Economy

US: Homebuilding drops, construction backlog surges as shortages worsen. US single-family homebuilding tumbled in Oct while the number of houses authorized for construction but not yet started jumped to a 15-year high, underscoring the disruption to the housing market from an ongoing shortage of materials and labour. Though the report from the Commerce Department showed an increase in permits for future homebuilding, the rise was concentrated in the volatile multi-family housing segment. This will do little to alleviate an acute shortage of houses on the market, which has led to record annual gains in home prices. Single-family housing starts, which account for the largest share of the housing market, dropped 3.9% to a seasonally adjusted annual rate of 1.039m units last month. The fourth-straight monthly decline pushed starts to the lowest level since Aug 2020. (Reuters)

US: Fed repo facility use hits second-highest ever amid debt-cap woe. Demand for the Fed’s overnight reverse repurchase agreement facility climbed for the second straight session as debt-ceiling concerns resurface and cash from the government sponsored enterprises enters the repo space. Seventy-nine counterparties parked USD1.52trn at the RRP Wednesday, the second-highest of all time. The record is USD1.605trn, reached on 30 Sept. Overnight GC repo traded as low as 0% before closing at 0.03%, according to Curvature Securities; it first traded at 0.05%, with a bid-ask of 0.05%/0.04%, according to ICAP. Additional dislocations in the Treasury bill curve have emerged after Treasury Secretary Janet Yellen said in a letter to Congress that there’s risk of a US government default if lawmakers fail to lift the legal debt ceiling by 15 Dec. (Bloomberg)

EU: Inflation climbs as estimated in Oct. Eurozone inflation increased as estimated in Oct, final data from Eurostat showed. Inflation rose to 4.1% in Oct from 3.4% in Sept. The rate came in line with the flash estimate published on Oct 29. A similar higher rate was last registered in July 2008. Excluding energy, food, alcohol and tobacco, core inflation advanced to 2.0% from 1.9% a month ago. The rate was revised down from 2.1% estimated previously. The highest contribution to the annual increase came from energy, followed by services and non-energy industrial goods. Energy prices logged a sharp annual growth of 23.7%. (RTT)

EU: Construction output rises for first time in 4 months. Eurozone construction output grew for the first time in four months in Sept, Eurostat said. Construction output expanded 0.9% on a monthly basis in Sept, reversing a 1.4% fall in Aug. Civil engineering output increased 2.6% and building construction gained 0.9% in Sept. On a yearly basis, construction output rose 1.5%, in contrast to the 2.6%  decrease in Aug. EU27 construction output climbed 1.2% on month taking the annual growth to 1.8% in Sept. (RTT)

EU: Italy trade surplus falls in Sept. Italy's trade surplus decreased in Sept from the same month last year, data published by the statistical office Istat showed. The trade surplus decreased to EUR2.454bn in September from EUR6.039bn in the same month last year. In Aug, trade surplus was EUR1.317bn. Exports grew 10.3% yearly in Sept, after a 16.7% gain in Aug. Imports rose 22.5% in Sept, after a 30.1% increase in the previous month. Data showed that on a seasonally adjusted basis, exports fell 1.3% monthly and imports declined 1.7%. The trade surplus was EUR3.495bn. Exports to non EU countries decreased 1.0%, and dropped 1.5% for EU countries. Imports from EU countries fell 3.5% and that from non-EU countries gained 0.6%. In the 3Q, exports and imports increased by 2.8% and 5.5%, respectively. (RTT)

UK: BOE's Mann confident UK inflation under control. British households, businesses and financial markets remain confident that the BOE will return inflation to its 2% target, BoE policymaker Catherine Mann said, after official data showed inflation at a 10-year high. BoE Governor Andrew Bailey said that he had been concerned last month that markets might lose faith in the BoE's commitment to fighting inflation as prices rose, which in turn had prompted him to signal a rate rise was coming. The BoE did not raise rates at its Nov meeting, wrong-footing investors who thought Bailey had implied a rate rise was imminent. But financial markets expect rates to rise next month, after strong jobs data and a jump in inflation to 4.2%. (Reuters)

UK: Inflation leaps to 10-year high, bolstering rate hike bets. British inflation has hit a 10-year high as household energy bills rocket, bolstering expectations the BOE will raise interest rates in Dec just weeks after it rocked markets by keeping borrowing costs on hold. Consumer prices rose by 4.2% in annual terms in Oct, leaping from a 3.1% increase in Sept, the Office for National Statistics said. The BoE and a Reuters poll of economists - none of whom predicted such a big jump - had pointed to a reading of 3.9%. (Reuters)

Japan: Export growth slows further as supply snags weigh . Japan’s exports gained at the slowest pace in eight months in Oct as car shipments continued to slump, adding to signs that global supply constraints are still weighing on the economy after it contracted by more than expected last quarter. The value of Japan’s overseas shipments increased 9.4% from a year earlier, according to the Ministry of Finance. Economists had expected a gain of 10.3%. While exports of steel and semiconductor manufacturing equipment continued to show sharp gains, exports of cars plunged by more than a third as major automakers scaled back production due to parts shortages. (Bloomberg)

Indonesia: Interest rate decision due. The central bank in Indonesia will wrap up its monetary policy meeting on Thursday and then announce its decision on interest rates, highlighting a light day for Asia-Pacific economic activity. The central bank is expected to keep its benchmark lending rate unchanged at 3.50%, while the deposit facility rate (2.75%) and the lending facility rate (4.25%) also are expected to be unchanged. The central bank in the Philippines also will conclude its monetary policy meeting and announce its decision on interest rates. No change is expected from the current lending rate of 2.00%. (RTT)

Markets

Gagasan Nadi: To build Merdeka 118's mosque. Gagasan Nadi Cergas has bagged a contract worth RM33.9m to build a mosque at Merdeka 118, an iconic skyscraper now under construction here. The construction company had accepted the Letter of Award from PNB Ventures for the construction of the mosque. (BTimes)

T7 Global: Bags RM150m contracts from Petronas Carigali, PTTEP Group. T7 Global has secured two contracts worth a combined value of approximately RM150m under its energy division for integrated well services and operations and maintenance businesses. The first contract was from Petronas Carigali and the second contract was from PTTEP Group. (The Edge)

Mesiniaga: Gets RM31m contract from Socso. Mesiniaga has secured a contract from the SOCSO worth RM31.16m. The new job involves the supply, installation, commissioning and maintenance of hardware and software for production, staging and development environment, and disaster recovery at SOCSO's Data Centre and Data Recovery Centre. (The Edge)

Kimlun: Lands construction and maintenance contract worth RM780m. Kimlun Corp has secured a construction and maintenance contract worth RM780m. Kimlun had been awarded the main works for construction and maintenance of the Sarawak Sabah Link Road project (the Lawas-Long Lopeng junction) by Samling Resources. (The Edge)

CTOS: Access to BNM's CCRIS restored. CTOS Digital has had to Bank Negara Malaysia's (BNM) Central Credit Reference Information System (CCRIS) restored. This comes after BNM imposed a temporary suspension of CCRIS access to all credit reporting agencies (CRAs) as a precautionary measure against potential cyberthreats on 1 Oct. (The Edge)

Supermax: 1Q net profit drops 19.12% to RM638.52m on narrowing profit margins. Supermax Corp posted a net profit of RM638.52m in the 1Q ended 30 Sept 2021, a 19.12% drop from RM789.52m in the previous corresponding quarter as profit margins slipped from a year ago. The margin regression is due to the fall in average selling prices (ASPs) as competition has intensified significantly following a period of substantial capacity expansion across the industry. (StarBiz)

Amway: 3Q net profit falls 49% on higher sales incentives, pays 5sen dividend. Amway (Malaysia) Holdings’s net profit for the 3QFY21 plunged 49% to RM7.96m from RM15.61m a year ago, due to a new sales incentive plan and increased sales incentives provision in view of a higher number of qualifiers. This was despite 19.25% higher quarterly revenue of RM383.93m from RM321.95m a year ago. The group has declared third interim dividend of 5sen per share. (The Edge)

Tomei: Records drop in 3Q net profit on lockdown woes. Tomei Consolidated reported a sharp YoY drop in net profit for the 3Q ended 30 Sept 2021, to RM1m as compared to RM13.6m in the previous corresponding quarter. The jewellery merchant experienced a decline in revenue as the retail segment's contribution slumped 42% YoY due to the government's Covid-19 lockdown measures. (StarBiz)

Market Update

The FBM KLCI might open lower today as fears of inflation put pressure on global stock markets on Wednesday, driving shares modestly lower while prices of government bonds rose. Wall Street closed the day modestly lower, with the S&P 500 declining 0.3% as shares of energy companies and banks slipped. The technology-heavy Nasdaq Composite also sank 0.3%. In the UK, the annual rate of consumer price growth reached 4.2% in October, data on Wednesday showed, more than double the central bank’s target and exceeding economists’ expectations for a 3.9% increase. The data added to mounting evidence of a global surge in inflation that has investors and analysts betting that some central banks will have to raise interest rates sooner than expected to keep a lid on price pressures. The FTSE 100 index closed the day down 0.5%.

Back home, the FBM KLCI closed 2.24 points up at an intra-day high of 1,525.13 on Wednesday after erasing losses on last-minute buying in heavyweights, mainly Top Glove Corp Bhd, Kuala Lumpur Kepong Bhd (KLK) and Petronas Dagangan Bhd. The index, which opened 0.47 of-a-point easier at 1,522.42, moved between 1,519.07 and 1,523.13 throughout the trading session. In the region, the markets finished mixed with the Shanghai Composite gained 0.44%, while the Nikkei 225 led the Hang Seng lower. They fell 0.40% and 0.25% respectively.

Source: PublicInvest Research - 18 Nov 2021