Economy

US: Factory orders jump much more than expected in Oct. Reflecting a sharp increase in orders for non-durable goods, showing new orders for US manufactured goods jumped much more than expected in the month of Oct. The factory orders surged up by 1.0% in Oct after climbing by an upwardly revised 0.5% in Sept. Economists had expected factory orders to increase by 0.5% compared to the 0.2% uptick originally reported for the previous month. (RTT)

US: Service sector growth unexpectedly accelerates in Nov. An unexpected acceleration in the pace of growth in US service sector activity in the month of Nov. The services PMI rose to a record high 69.1 in Nov from 66.7 in Oct, with a reading above 50 indicating growth in the sector. The increase surprised economists, who had expected the index to dip to 65.0. In Nov, record growth continued for the services sector. (RTT)

US: Faster Fed taper, earlier rate hikes in sight as unemployment falls. Federal Reserve policymakers look likely to accelerate the winddown of their bond-buying program when they meet later this month as they respond to a tightening labor market and move to open the door to earlier rate hikes than they had projected. US employers added 210,000 jobs last month, less than half of what economists had expected. (Reuters)

EU: Private Sector Growth Accelerates In Nov. Eurozone private sector growth re-accelerated in Nov primarily reflecting the resilience in the service sector as severe supply-related constraints weighed on manufacturing activity. Retail turnover in the currency bloc recovered, as expected, in Oct despite a fall in food sales. The final composite output index rose to 55.4 in Nov from 54.2 in Oct. (RTT)

EU: French Industrial Production rebounds in Oct. France's industrial production rebounded in Oct, largely led by a strong recovery in the manufacture of transport equipment. Industrial production grew 0.9% from Sept, when it decreased 1.5%. Economists had forecast 0.5% gain. Manufacturing output also grew 0.9% monthly in Oct. (RTT)

UK: Service sector logs robust expansion on new business growth. The UK service sector continued to log strong recovery in Nov driven by the fastest rise in new business intakes for five months. The Chartered Institute of Procurement & Supply services Purchasing Managers' Index dropped to 58.5 in Nov from Oct's three-month high of 59.1. (RTT)

India: Services growth eases in Nov. India's service sector grew at a softer pace in Nov. The services Purchasing Managers' Index fell to 58.1 in Nov from 58.4 in Oct. Economists had forecast the index to rise to 57.8. A reading above 50.0 indicates expansion in the sector. (RTT)

Singapore: Retail sales accelerate in Oct. Singapore retail sales grew in Oct. Retail sales grew 7.5% YoY in Oct, after a 6.8% rise in Sept. Motor vehicle sales declined 13.1% annually in Oct, following a 2.0% fall in the previous month. (RTT)

Markets

Alliance Bank (Outperform, TP: RM3.10): Seals sale of stockbroking business to Phillip Futures . Alliance Bank Malaysia is disposing of its stockbroking business to stockbroking firm Phillip Futures SB, as part of the banking group’s strategic plan to re-prioritise its businesses to accelerate growth in its consumer, small- and medium-sized enterprise (SME) and Islamic banking businesses. (The Edge)

Comments: While the stock-broking business has had a bumper 18 months, this is not likely to persist for too long given the operating environment ahead, amid intensified competition. We think this move makes sense. A potential loss of <5% from its total income will be easily mitigated by its accelerated growths in the consumer, SME and Islamic banking businesses. We affirm our Outperform call with unchanged target price of RM3.10.

TM (Outperform, TP: RM6.70): Signs up for Malaysia's 5G trials. Telekom Malaysia (TM) said it would be conducting 5G trials with a state-run agency ahead of a planned roll-out of 5G network services this month. The telco would be participating in the pilot trials in some parts of the capital, Kuala Lumpur, and two other urban centres. It is the first telco to sign up for 5G trials. However, it did not say if it had signed a long-term agreement on the usage of the government's 5G network. (The Edge)

DRB-Hicom (Outperform, TP: RM2.18): Proton breaches 100,000 sales mark. DRB-Hicom’s 50.1% owned subsidiary, Proton Holdings, has broken through the 100,000 sales barriers for a third year in succession. Overall sales of 14,187 units, both domestic and exports, in Nov had pushed its YTD number to 100,566 units, raising expectations the company would be able to end the year with "positive" sales growth. The sales improved by 6.2% over Oct.. (BTimes)

Pecca: Banking on electric vehicle segment. Pecca Group is looking to expand its reach within the automotive industry by moving into a new area, the electric vehicle (EV) segment. The company, which is currently one of the largest automotive leather upholstery players for Malaysia’s original equipment manufacturer (OEM) and pre-delivery inspection (PDI) passenger vehicle segments, recently signed a memorandum of understanding with Malaysia Automotive Robotics and IoT Institute (MARii) to collaborate on EV parts and technology. (StarBiz)

Petronas Chemicals: PCG PCC builds new plant for specialty oxyalkylates in Terengganu. The JV Company of Petronas Chemicals Group and PCC SE has reached a new milestone with a project for a new production facility for specialty oxyalkylates in Terengganu. The JV celebrated the construction commencement ceremony of the project called OXY.my in Oct. The change of company name underscored the successful development of the JV Company and the strategic partnership. (BTimes)

Westports: Replaces Hap Seng as FBM KLCI constituent. Westports Holdings has been included in the constituents of the FTSE Bursa Malaysia KLCI (FBM KLCI), replacing Hap Seng Consolidated. This follows the semi-annual review of the FTSE Bursa Malaysia Index Series. All constituent changes would effect at the start of business on Dec 20. The next review will take place in June 2022. The index series is reviewed semi-annually in accordance with the index ground rules. (The Edge)

Market Update

The FBM KLCI might open lower today as investors retreated from US stocks on Friday, dumping shares in large technology companies and sending the tech-heavy Nasdaq Composite index sharply lower. The Nasdaq closed down 1.9% in New York, as a mixed US jobs report was seen as paving the way for more hawkish monetary policy, which would lead to tighter financial conditions and weigh on corporate valuations. Etsy, Adobe and Tesla were all among the biggest losers on the day, falling more than 5%. Facebook fell 1.1% on the day and is now down more than 20% from its intraday peak in September. The blue-chip S&P 500 stock index declined 0.8%. The sharp drops marked a volatile end to a fortnight of trading characterised by big swings in prices across asset classes. The moves came after a report from the Bureau of Labor Statistics showed the US economy added just 210,000 new jobs last month, fewer than the 550,000 forecast by economists. While the economy added fewer jobs than forecast last month, the unemployment rate still fell to its lowest level since the pandemic began. The Stoxx Europe 600 share index fell 0.6%, after losing 1.2% in the previous session. London’s FTSE 100 declined 0.1%. In the region, Hong Kong’s Hang Seng index closed down about 0.1%. Shares in Chinese companies listed in New York also came under heavy pressure on Friday after the ride-hailing app Didi Chuxing announced plans to delist from the New York Stock Exchange and to prepare to go public in Hong Kong. Didi’s shares dropped more than 20% in US hours. JD.com, Baidu and Pinduoduo all fell about 8%, as did Alibaba.

Source: PublicInvest Research - 6 Dec 2021