Economy

US: Biden hints at Fed Chair pick soon as senators rush to chime in. President Joe Biden is still deciding whether to reappoint Fed Chair Jerome Powell or replace him with Fed governor Lael Brainard, as key senators wade in with their views on the choice. Biden told reporters to expect the announcement of a nominee for Fed chair in “the next four days.” The president has ruled out other possible contenders for the job, said a person familiar with the matter, cautioning that the announcement may slip until next week. Biden considers them both strong options and respects them both. (Bloomberg)

US: Fed’s Bullard urges more hawkish policy to offset inflation rise. Federal Reserve Bank of St. Louis President James Bullard said the central bank should speed up its reduction of monetary stimulus in response to a surge in US inflation. “I think it behooves the committee to go in a more hawkish direction in the next couple of meetings so we are managing the risk of inflation appropriately,” Bullard, who votes on monetary policy in 2022, said in a Bloomberg Television interview with Michael McKee, Lisa Abramowicz and Tom Keene. The Federal Open Market Committee earlier this month that it would begin tapering the USD120bn-a-month bond-buying program it put in place last year in the early days of the Covid-19 pandemic. The planned pace of reduction puts it on track to cease purchases entirely by the mid-2022. (Bloomberg)

US: Business inventories rise solidly in Sept. US business inventory accumulation increased solidly in September, but motor vehicle retailers continued to struggle to restock amid an ongoing global semiconductor shortage, which has undercut production. Business inventories rose 0.7% after rising 0.8% in Aug, the Commerce Department said. Inventories are a key component of GDP. Sept’s increase was in line with economists’ expectations. Inventories increased 7.5% on a YoY basis in Sept. Retail inventories slipped 0.2% in Sept as estimated in an advance report published last month. That followed a 0.2% gain in Aug. Motor vehicle inventories slumped 2.9% instead of 2.4% as estimated last month. (Reuters)

US: Manufacturing output races to 2-1/2-year high. Production at US factories rebounded more than expected in Oct as the drag from Hurricane Ida faded and motor vehicle output picked up, but manufacturing continues to be constrained by shortages of raw materials and labour. Manufacturing output surged 1.2% last month to its highest level since March 2019, after falling 0.7% in Sept, the Fed said. Economists polled by Reuters had forecast manufacturing production rising 0.7%. Output increased 4.5% compared to Oct 2020. Manufacturing, which accounts for 12% of the US economy, is being underpinned by businesses desperate to rebuild depleted inventories. (Reuters)

US: Retail sales accelerate in strong boost to economy. US retail sales surged in Oct, likely as Americans started their holiday shopping early to avoid empty shelves amid shortages of some goods because of the ongoing pandemic, giving the economy a lift at the start of the fourth quarter. The solid report from the Commerce Department suggested high inflation was not yet dampening spending, and added to strong employment growth in Oct and an acceleration in services sector activity in painting an upbeat picture of the economy after it grew at its slowest pace in more than a year in the third quarter. (Reuters)

US: Import prices surge in Oct on petroleum, food. US import prices surged in Oct as the costs of petroleum products and food increased, adding to signs that inflation could remain high for a while. Import prices accelerated 1.2% last month after gaining 0.4% in Sept, the Labor Department said. In the 12 months through Oct, prices jumped 10.7% after rising 9.3% in Sept. Economists polled by Reuters had forecast import prices, which exclude tariffs, increasing 1.0%. The government reported last week a broad-based surge in both consumer and producer prices in Oct. Inflation is being fuelled by fiscal stimulus and strained global supply chains related to the nearly two-year long COVID-19 pandemic. (Reuters)

UK: Economy withstands end of jobs support, easing BoE worries. Britain's job market withstood the end of the government's furlough scheme last month, according to data which could ease lingering concerns at the BOE about the risks of raising interest rates from their pandemic low. Sterling strengthened as the number of staff on businesses' payrolls in Oct rose to 0.8% above levels in Feb 2020, before the coronavirus pandemic hit, and increased by 160,000 on the month. The BOE has been watching closely in case unemployment rose after the job-protecting furlough scheme expired at the end of Sept. (Reuters)

UK: Payrolled employment rises again, unemployment rate down. British employers added 160,000 workers to their payrolls in Oct, the first month after the end of the government’s job-protecting furlough scheme, figures showed. The BOE, weighing up when to raise interest rates, is watching closely for how the labour market holds up after the scheme expired, with an estimated 1.1m people still on it in its final days. (Reuters)

Hong Kong: Aug-Oct unemployment slips to 4.3%. Hong Kong’s seasonally adjusted unemployment rate slipped to 4.3% in the Aug Oct quarter, the government said, the lowest since Jan-March 2020, as the labour market improved along with an economic recovery. The figure compared with 4.5% in the July-Sept period. The under employment rate slid to 1.9%, from 2.1% in the previous three months. (Reuters)

Japan: Tertiary activity grows in Sept. Japan's tertiary activity grew in Sept, data from the Ministry of Economy, Trade and Industry showed. The tertiary activity index rose 0.5% MoM in Sept, after 1.1% decrease in Aug. Among the individual components, living and amusement-related services, retail trade, finance and insurance, transport and postal activities, wholesale trade, electricity, gas, heat supply and water, and goods rental and leasing increased in Sept. (RTT)

Australia: RBA chief says rate hike unlikely in 2022. RBA Governor Philip Lowe said the latest data and forecasts do not warrant an increase in the cash rate in 2022. In order to consider a rate hike next year, the economy and inflation would have to turn out very differently from the central scenario, he said in an address to the Australian Business Economists. (RTT)

Markets

Sime Darby (Outperform, TP: RM2.78): Future-proof its motors business, establishes mobility special task force. Sime Darby has launched future-focused plans for its motors division with the establishment of a mobility special task force. The task force was established to explore new trends and opportunities for growth in the automotive sector, particularly in shared mobility and the industry's electrification. (BTimes)

LBS Bina Group (Outperform, RM0.69): Unveils KITA Mesra in Dengkil. LBS Bina Group has unveiled another affordable landed home project, KITA Mesra, with a total of 646 units comprising townhouses, as well as one- and two-storey terraced houses. The one-storey houses are set to be launched first. The estimated gross development value for KITA Mesra is RM309m. (The Edge)

Straits Energy: To partner Baicells Technologies on wireless network opportunities. Straits Energy Resources has entered into a MoU with Baicells Technologies Co to collaborate on driving wireless network communication business opportunities from the 4G and 5G rollout and also in the digital transformation of the oil and gas industry. (StarBiz)

Pacific & Orient: Sells 23.26m Ancom shares for RM57.6m. Pacific & Orient disposed of 23.26m Ancom shares for RM57.63m. The shares were disposed via open market and direct business transactions. The proceeds from the disposal will be utilised to fund P&O group’s working capital. The original cost of investment was RM16.44mil. P&O has decided to dispose of the Ancom shares to capitalise on the appreciating share price of Ancom shares. The expected gain on the disposal for the year ending 30 Sept 2022 is RM7.14m. (StarBiz)

MAHB: Free to form joint ventures for airport expansion projects. The Ministry of Transport (MoT) does not prohibit Malaysia Airports Holdings from forming joint ventures with private entities to carry out airport expansion projects. However, MAHB had chosen to postpone the implementation of the projects until it had sufficient cash flow to cover its expenses. MAHB had to bear the operating costs of 39 airports under its network nationwide, which comes up to RM140m per month. (The Edge)

CJ Century: To provide logistics services to Astro. CJ Century Logistics Holdings has signed a warehousing, fulfilment and logistics services agreement with Measat Broadcast Network Systems (Astro). The partnership will commence on 1 Dec 2021, for a period of three years with an option to extend for two more years upon conclusion of the initial term. (StarBiz)

BSL Corp: Secures RM14.58m contract from SDU. BSL Corporation has secured a USD3.5m (RM14.58m) contract from SDU to fabricate and supply semiconductor components, sub assembly modules. The contract involved manufacturing and supplying a total USD3.5m worth of integrated console, sheet metal fabrication including precision machining. (StarBiz)

Pos Malaysia: 3Q net loss widens to RM43.9m. Pos Malaysia recorded a net loss of RM43.9m in the 3Q ended 30 Sept 2021 as compared to a net loss of RM7.43m in the previous corresponding quarter, on the back of lower postal revenue. The revenue for the quarter was RM536.26m, a 13.93% decline YoY due to slower domestic and international mail. (StarBiz)

Market Update

The FBM KLCI might open higher today after strong US retail sales data helped to lift the dollar to a 16-month high on Tuesday, driving down emerging market currencies, including the Turkish lira which fell to a record low. US retail sales rose 1.7% in October from the previous month, a larger gain than economists had expected. The October data indicated shoppers were accepting higher inflation, but raised questions about how long the Federal Reserve could hold US interest rates at record lows. The blue-chip S&P 500 closed up 0.4%, just off its all-time high, while the technology focused Nasdaq Composite was 0.8% higher at the bell. Europe’s regional Stoxx 600 index closed the day 0.2% higher, eking out its latest record high as a rally in energy shares following a surge in gas prices added to gains notched up during a better than expected quarterly earnings season. The FTSE 100 in London closed 0.3% lower.

Back home, Bursa Malaysia ended the day marginally higher on bargain hunting in selected heavyweights led by Nestle (Malaysia) Bhd, PPB Group Bhd and Telekom Malaysia Bhd (TM). At 5pm, the FBM KLCI added 0.55 of-a-point to 1,522.89 after moving between 1,518.93 and 1,528.1 in the course of the day. In the region, Hong Kong’s Hang Seng share index closed 1.3% higher to reflect optimism about discussions between US president Joe Biden and Chinese leader Xi Jinping. In a rare virtual meeting, Biden urged Xi to not allow competition between the two economic powers and closely linked trading partners to “veer into conflict”. Elsewhere, Japan’s Nikkei 225 edged up 0.1% and China’s Shanghai Composite Index fell 0.3%.

Source: PublicInvest Research - 17 Nov 2021