Economy

US: Rental vacancy rate tightens in 3Q. The US residential rental vacancy rate dropped further in the 3Q as the economy continued to normalize after severe disruptions caused by the COVID-19 pandemic, potentially indicating that high inflation could last for a while. The rental vacancy rate fell to 5.8% last quarter, the lowest since the 2Q of 2020. That was down from 6.2% in the April-June period and 6.4% a year ago. The collection of data was affected by the coronavirus last year and part of 2021. The pandemic-related restrictions on data collection had ended in almost all areas in the 3Q, adding that less than 0.5% of cases were affected. The rental vacancy rate is being closely watched as the debate over whether the current phase of high inflation is transitory heats up. Rents increased by the most since 2001 in Sept, helping to boost consumer prices that month. Rents are one of the sticky components of inflation, which is running well above the Federal Reserve’s flexible 2% target. (Reuters)

US: Fed to taper in Nov amid inflation concerns. Federal Reserve policy makers are expected to announce this week that they will start scaling back their massive asset-purchase program amid greater concern over inflation. A majority of the 49 economists predicted the US central bank will begin the taper in Nov and wrap it up by mid2022, curbing the current USD120bn monthly buying pace by reducing Treasuries by USD10bn a month and mortgage-backed securities by USD5bn. They are closely divided on whether interestrate liftoff will be in 2022 or early 2023, with a slim majority estimating the latter timing while they see rates rising to 1.75% by the end of 2024, a quarter point more than the survey projected in September. The Federal Open Market Committee meets for two days and will issue a policy statement. There will be no quarterly economic and rate forecasts published at this meeting. (Bloomberg)

EU: Oct factory growth hurt by supply woes, price pressures - PMI. Eurozone manufacturing activity remained strong last month but was curtailed by supply chain bottlenecks and logistical problems which sent input costs soaring. Ongoing disruptions caused by the coronavirus pandemic, alongside a shortage of heavy goods vehicle drivers, has caused product shortages and left factories struggling to get the raw materials they need. IHS Markit’s final manufacturing Purchasing Managers’ Index (PMI) dipped to an eight-month low of 58.3 in Oct from Sept’s 58.6, shy of an initial 58.5 “flash” estimate but still comfortably above the 50-mark separating growth from contraction. An index measuring output, which feeds into a composite PMI due on Thursday and seen as a good guide to economic health, dropped to 53.3 from Sept’s 55.6, its lowest reading since June last year. (Reuters)

EU: Italy’s factories outperform most european peers on supply shock. Italy’s manufacturing sector saw more rapid expansion last month, bucking the general weakening trend in the region as Prime Minister Mario Draghi tries to spur growth in the euro area’s thirdlargest economy. The Netherlands, Ireland and Greece also recorded stronger performances in surveys of purchasing managers by IHS Markit. With Germany, France and Spain lagging behind, momentum in the entire euro area slowed in Oct. Purchasing managers blamed global supply bottlenecks for interrupted production schedules and dented order books as well as steeply rising prices. Euro-area inflation breached 4% in Oct, though is projected to slow in 2022. Having already expanded more strongly than expected in the third quarter, Italy’s economy is now on track to grow more than 6% this year. German output, meanwhile, slowed from the previous three months, due to shortages of components and raw materials. (Bloomberg)

China: Economy faces new downward pressures. China’s economy faces new downward pressures and has to cut taxes and fees to address the problems faced by small and medium-sized companies. The economy needs “cross-cyclical adjustments” to continue in a proper range. China’s economy has been slowing in recent months due to Beijing’s push to slow growth in the real-estate sector. Further signs of weakness in Oct due to power shortages which weighed on manufacturing, and strict coronavirus controls which put a brake on holiday spending. The official manufacturing purchasing managers’ index fell to 49.2, the second month it was below the key 50-mark that signals a contraction in production.

HK: Hong Kong retail sales growth slows in Sept. Hong Kong's retail sales grew at a softer pace in Sept, figures from the Census and Statistics Department showed. The retail sales volume rose 4.7% YoY in Sept, after a 10.0% growth in Aug. The value of retail sales increased 7.3% annually in Sept, following 11.9% gain in the preceding month. Sales value of jewelry, watches and clocks, and valuable gifts surged 16.2% annually in Sept. Sales of clothing, footwear and allied products gained 6.5% and those of consumer durable grew 29.2%. Looking ahead, the stable local epidemic and improving employment and income conditions, together with the Consumption Voucher Scheme, should remain supportive to the retail sector in the near term (RTT)

Australia: Services PMI climbs to 51.8 in October – Markit. The services sector in Australia moved into expansion territory in Oct, the latest survey from Markit Economics revealed on Wednesday with a services PMI score of 51.8. That's up from 45.5 in Sept and it moves above the boom-or-bust line of 50 that separates expansion from contraction. The rate at which business activity increased was moderate and broadly in line with the survey average since 2016. Panelists widely noted the lifting of COVID-19 lockdowns underpinned the improvement in economic conditions. Demand likewise improved for the first time since June, which was prior to when the latest COVID-19 Delta wave struck the Australian service sector hard. (RTT)

Singapore: Central Bank ‘Ready to Act’ against inflation risks. Singapore’s top central banker said the monetary authority is watching for signs of accelerating inflation and is ready to act, underscoring how policy makers globally are refocusing attention on rising prices after their extraordinary efforts to weather the pandemic. Overall, the balance of risk has shifted toward inflation. Will be very watchful of any risk of escalation in prices. Like its counterparts globally, Singapore’s central bank is watching closely for signs that rising prices will become a persistent issue rather than a transitory problem caused by pandemic snags. (Bloomberg)

Markets

NCT Alliance: To revive abandoned project with RM500m GDV in Selangor. NCT Alliance said it has been appointed to revive two phases of an abandoned project in Batang Kali, Selangor with an estimated gross development value of RM500m. The development involves 168 units of bangalow on 80 acres of freehold land, NCT Alliance said. The company said it has been proposed by the liquidator to undertake the scheme proposal to revive the development of phases 2 and 3 of the Genting Valley project. The project was initiated in year 2000 and involved 665 bungalows lots, but was abandoned by the initial developer in 2004. (The Edge)

Haily Group: Secures RM27.21m residential construction contract. Haily Group's subsidiary has bagged a RM27.21m terrace residential project from Gunung Impian Development SB in Tebrau Johor. The company said it had accepted a letter of award (LA) from Gunung Impian, which was a fixed price lump sum. The commencement date is scheduled to be December 10, 2021, and the project's full completion shall be December 9, 2022. Haily said the project comprised a total of 176 units of single-storey terrace houses and one unit of single-chamber Tenaga Nasional Bhd (TNB) sub-station. (BTimes)

Ramssol Group: Partners Impiana Hotels to provide upskill, reskill training. Ramssol Group (RGB) and Impiana Hotels (Impiana) signed a two-year partnership to provide Human Resources Development Corporation (HRD Corp)-certified training programmes. Under this partnership, RGB will conduct and manage HRD Corp training programmes physically and virtually, with participants given full access to the company's in-house employee engagement mobile application, Feet's, for one year. Training sessions in turn will be held at Impiana's hotels across three locations namely Kuala Lumpur, Ipoh and Senai. (BTimes)

PRG: Unit to acquire 37.25% of Singaporean energy services company. PRG Holdings’s 54.19%-owned subsidiary Furniweb Holdings Ltd has entered into a Sale and Purchase Agreement with Energy Solution Global Ltd (ESGL) to acquire 37.25% of the latter’s issued and paid-up capital for approximately RM5.11m. Through the acquisition, PRG Group is making its first foray into the energy efficiency industry, in line with the global push for sustainability through environmental, social and corporate governance (ESG) efforts, it said. (Bernama)

Ibraco: Clinches RM375m construction job in Sarawak. Ibraco has secured a contract for construction works in Kuching, Sarawak, worth approximately RM375m. The company said it has accepted the letter of award from Lestari Asiabina SB as turnkey contractor for the construction of various components, including road and drain reserve, condominium, apartment and shophouses, on Lot 6036 Block 26 Muara Tuang Land district. The various construction works are expected to start from the 3Q of 2022 and be completed by the 4Q of 2026. (The Edge)

Trive Property: Plans another cash call to fund upgrading of office building. Trive Property plans to raise up to RM19.89m via a private placement to upgrade an office building. Trive Property said the private placement involves the issuance of 342.93m new shares or up to 20% of the group’s issued shares, to be placed to third party investors who have yet to be identified. (The Edge)

MARKET UPDATE

US markets powered ahead even as investors waited on key Federal Reserve (FED) decisions which is currently in a 2-day meeting, with strong corporate earnings announcements continuing to bolster sentiment. The Dow Jones Industrial Average gained 0.4% (+138.8pts) while both the S&P 500 and Nasdaq Composite inched 0.3% higher. This is the third session in a row that all three major averages closed at a record. The FED, at the conclusion of its two-day meeting later today, is expected to announce it will begin unwinding its USD120bn in monthly bond purchases implemented during the pandemic. European markets were mixed however as investors here exercised caution instead, ahead of the FED decision. All eyes are also on the United Nation’s COP26 climate summit in Glasgow, widely seen as a make-or-break moment for global leaders to take decisive action to limit carbon emissions though hopes are not high for ambitious targets. Germany’s DAX and France’s CAC 40 jumped 0.9% and 0.4% higher though UK’s FTSE 100 slipped 0.2%. Asian markets were mostly lower earlier in the day as Hong Kong-listed shares of Chinese real estate firms fell amid renewed fears. The Shanghai Composite slumped 1.1%, the Hang Seng Index fell 0.2% while the Nikkei 225 also ended 0.4% lower.

Ibraco has secured a construction contract worth RM375m in Kuching which involves the construction of road and drain reserves, condominium, apartment and shophouses. NCT Alliance (formerly known as Grand-Flo) has been appointed to revive two phases of an abandoned project involving 168 bungalow units on 80 acres of freehold land in Batang Kali that carries an estimated gross development value of RM500m.

Source: PublicInvest Research - 3 Nov 2021