Economy

US: Jobless claims in US unexpectedly fall to three-week low . Applications for US unemployment insurance unexpectedly fell to a three-week low, indicating firm labour demand for workers despite concerns about the economy. Initial unemployment claims declined by 12,000 to 214,000 in the week ended Oct 15, Labor Department data showed. The median estimate in a Bloomberg survey of economists called for 233,000 new applications, and the latest figure was lower than all but one projection. The four-week moving average, which smooths out volatility from week to week, increased to 212,250. (Bloomberg)

US: Existing home sales decline for eighth straight month in Sept . A report released by the National Association of Realtors showed a continued decrease in US existing home sales in the month of Sept. NAR said existing home sales slid 1.5% to an annual rate of 4.7m in Sept after falling by 0.8% to a revised rate of 4.8m in Aug. Economists had expected existing home sales to slump by 2.1% to a rate of 4.7m from the 4.8m originally reported for the previous month. Existing home sales declined for the eighth consecutive month, falling to their lowest level since spring of 2020. (RTT)

EU: Current account deficit biggest on record . The euro area current account balance logged its biggest deficit ever in the history, data published by the European Central Bank showed. The current account balance showed a deficit of EUR26.3bn in Aug, up from EUR19.9bn in July. In the corresponding month last year, there was a surplus of EUR 17.1bn. The increase in trade gap was mainly related to the deficits that were recorded in goods and primary income. (RTT)

China: Keeps loan prime rates unchanged. China kept its main lending rates unchanged for the second straight month as the yuan's weakness limited the scope for policy loosening. The People's Bank of China retained its one-year loan prime rate, or LPR, at 3.65%. Likewise, the five-year LPR, the benchmark for mortgage rates, was kept unchanged at 4.3%. Previously, the bank had reduced the five-year LPR rate by 15 bps each in Aug and May and by 5 bps in Jan. The LPR is fixed monthly based on the submission of 18 banks, though Beijing has influence over the rate setting. (RTT)

Taiwan: Export orders fall in Sept on weak China demand . Taiwan's export orders contracted for the third time this year in Sept as demand from China continues to fall, the latest sign the trade dependent economy is under growing pressure. Orders dropped 3.1% in Sept compared with the same month last year, according to a statement from Taiwan's Ministry of Economic Affairs. That was better than the median estimate of a 5% decline in a Bloomberg survey of economists, but worse than Aug's 2% growth. (Bloomberg)

Indonesia: Central bank hikes policy rate further . Indonesia's central bank raised interest rates for a third policy session in a row, as expected, to rein in the rising inflation and to strengthen the weakening rupiah exchange rate, which was caused by increased capital outflows. The Board of Governors decided to raise the seven-day reverse repo rate, or BI rate, by 50 bps to 4.75%, the Bank Indonesia said. Borrowing costs are at their highest since Feb 2020. (RTT)

Markets

TNB (Outperform, TP: RM12.42): To invest RM5.8bn to refurbish Sg Perak hydropower plant. Tenaga Nasional Bhd (TNB) has received approval from the Energy Commission (EC) to implement the Hydro Life Extension Programme for six stations in Sungai Perak Power Stations (SSJ Sungai Perak) with an investment of RM5.8bn commencing this year. (StarBiz)

Capital A (Neutral, TP: RM0.69): Ikhlas platform to tap Indonesian market next year. Capital A’s Muslim-friendly travel and lifestyle platform, Ikhlas, plans to tap the Indonesian market next year by expanding its umrah and halal travel packages. (The Edge)

Pestech: Unit to dispose of transmission system project in Cambodia for USD118m. Pestech’s 60% indirect-owned subsidiary Diamond Power Ltd (DPL) has proposed to dispose of its 230kV Kampong Cham-Kratie Transmission System project to Cambodian Transmission II Co Ltd (CTL II) for USD118m. (StarBiz)

Atlan: Buys hotel and asset management company in UK for RM58m. Atlan Holdings is buying a property in the UK and its asset management company for a total combined value of RM58.8m. (The Edge)

T7 Global: Unit secures plug and abandonment work order from Hibiscus Oil. T7 Global's unit has secured a work order from Hibiscus Oil & Gas Malaysia Ltd to undertake well workover and plug and abandonment services. (The Edge)

ILB: Aborts RM16m Petaling Jaya land purchase. ILB Group is aborting its planned purchase of 1,124 sq metres of freehold commercial land with shoplots in Petaling Jaya for RM15.9m. (The Edge)

Keck Seng: Signs deal with Pasir Gudang council to facilitate future development. Keck Seng said it is allocating 20 acres of its land to the Pasir Gudang City Council (MBPG) to facilitate the development of a new administrative centre in the city. (The Edge)

Yinson: Wins RM16.0m contract extension. Yinson Holdings has secured a contract extension worth USD3.4m (RM16.04m) for the charter of one floating, production, storage and offloading vessel (FSPO). (StarBiz)

K-One: To conduct cloud computing business in Vietnam. K One Technology Bhd is planning to form a joint venture (JV) company in Vietnam to conduct cloud computing business. (The Edge)

Caely: Withdraws letter of demand against auditor, forensic audit to resume with support from new board. Caely’s new board of directors said Virdos Lima Consultancy (M) SB will resume its forensic audit into allegations of suspicious and irregular transactions at its wholly-owned subsidiary Caely (M) SB (CMSB).

IPO: ACE-Market bound Betamek post RM4.7m net profit in 2Q. Betamek, en route to the ACE Market of Bursa Malaysia on Oct 26, posted a net profit of RM4.7m on revenue of RM48.6m in the second quarter ended Sept 30. (StarBiz)

Market Update

The FBM KLCI might open weaker after US stocks reversed gains from earlier in the week, falling on Thursday for the second straight session as traders scrutinised economic indicators that suggest monetary policy will continue to tighten. The S&P 500 index of blue chip US stocks closed down 0.8%, while the Nasdaq Composite gave up 0.6%. The declines came as futures markets that track the US federal funds rate indicated the borrowing benchmark would reach 5% by May 2023, up from 4.6% before inflation data was released last week. US shares had gained earlier in day, with IBM rising 4.7% after the tech group late on Wednesday posted better than expected third-quarter earnings and forecast full-year revenue growth above its previous guidance. Tesla stock fell 6.7% after its revenues fell short of expectations for the most recent quarter. US labour market data on Thursday showed initial unemployment claims had unexpectedly fallen in the week ending October 15, dropping from 226,000 to 214,000. Europe’s regional Stoxx 600 share index closed 0.3% higher.

Back home, Bursa Malaysia shook off early losses to end the trading day higher for the fifth straight day, with the benchmark index putting on 1.6% driven by buying interests in selected heavyweights led by Petronas Chemicals Group Bhd and Public Bank Bhd. The benchmark FBM KLCI has gained a total of 55.25 points over the last five trading days. The regional markets finished broadly lower today with shares in Hong Kong leading the region. The Hang Seng dropped 1.40% while Japan's Nikkei 225 lost 0.92% and China's Shanghai Composite gave away 0.31%.

Source: PublicInvest Research - 21 Oct 2022