Economy

US: Consumer confidence unexpectedly improves in Oct. Reflecting easing concerns about the Delta variant of the coronavirus, the Conference Board released a report showing US consumer confidence reversed a three-month downward trend in the month of October. The Conference Board said its consumer confidence index climbed to 113.8 in Oct from an upwardly revised 109.8 in Sept. The rebound surprised economists, who had expected the consumer confidence index to edge down to 109.0 from the 109.3 originally reported for the previous month. (RTT)

US: New home sales spike much more than expected in Sept. New home sales in the US skyrocketed in the month of Sept, according to a report released by the Commerce Department. The new home sales soared by 14% to an annual rate of 800,000 in Sept after falling by 1.4% to a downwardly revised rate of 702,000 in Aug. Economists had expected new home sales to jump by 2.7% to an annual rate of 760,000 from the 740,000 originally reported for the previous month. (RTT)

US: Home price growth slowed in Aug - S&P Case-Shiller. US single-family home prices rose less than expected in Aug, posting the smallest monthly gain in more than a year, a closely watched survey said. The S&P CoreLogic Case Shiller composite index of 20 metropolitan areas rose 1.2% on a seasonally adjusted basis after posting a 1.5% increase in July. It was the smallest monthly gain since July 2020 and was below the consensus estimate in a poll of economists for a gain of 1.5%. (Reuters)

EU: Banks to tighten conditions for housing loans - ECB Survey. Eurozone banks plan to tighten their conditions for housing loans further in the 4Q, the Bank Lending Survey from the European Central Bank showed. In the 4Q, banks plan to tighten credit standards for loans to firms and to ease criteria slightly for consumer credit. Lending standards for consumer credit and other lending to households remained broadly unchanged in the 3Q. (Reuters)

EU: Germany cuts 2021 GDP growth forecast, lifts 2022 estimate - sources. The German government has cut its economic growth forecast for this year to 2.6% but lifted its estimate for next year to 4.1% as supply problems are delaying the recovery in Europe’s largest economy, two sources familiar with the decision said. The revised government forecast for GDP growth compares with an April prediction for the economy to grow by 3.5% in 2021 and by 3.6% in 2022. (Reuters)

UK: Retailers expect sales to rise further in Nov - CBI. UK retailers expect sales to be above seasonal norms in Nov, the Distributive Trades Survey results from the Confederation of British Industry revealed. The retail sales balance rose to 30% in Oct from 11% in Sept. A net 35% forecast sales to increase further next month. A net 48% of retailers reported order growth in Oct versus 20% in Sept. However, a net 41% expects orders to ease slightly next month. (RTT)

UK: Annual pay data shows biggest rise since 2008. Full-time earnings in Britain rose by the most since 2008 in April, up by 4.3% from a year earlier, although the government’s furlough scheme and other distortions related to COVID-19 probably pushed up growth, official data showed. The Office for National Statistics’ annual earnings survey is normally the gold standard of British labour market data, covering many more workers than its monthly figures. (Reuters)

South Korea: Consumer confidence index climbs to 106.8 in Oct - BoK. Consumer confidence in South Korea improved in Oct, the latest survey from the Bank of Korea showed with a Composite Consumer Sentiment Index score of 106.8 - up from 103.8 in Sept. Consumer sentiment for current living standards was one point higher than in Sept at 92, while the outlook was two points higher at 98. Consumer sentiment related to future household income was two points higher than in Sept at 101, while the outlook for future household spending was three points higher at 112. (RTT)

Singapore: Industrial production drops in Sept. Singapore's industrial production dropped in Sept, data from the Economic Development Board showed. Industrial output declined 3.4% YoY in Sept, after a 11% rise in Aug. Production was forecast to decrease 0.5%. Excluding biomedical manufacturing, industrial production gained 9.4% yearly in Sept, after a 13.5% rise in the preceding month. On a monthly basis, industrial production fell 2.8% in Sept, after a 5.6% gain in the previous month (RTT)

Markets

Sime Darby (Outperform, TP: RM2.78): Invests over RM120m on new BMW centre. Sime Darby marked a milestone as it broke ground on its new BMW 4S dealership in Balakong, Selangor. (BTimes)

Comments: Sime Darby’s auto division has broken ground on its new BMW 4S dealership in Balakong. The RM120m 243,342 sqft facility sits along the Silk Highway is set to open its doors in 1Q 2023. The investment is expected to be funded via internally generated fund and borrowings. Overall we expect the Group to derive bulk of its revenue from China luxury segment while Malaysia’s automotive sector is likely to remain under pressure from cautionary consumer spending, though stimulus measures such as the sales tax exemption could support sales. We keep our estimate unchanged and maintain our Outperform call with unchanged TP of RM2.78.

Serba Dinamik (Neutral, TP: RM0.31): Premature to release special independent review. Serba Dinamik Holdings has no intention to delay the release of its special independent review's actual findings update. Serba Dinamik said what really transpired was that three of its independent non-executive directors had attended the presentation by the special independent reviewer EY in the presence of representatives from Bursa. However, with the briefing being "a preliminary finding which was inconclusive", EY had not reached any conclusion, hence certainly not for them or anyone else to second guess them. (BTimes)

CTOS: Submitted assessment report on 18 Oct, awaiting BNM review. CTOS Digital, which is among the credit reporting agencies suspended from accessing the Central Credit Reference Information System (CCRIS) amid potential cyberthreats, said that its assessment indicated no breach of its data assets. (The Edge)

Advancecon: To acquire 51% stake in quarry operator. Advancecon Holdings has received its shareholders’ nod to acquire a 51% controlling stake in quarry operator Spring Energy Resources for RM30.4m. The acquisition would be satisfied via RM15.2m in cash and RM15.2m via the issuance of 33m new Advancecon shares at an issue price of 46 sen per share. (The Edge)

Yinson: Partners GreenTech to speed up EV charging infra in Malaysia. Yinson Holdings has signed a term sheet with GreenTech Malaysia Alliances (GTMA) to speed up the development of electric vehicle (EV) charging infrastructure in Malaysia. (StarBiz)

Mestron Holdings: Aims to secure 180 telecommunication towers in Sawarak under JENDELA initiative. Mestron Holdings (MHB) targets to secure 180 telecommunication towers from the total 600 towers that are planned to be constructed in Sarawak under the National Digital Network (JENDELA) initiatives. (The SunDaily)

Deleum: Bags two contract extensions from Petronas Carigali. Deleum has bagged two contract extensions from Petronas Carigali (PCSB) for the provision of slickline equipment and services and provision of gas lift valves (GLV) & insert strings equipment, accessories and services. (The Edge)

Market Update

US benchmarks continued to break new highs as strong earnings expectations from the likes of Microsoft and Alphabet (parent company of Google) buoyed sentiment. Nearly 30% S&P 500 companies have reported earnings with more than 80% of them beating Wall Street expectations. The Dow Jones Industrial Average added another 15 points to end the day at 35,756.88pts, after having gained as much as 150 points earlier. The S&P 500 and Nasdaq Composite inched 0.2% and 0.1% higher respectively meanwhile. On the data front, US consumer confidence rose in October, reversing a three-month downward trend, according to the Conference Board. Over in Europe, markets were notably higher with travel and leisure stocks leading the gains. Earnings were also the key driver of individual share price movement in Europe. Germany’s DAX rose 1.0% as UK’s FTSE 100 and France’s CAC 40 both gained 0.8%. Asian equities were mostly higher earlier in the day with electric vehicle battery makers surging after car rental giant Hertz said it would order 100,000 vehicles from Tesla by the end of 2022. Japan’s Nikkei 225 and Korea’s KOSPI jumped 1.8% and 0.9% higher respectively, with both countries’ companies being a beneficiary. Real estate stocks in Hong Kong declined amid fears that Beijing could tax property owners, weighing on the Hang Seng Index which slipped 0.4% on the day. The Shanghai Composite Index dipped 0.3% meanwhile.

Favelle Favco says it has secured purchase orders for tower cranes, offshore cranes, supervisory control and data acquisition system with a combined value of RM37.1m. Yinson Holdings has signed a term sheet with GreenTech Malaysia Alliances Sdn Bhd, a wholly-owned subsidiary under the Malaysian Green Technology and Climate Change Corporation, to accelerate the development of electric vehicle charging infrastructure in Malaysia. Mestron Holdings targets to win 30% of orders for the total of 1,661 telecommunication towers to be constructed under Phase One of the National Digital Network (JENDELA) initiative.

Source: PublicInvest Research - 27 Oct 2021