Economy

US: Consumer spending strong. US consumer spending increased solidly in Sept, but was partly flattered by higher prices, with inflation remaining hot as shortages of motor vehicles and other goods persisted amid global supply constraints. The strength in consumer spending at the end of last quarter, together with falling COVID-19 infections and recovering consumer confidence bode well for a pickup in economic activity in the final three months of the year. Consumer spending rose 0.6% last month after rebounding 1.0% in Aug, the Commerce Department said. Economists had forecast consumer spending increasing 0.5%. (Reuters)

US: Labor costs power ahead in 3Q as wages surge. US labor costs increased by the most since 2001 as companies’ boosted wages and benefits amid a severe worker shortage, suggesting inflation could remain high for some time. The Employment Cost Index surged 1.3% last quarter after rising 0.7% in the April-June period, the Labor Department said. The largest gain since 2001 reflected an increase across industries. (Reuters)

US: Consumer sentiment deteriorates slightly less than initially estimated in Oct. Consumer sentiment in the US deteriorated by slightly less than initially estimated in the month of Oct, the University of Michigan revealed in a report. The consumer sentiment index for Oct was upwardly revised to 71.7 from the preliminary reading of 71.4. While the upward revision surprised economists, who expected the index to be unrevised, the final reading was still below Sept's 72.8. (RTT)

EU: Inflation expectations revised up – ECB survey. Eurozone inflation expectations were revised upward for all horizons due to higher energy prices and the impact of supply chain tensions, the Survey of Professional Forecasters from the European Central Bank showed. The inflation forecast for this year was revised up to 2.3% from 1.9%. Similarly, the projection for next year was lifted to 1.9% from 1.5% and that for 2023 to 1.7% from 1.5%. Data released by Eurostat showed that Eurozone inflation accelerated sharply to the highest since 2008 on higher energy prices. Inflation rose to 4.1% in Oct from 3.4% in Sept. (RTT)

EU: German economy expands less than expected in 3Q. The German economy expanded less than expected in the 3Q, provisional data published by Destatis revealed. GDP grew 1.8% sequentially, slightly slower than the 1.9% expansion posted in the 2Q. Economists had forecast a quarterly growth of 2.2%. This was the second consecutive expansion after the 1.9% decline posted at the start of the year. The 3Q growth was mainly attributable to higher household consumption expenditure. On a yearly basis, calendar-adjusted GDP growth eased markedly to 2.5%, in line with expectations, from 9.8% in the 2Q. (RTT)

UK: Businesses report stronger-than-average growth – CBI. British businesses gained a small amount of momentum and grew at an above-average pace in the three months to the end of Oct, despite widespread disruption to supply chains, the Confederation of British Industry (CBI) said. The CBI's monthly growth indicator rose slightly to +29 from +27 in Sept, after hitting its highest since 2014 in Aug at +34. (Reuters)

China: Oct official services PMI falls to 52.4 vs 53.2 in Sept. Activity in China’s services sector grew at a slower pace in Oct, official data showed, as China combats small-scale COVID-19 outbreaks hitting mainly the north. The official non-manufacturing Purchasing Managers’ Index (PMI) fell to 52.4 in Oct from Sept’s 53.2, data from the National Bureau of Statistics (NBS) showed. The services sector is more vulnerable to sporadic COVID-19 outbreaks, clouding the outlook for the much anticipated rebound in consumption in the months to come. The official Oct composite PMI fell to 50.8 from Sept’s 51.7. (Reuters)

Japan: Factory output hit by supply snags as outlook darkens. Japan's factory output shrank for the third straight month in Sept as the auto sector was hit by a persistent global supply shortage, raising the risk of an economic contraction in the 3Q and throwing the recovery into doubt. (Reuters)

Markets

GENM (Neutral, TP: RM3.25): 49%-owned associate Empire Resorts Inc issues USD300m bonds. Genting Malaysia’s (GenM) 49%-owned associate Empire Resorts Inc has issued USD300m (RM1.2bn) bonds due 2026 on the Singapore Exchange (SGX). According to Empire Resorts filing with the SGX, the notes, which pay an annual interest rate of 7.75%, will be listed and quoted on the SGX's Bonds Market at 9am on Monday (Nov 1). (The Edge)

Solarvest: Inks MoU with Taiwanese RE player Hsinjing to tap 500 MW solar projects by 2025. Solarvest Holding’s (SHB) wholly-owned subsidiary Solarvest (Taiwan) Corporate Ltd (SCL), signed a MoU with Hsinjing Holding Corporate Ltd (HHCL) to develop 500 megawatts (MW) worth of solar projects in Taiwan by 2025. SHB group CEO Davis Chong Chun Shiong said the MoU with HHCL is an important step for the company to advance its regional expansion agenda and within the Taiwanese renewal energy (RE) market. (Business Times)

KNM: Secures RM17.7m reactor gas exchanger order from Aramco subsidiary. KNM Group announced its indirect wholly-owned subsidiary FBM Hudson Italiana SpA had accepted a purchase order (PO) from Saudi Aramco’s subsidiary Saudi Basic Industries Corp (SABIC) for the supply of a reactor gas-gas exchanger, amounting to approximately RM17.7m. A gas/gas heat exchanger allows the transfer of a heat quantity recovered from raw gas directly to the clean gas side. KNM said the supply and delivery duration of the transaction is for a period of approximately 55 weeks from the date of the PO. (The Edge)

Cahya Mata: Says more time needed to complete financial management probe. Cahya Mata Sarawak (CMSB) has agreed to extend the ongoing investigation into its former group CFO Syed Hizam Alsagoof over allegations of possible financial mismanagement in relation to the group's investments and operations by another month. The company had expected the complete result of the review to be announced by the end of Oct. However, this is being extended until end-November. (The Edge)

Vertice: Plans to raise RM19.44m from private placement. Vertice has proposed to undertake a private placement of up to 72m shares to third-party investors to be identified later and at an issue price to be determined later. The company said the placement shares represents approximately 27.07% of the total number of 265.98m issued shares as at the latest practical date (LPD); and about 10.55% of the total number of 682.53 million enlarged issued shares, after taking into account the full exercise and conversion of the convertible securities. (The Edge)

Pentamaster: 3Q net profit up 29% on stronger revenue growth from automated test equipment segment. Pentamaster Corp's net profit surged 29.47% to RM19.47m for the 3Q ended Sept 30, 2021 (3QFY21), from RM15.04m a year earlier, helped by a revenue growth at its automated test equipment (ATE) division. Earnings per share rose to 2.73 sen from 2.11 sen, the group's filing with Bursa Malaysia showed. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today despite stronger close on Wall Street last Friday due to the proposed “prosperity tax” accounted that could weigh down market sentiment. Wall Street stocks staged a late rally to retrace early losses on Friday and post their best monthly performance of the year, despite disappointing results from Apple and Amazon reviving questions about labour shortages, supply squeezes and, in turn, persistently high inflation. The blue-chip S&P 500 and tech-heavy Nasdaq Composite fell in morning trading, but both indices steadied in the early afternoon. A late surge in the final 30 minutes of trading left the indices up 0.2% and 0.3% respectively, both notching new record highs. Figures showed that US consumer spending softened in September, with growth of 0.6% marking a slowdown from 1% in August. Meanwhile, the core personal consumption expenditure price index — a measure of inflation — rose 3.6% in September year on year, broadly in line with projections. Europe’s Stoxx 600 share index closed 0.1% higher after data showed that annual inflation for the eurozone rose to 4.1% in October. This marked an increase from 3.4% in September and topped consensus forecasts of 3.7%. Those inflation data were released alongside figures showing that the eurozone economy grew 2.2% in the three months to September, compared with the previous quarter — higher than estimates of 2%.

Back home, Bursa Malaysia ended lower on Friday, with the key index falling 0.29% amid a market consolidation mode due to lack of buying interest as investors digest the announcements in Budget 2022 tabled on Friday. At 5pm, the benchmark FBM KLCI trimmed 4.55 points to 1,562.31 from Thursday's close of 1,566.86. In the region, stock indiced closed with mixed performance. China’s Shanghai Composite added 0.8% for the day, but posted a 0.6% loss for the month. Hong Kong’s Hang Seng fell 0.7% on a daily basis but rose 3.3% for the month. South Korea’s Kospi declined 1.3% for the day and 3.2% for the month.

Source: PublicInvest Research - 1 Nov 2021