Economy

Global: IMF cuts 2023 growth outlook amid colliding global shocks. The International Monetary Fund cut its global growth forecast for 2023 amid colliding pressures from the war in Ukraine, high energy and food prices, inflation and sharply higher interest rates, warning that conditions could worsen significantly next year. The Fund said its latest World Economic Outlook forecasts show that a third of the world economy will likely contract by next year, marking a sobering start to the first in-person IMF and World Bank annual meetings in three years. (Reuters)

EU: Italy industrial production grows more than forecast. Italy's industrial production expanded for the second straight month in Aug, and at a faster-than-expected pace, the statistical office Istat said. Industrial production rose a seasonally-adjusted 2.3% MoM in Aug, faster than the 0.5% gain in July. That was also well above the 0.2% increase expected by economists. Production of consumer goods logged the strongest growth of 2.6%, and capital goods output was 1.8% higher compared to last month. Output produced in the intermediate goods segment rose 0.8%, while production dropped by 2.3% in the energy sector. (RTT)

UK: Bank of England's Bailey tells pension funds they have 3 days to rebalance. Bank of England Governor Andrew Bailey told pension fund managers to finish rebalancing their positions by Friday when the British central bank is due to end its emergency support programme for the county's fragile bond market. "We have announced that we will be out by the end of this week. We think the rebalancing must be done," Bailey said at an event organised by the Institute of International Finance in Washington. (Reuters)

UK: Jobless rate falls unexpectedly. The UK jobless rate eased unexpectedly to the lowest since 1974 and more people dropped out of workforce making it difficult for businesses to find employees to fill vacancies, official data showed. The jobless rate fell to 3.5% in three months to August from 3.6% in three months to July, the Office for National Statistics reported. This was the lowest since December to February 1974. The unemployment rate was forecast to remain unchanged at 3.6%. (RTT)

China: Auto sales growth slows in Sept as signs of softening demand emerge. Sales of electric vehicles (EV) in China rose at their slowest pace in five months as demand faltered in a sputtering economy despite government incentives to revive the auto market, though industry officials forecast a stronger end to the year. Sept sales of new energy vehicles (NEV), which include pure EVs, plug in hybrids and hydrogen fuel-cell vehicles, increased 93.9% from the previous year, data from the China Association of Automobile Manufacturers (CAAM) showed. (Reuters)

Japan: Kishida backs Bank of Japan's ultra-loose policy despite yen plunge - FT. Japanese Prime Minister Fumio Kishida signalled his support for the Bank of Japan’s ultra-loose monetary policy in an interview with the Financial Times and said the central bank needs to maintain its current policy until wages rose. Referring to BOJ Governor Haruhiko Kuroda’s 10-year tenure which ends in April next year, Kishida said: “At the moment, I am not thinking of shortening his term.” (Reuters)

Japan: Eco watchers current assessment at 3-month high, outlook eases. A measure of the public assessment of the current situation of the Japanese economy improved in Sept to its highest level in three months, survey data from the Cabinet Office showed. The current conditions index of the Economy Watchers' Survey, which measures the present situation of the economy, increased to 48.4 in Sept to 45.5 in Aug. (RTT)

Australia: Business activity booms in Sept as demand stays hot. Australian businesses reported booming sales in Sept as demand remained surprisingly resilient to higher interest rates, while cost pressures cooled in a hopeful sign for inflation. Survey from National Australia Bank Ltd (NAB) showed its index of business conditions climbed 3 points to +25 in Sept, far above its long-run average. The NAB surveys have shown business activity beating all expectations for some months even as the Reserve Bank of Australia (RBA) has lifted interest rates by a total 250 basis points to a nine-year peak of 2.6%. (Reuters)

Australia: Westpac consumer sentiment weakens further. Australia's consumer confidence declined to near historic lows in Oct amid a surge in the cost of living, rising interest rates and concerns about the near-term economic outlook, survey results from Westpac showed. The Westpac Melbourne Institute Index of Consumer Sentiment fell 0.9% to 83.7 in October from 84.4 in Sept. (RTT)

Indonesia: Retail sales growth slows in Aug. The Indonesian retail sector continued to expand in Aug, albeit at a slower pace, and retailers estimated that the positive trend continued in Sept, the results of a survey by Bank Indonesia showed. Retail sales climbed 4.9% YoY in Aug, following a 6.2% rise in July. The overall growth in Aug was underpinned by increasing growth in food, beverages, and tobacco amid persistently strong growth in automotive fuels, clothing, as well as cultural and recreation goods. (RTT)

Markets

DRB-Hicom (Outperform, TP: RM1.95): Geely, Perak govt in talks on automotive HiTech Valley. DRB-Hicom and Zhejiang Geely Holding Group Co Ltd (Geely) are in discussion to extend the duration of the memorandum of understanding (MoU) on developing and promoting the Automotive HiTech Valley in Tanjong Malim, Perak. DRB-Hicom said this in a filing with Bursa Malaysia today, updating on the status of the MoU which was inked on April 11, 2022, and expires after six months. The setting up of an automotive industry cluster in Tanjong Malim would attract investors and vendors from China and other parts of the world. (StarBiz)

Caely Holdings: Appoints former cops to board amid police probe over misuse of funds allegations. PERAK-based lingerie and apparel manufacturer Caely Holdings, which is embroiled in allegations of corruption, misconduct and misuse of funds, has appointed four retired senior police officers to its board of directors — the first listed company on Bursa Malaysia to appoint that many law enforcement officers at this level. Their appointments come amid an investigation into alleged misappropriation of funds in the group by the Bukit Aman Commercial Crime Investigation Department (CCID). (The Edge)

Privasia Technology: JV bags RM1.2bn fibre optics installation, maintenance contracts from ministry. Privasia Technology has secured two contracts worth approximately RM1.2bn in total from the Ministry of Communications and Multimedia relating to the installation and maintenance of fibre optics in both northern and southern regions of the country. This follows Konsortium Apex Privasat, a joint venture (JV) between Apex Communications SB and Privasat SB (a wholly owned subsidiary of Privasia), accepting the contracts from the ministry. (The Edge)

MHB: Clinches EPC services contract for solar-powered offshore platform contract from Sarawak Shell. Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) has secured an engineering, procurement and construction (EPC) services contract from Sarawak Shell Bhd relating to an offshore platform for the Rosmari-Marjoram gas project, located off the coast of Sarawak. The works comprise the construction of a wellhead platform, a topside, and a four-legged jacket, according to MHB in a bourse filing. (The Edge)

Southern Cable: Targets RM100m sales to US in FY23. Southern Cable is targeting RM100m sales of cables and wires to the US in the financial year ending Dec 31, 2023 (FY23). The cable and wire manufacturer said it will begin deliveries to a US-based cable and wire distributor in Q4FY22. It said the positive demand outlook for FY23 is supported by an upcoming distributorship agreement from its US-based customer, following recent successful performance of trial orders. (The Edge)

Naim: Wins RM73m construction contract. Naim Holdings Bhd’s wholly-owned subsidiary, Naim Engineering Sdn Bhd has secured a construction contract worth RM73m from Amanah Khairat Yayasan Budaya Melayu Sarawak (AKYBMS). In a Bursa filing, Naim said the contract was for the proposed construction of Wisma Melayu at Salak Land district. The contract is for a period of 30 months, commencing on Nov 8, 2022. The project is expected to contribute positively to the revenue and earnings of the group over the duration of the contract. (StarBiz)

Market Update

The FBM KLCI might open lower today after Wall Street stocks fell in choppy trading on Tuesday, pulled lower by the announcement from the Bank of England that it would end its emergency intervention in the UK bond market by Friday. The broad S&P 500 index ended the day down 0.7% in New York, having hit its lowest level since November 2020 during the trading session. The tech heavy Nasdaq Composite fell 1.1%, hitting its lowest level since July 2020. The Bank of England has staged two emergency interventions in the UK bond market this week, on Tuesday briefly expanding its £65bn gilts purchasing programme to include inflation-linked bonds. But Governor Andrew Bailey said that the bank did not expect to extend those interventions past Friday, as they conflicted with the BoE’s efforts to tighten monetary policy.

Back home, Bursa Malaysia ended sharply lower on Tuesday, weighed down by persistent selling in heavyweight stocks due to the global market selldown. At the closing bell, the benchmark FBM KLCI fell 19.18 points to 1,386.82 from Friday's close. In the regional equity markets, Hong Kong’s Hang Seng closed 2.2% lower, touching its lowest level since October 2011. Washington last week launched new export controls to restrict Beijing’s plans for technological self-sufficiency, limiting the sales of semiconductors made with US technology unless vendors obtain an export licence.

Source: PublicInvest Research - 12 Oct 2022