chiu. AME Elite Consortium has secured a RM359m contract from Ye Chiu Non Ferrous Metal (M) to construct its new integrated production facility, logistics warehouse and office building in Johor. AME Elite will build four blocks of production facility with logistics warehouses together with offices and ancillary buildings. (SunBiz)

Ageson: Partners with China's Shuangling to develop a RM95.2m residential development project in Selangor. Ageson signed a collaboration agreement with Shuangling Holdings Ltd (SHL) to undertake a residential construction development project at Mukim Batu, Daerah Gombak, Selangor. The project has a gross development value of approximately RM95.2m. (BTimes)

Opcom: Partners Global Forway in 5G push. Opcom Holdings has entered into a joint venture with Global Forway to combine their capabilities in bidding for jobs in the 5G sector. The collaboration will be formalised through a newly incorporated company, Opcom Visio, in which Opcom will hold a 60% equity interest and Global Forway, the remaining 40%. (StarBiz)

KNM: Accepts RM111m purchase order for air cooled heat exchangers. KNM Group has accepted a purchase order from Bechtel International Inc for the supply of air cooled heat exchangers for RM111m. The duration of the transaction is for a period of about 20 months from the date of the order. (StarBiz)

OCR: Signs MoUs with EMG, BlueDuck to complete property loop. OCR Group has signed two memorandums of understanding (MoUs) to assist its property buyers to utilise a tenant management platform and insurance fintech in seeking, on-boarding and managing the entire tenancy ecosystem. (The Edge)

Texchem: 3Q net profit drops 84% on lower revenue. Texchem Resources saw its net profit contract by 83.86% to RM1.18m or earnings per share of 0.97 sen in the 3QFY21 from RM7.28m or 6.04 sen a year ago, dragged by lower revenue contribution across all its business segments. Quarterly revenue dropped 18.07% YoY to RM235.6m from RM287.56m in 3QFY20. (The Edge)

Hextar Industries: Business disruption due to EMCO hampered earnings in 4Q. Hextar Industries registered a net profit of RM232,000 in the 4Q ended 31 Aug 2021, from a net loss of RM4.31m a year earlier. The revenue decreased 19.5% to RM29.96m in 4Q from RM37.22m last year due to the Enhancement Movement Control Order (EMCO) imposed by the government. (BTimes)

Market Update

The FBM KLCI might open lower today after Wall Street stocks eased off their peak on Friday, while European equities rose, as traders weighed strong corporate earnings against persistent concerns over elevated global inflation. The S&P 500 slipped 0.1% on Friday in New York, having logged an all-time high a day earlier. The Nasdaq Composite dropped 0.8%, weighed down by weak tech stocks. The soggy performance contrasted with a more upbeat session in Europe, where the Stoxx Europe 600 index advanced 0.5%, taking its gain during October so far to almost 4%. The Stoxx 600 has now recouped all of its losses chalked up in September, when global stock markets were weighed down by stagflation fears caused by spiralling energy costs, pandemic related supply chain disruptions and the prospect of central banks raising interest rates to combat high consumer prices.

Back home, the FBM KLCI closed down 3.54 points or 0.22% at 1,588.08 on Friday on profit-taking after rising in recent days ahead of Malaysia's Budget 2022 announcement on Oct 29, 2021. The regional markets were mixed. China’s CSI 300 index rose 0.6% while Tokyo’s Topix closed flat. Brent crude, the oil benchmark, settled up 1.1% to $85.53 a barrel, remaining close to its highest level in three years.

Source: PublicInvest Research - 25 Oct 2021