Economy

Global: Economy faces four key risks, warns Singapore central bank chief. The global economy faces not one but four key uncertainties including a downturn next year, according to Singapore central bank chief Ravi Menon, in a signal that policy makers will be in firefighting mode for longer. He listed severity of the downturn, inflation’s trajectory in the medium term, impact of geopolitics on markets and climate risk on portfolios as the main risks to the global outlook. The key question is how deep and prolonged will the downturn be, Menon, managing director of the Monetary Authority of Singapore (MAS), said in a speech at the SuperReturn Asia conference of private equity and venture capital enthusiasts. (Bloomberg)

US: Housing starts unexpectedly rebound from two-year low in Aug . The Commerce Department released a report showing an unexpected spike in new residential construction in the US in the month of Aug, although the report also showed a steeper than expected slump in building permits. The report showed housing starts soared by 12.2% to an annual rate of 1.575m in Aug after plunging by 10.9% to a revised rate of 1.404m in July. The sharp increase surprised economists, who had expected housing starts to edge down by 0.1% to an annual rate of 1.445m from 1.446m originally reported for the previous month. Housing starts rebounded after hitting their lowest level since dropping to an annual rate of 1.376m in Aug 2020. (RTT)

EU: Current account deficit biggest since 2008 . The euro area current account balance showed the biggest deficit since late 2008, data published by the ECB showed. The current account registered an unexpected deficit of EUR19.86bn in July, in contrast to a surplus of EUR4.24bn in June. Economists had forecast a surplus of EUR5.3bin. Moreover, this deficit was the biggest since Nov 2008, when the shortfall totaled EUR26.38bn. Data showed that the trade in goods resulted in a deficit of EUR18bn after showing a zero balance in June. At the same time, the surplus on services fell to EUR10bn from EUR18bn. Primary income dropped to EUR3bn from EUR4bn, while the secondary income posted a negative balance of EUR15bn versus a EUR17bn deficit in June. (RTT)

EU: Germany producer price inflation soars to record high . Germany's producer price inflation hit a fresh record high in Aug driven by energy prices, data released by Destatis showed. Producer prices registered an annual increase of 45.8% in Aug, faster than the 37.2% rise in July. The rate was forecast to ease slightly to 37.1%. Energy prices soared 139.0% in Aug from the last year. Excluding energy, producer prices were up 14.0%. Prices of intermediate goods were up 17.5% and that of capital goods rose 7.8%. Durable and non-durable consumer goods prices moved up 10.9% and 16.9%, respectively. On a monthly basis, producer prices gained 7.9%, the highest on record, from 5.3% in July. Economists had expected inflation to ease sharply to 1.6%. (RTT)

Japan: Aug consumer inflation hits near eight-year high . Japan's core consumer inflation quickened to 2.8% in August to hit the fastest annual pace in nearly eight years, data showed, as pressures from higher raw material costs and a weak yen broadened. While core consumer inflation has exceeded the central bank's 2% target for five straight months, the Bank of Japan (BOJ) is unlikely to raise interest rates any time soon as wage and consumption growth remain weak, analysts say. The data highlights the dilemma the BOJ faces as it tries to underpin a fragile economy by maintaining ultra-low interest rates, which in turn are fuelling an unwelcome slide in the yen that is driving up households' cost of living. (Reuters)

Taiwan: Export orders rise unexpectedly . Taiwan's export orders increased unexpectedly in Aug, data from the Ministry of Economic Affairs showed. Export orders climbed 2.0% YoYin Aug versus an expected fall of 2.0%. Orders for mineral products jumped 134.7% annually in Aug, and those for textile items rose 6.0%. Meanwhile, bookings for optical, photographic, and cinematographic apparatus fell sharply by 36.5%, and orders for machinery slid 15.2%. On a MoM basis, export orders increased 0.6% in Aug. (RTT)

Markets

SKP Resources (Outperform, TP: RM2.04): Chairman Gan Kim Huat passes away. SKP Resources has announced that its executive chairman cum managing director Datuk Gan Kim Huat, has passed away. He was 74. (StarBiz)

Nestcon: Bags RM165m works contract for Balingan coalfield in Mukah. Nestcon has bagged a RM165.08m contract to provide site clearance, earthwork and ancillary works for Block 1 of CBS 2 in Sungai Bakau at the Mukah-Balingan coalfield in Sarawak. Nestcon said its wholly-owned subsidiary Nestcon Infra SB, had accepted a two-year letter of award (LOA) with an option to extend for another two years, from BARA Mining & Construction SB, after it was appointed as a contractor for the project. (The Edge)

Turiya: Shareholders reject Tunku Yaacob's re-election as director. Turiya's shareholders rejected a resolution to re-elect non independent director, Tunku Datuk Yaacob Khyra, at the group's annual general meeting on Sept 20. The group said six shareholders who collectively hold 3.83m shares (representing 99.5% of voting shares) voted against his re-election. (The Edge)

HSS Engineers: Aborts proposals due to fall in its share price. HSS Engineers has decided to abort its proposals to issue free warrants in the company as bonus for shareholders and its plans for a private placement of up to 20% of its total shares issued due a fall in its share price. (StarBiz)

PetChem: With Exxon plastics recycling pact. Petronas Chemicals Group Bhd (PetChem) and Exxon Mobil have signed a memorandum of understanding to assess the potential of advanced and large-scale plastic recycling technology, with a view to helping create a circular economy for plastics in Malaysia. (StarBiz)

SCIB: Clients to assume debt obligation for six projects in Qatar and Oman. Sarawak Consolidated Industries Bhd (SCIB) is set to gain USD13.32m (RM60.72m) after the clients of six contracts in Qatar and Oman agreed to take on the debts that the group owes to its subcontractors for the projects. (The Edge)

Scomi: Gets more time to settle its debt. The High Court has granted leave to Scomi to call for a court convened meeting with the latter’s creditors within the next three months. The meeting will deliberate on Scomi’s proposed scheme of arrangement to settle its debt with its creditors. (StarBiz)

AME REIT: Eyeing three more industrial properties from sponsor. AME Real Estate Investment Trust (REIT), which debuted on Bursa Malaysia on Sept 20, has identified three more industrial properties for potential acquisition over the next 12 months from its sponsor AME Elite Consortium. (The Edge)

Pos Malaysia: Introduces omnichannel chatbot to ease customs clearance. Pos Malaysia on Sept 20 announced the implementation of a digitally-enabled initiative through an omnichannel chatbot that allows customers to self-serve customs clearance for inbound parcels from any device. (The Edge)

Market Update

The FBM KLCI might open lower today after US stocks dropped on Tuesday and government bonds came under pressure as investors awaited a closely watched interest rate decision by the Federal Reserve. Wall Street’s S&P 500 gauge ended the day down 1.1%, while the technology-heavy Nasdaq Composite fell 1%. In Europe, the regional Stoxx 600 gauge closed 1% lower, while London’s FTSE 100 slipped 0.6% as traders returned to their desks following a UK public holiday to mark the state funeral of Queen Elizabeth. Central bankers are poised this week to discuss how far they can jack up borrowing costs to curb rapid price growth while facing the prospect of a prolonged global economic downturn. Central banks in Japan, Norway, Brazil, South Africa, the Philippines, Indonesia, Taiwan, Turkey and Switzerland are also due to announce their latest decisions on interest rates this week.

Back home, Bursa Malaysia has snapped its four-day losing streak to end in the green, supported by bargain hunting in selected heavyweight stocks. At the closing bell, the benchmark FBM KLCI rose by 9.58 points to 1,461.1 from Monday's close of 1,451.52. In the region, Japan's Nikkei 225 rose 0.44% to 27,688.42, Hong Kong's Hang Seng Index advanced 1.16% to 18,781.42 , South Korea’s Kospi gained 0.52% to 2,367.85 and Shanghai’s SSE index perked up by 0.22% to 3,122.41.

Source: PublicInvest Research - 21 Sept 2022