Economy

US: Fed officials keep rate-hike pivot on the radar despite strong jobs data. Four Federal Reserve policymakers indicated they would still consider a smaller interest rate hike at their next policy meeting, despite new data showing another month of robust job gains and only small signs of progress in lowering inflation. The United States added 261,000 jobs last month, the Labour Department said in its closely watched employment report, well above the 200,000 gain expected by economists in a Reuters poll. Data for Sept was revised higher to show 315,000 jobs created instead of the previously reported 263,000, but the unemployment rate ticked up to 3.7% from 3.5%. (Reuters)

EU: Eurozone private sector shrinks most in almost 2 years. The euro area private sector contracted at the fastest pace in almost two years in Oct signalling that the currency bloc is sliding into a recession, final survey results from S&P Global showed. The final composite output index fell to 47.3 in Oct from 48.1 in Sept. The score was slightly above the flash 47.1. The latest reading was the lowest since Nov 2020. The PMI reading has remained below the neutral 50.0 mark for the fourth straight month. (RTT)

EU: Eurozone PPI inflation eases more than forecast. Eurozone producer price inflation eased more-than-expected in Sept from a fresh record high in Aug, data released by Eurostat showed. Producer prices climbed 41.9% YoY in Sept, slower than the revised 43.4% surge in Aug. That was just below the 42.0% increase expected by economists. The strong inflation in September was largely driven by a 108.2% jump in energy prices. Excluding energy, producer price inflation eased slightly to 14.5% from 14.6%. (RTT)

EU: Germany factory orders decline further on weak foreign demand. The decline in Germany's factory orders deepened in Sept due to a sharp fall in foreign demand, data from Destatis showed. Factory orders declined by more-than-expected 4.0% on a monthly basis, following a 2.0% fall in Aug. This was the biggest fall since March 2022. Orders were forecast to ease 0.5%. Excluding large-scale orders, there was a decrease of 3.9 %. (RTT)

UK: Car sales set to see worst performance since 1982. The UK car market remained on course for the toughest year since 1982 despite bumper sales in Oct, the Society of Motor Manufacturers and Traders, or SMMT, said. New car registrations expanded 26.4% on a yearly basis in Oct, which was third consecutive increase. Sales were driven up by hybrid and battery electric vehicles. In the year to date, the market was down 5.6% on the same period in 2021, but still a third below pre-Covid levels, said SMMT. (RTT)

UK: Construction growth strongest in 5 months. The UK construction sector expanded at the fastest pace in five months in Oct despite a fall in new orders, survey data from S&P Global showed. The Chartered Institute of Procurement & Supply construction Purchasing Managers' Index rose to 53.2 in Oct from 52.3 in Sept. Meanwhile, the reading was forecast to fall to 50.5. A reading above 50 indicates expansion in the sector. Higher levels of business activity were attributed to a combination of new project starts and strong pipelines of unfinished work. Commercial building was the best-performing category in Oct, with growth reaching a five-month high. (RTT)

Australia: Inflation to peak around 8%, says RBA. Australia's inflation is set to peak at around 8% this year, driven by the pass through cost pressures and higher food prices, the RBA said in its quarterly statement on monetary policy. Inflation is expected to peak at around 8% at the end of 2022, before starting to ease early next year, the bank noted. The rate was expected to peak at 7.75% in the Aug Statement. (RTT)

Singapore: Retail sales growth eases in Sept. Singapore's retail sales growth eased further in Sept, data from the Department of Statistics showed. Retail sales rose 11.2% YoY in Sept, after a 13.3% growth in Aug. Excluding motor vehicles, retail sales grew 16.8% yearly in Sept, after a 16.8% gain in the preceding month. Sales of wearing apparel and footwear grew the most, by 52.4% in Sept from a year ago. This was closely followed by a 51.7% surge in sales of food and alcohol. (RTT)

Philippines: Trade deficit widens in Sept. The Philippine trade deficit increased in Sept from the last year, as imports rose more than exports, the Philippine Statistics Authority showed. The trade deficit widened to USD4.8bn in Sept from USD3.8bn in the same month last year. In August, the deficit was USD6.0bn. Exports rose 7.0% yearly in Sept, after a 2.0% decline in Aug. This was the highest growth seen in seven months. (RTT)

Markets

Capital A (Neutral, TP: RM0.69): Engages research firm to assist in developing PN17 regularisation plan. Capital A has engaged Providence Strategic Partners SB as the independent market researcher to assist in developing a proposed PN17 regularisation plan. The parent company of AirAsia Aviation Group said Providence Strategic Partners would help with independent market research and review of potential business plans with regard to the plan’s development. (StarBiz)

FGV (Neutral, TP: RM1.61): Hire additional 16,000 migrant workers by end 2023. FGV Holdings is recruiting an additional 16,000 migrant works to resolve its labour shortage issue for its plantation business by end 2023. The workers recruited from source countries such as India, Indonesia and Nepal will further strengthen the company's growth trajectory via an expected increase in its plantation yields and productivity. FGV received 4,980 workers from India and Indonesia in Oct and expects another 3,000 workers in Nov. The company's recruitment began in July and to date has recruited 68% of the workers. It expects to welcome 10,000 additional new recruits by year end and another 6,000 workers by 2023. (StarBiz)

Westports: Net profit dropped 24.4% to RM150.39m in 3Q. Westports Holdings's net profit dropped 24.4% YoY to RM150.39m in the 3Q, from RM199.06m in the same quarter last year due to higher fuel costs and one-off sundry income in Q3FY21. The company noted that the net profit was also dragged down by a one off prosperity tax this year. Revenue rose 3.1% to RM520.54m in Q3FY22 versus RM504.89m a year earlier, mainly attributable to the growth in conventional revenue. For the nine months, the company's net profit dropped 20.6% to RM464.54m from RM585.35m in the same period last year. (New Straits Times)

Salcon: Inks agreement to provide transportation services. Water and wastewater engineering firm Salcon has inked an agreement with APM to provide transportation services for the employees of APM to its clients' sites. Salcon said its wholly owned subsidiary Eco-Coach & Tours (M) SB has entered the agreement with APM, with the job commencing on 1 March 2023 until 31 Dec 2026. APM's principal activity is to carry out property or facilities management services. (The Edge)

Caely: Rejects requisition notice to convene EGM. Caely Holdings has rejected a requisition claim from five shareholders to convene an EGM on the grounds that they do not hold in aggregate at least 10% of the company's issued share capital. The shareholders, former executive chairman, Datin Seri Jessie Wong Siaw Puie, Zhang Jia, Leow Boon Kin, Datuk JP Low Kok Chuan and Cheng Kwee had in their requisition notice dated 21 Oct requested for the EGM to table 14 resolutions. Among others, the resolutions pertained to the disqualification of 12 shareholders' rights, the reinstatement of the company's previous lawyers Messrs Bachan & Kartar, and the barring of the company from withdrawing certain lawsuits. (The Edge)

S&F Capital: Acquires land near Kulim Hi-Tech Park. S&F Capital is acquiring 9.44 acres of land near Kulim Hi-Tech Park (KHTP) in Kedah for RM7.4m. The group said its 55%-owned subsidiary is buying the freehold land in Tempat Naga Lilit from Balkhis Othman and Siti Hawa Othman. The land has an upside potential in terms of capital appreciation as it is strategically located in the Kulim area and is only 3km away from KHTP, a mega international industrial scheme that is expanding rapidly. (The Edge)

Market Update

The FBM KLCI might open with a cautious note as US stocks finished the week lower after hawkish comments from the Federal Reserve signalled that interest rates will rise higher than previously expected, and a jobs report indicated the labour market is still running hot. Although the Nasdaq Composite closed 1.3% higher on Friday, its 5.6% drop for the week was the biggest decline since late January. Concerns over a higher “endpoint” for interest rates weighed on the technology stocks that comprise the index and are more sensitive to elevated borrowing costs. The S&P 500 rose 1.4% on Friday to trim its drop over the past five sessions to 3.4%, the biggest weekly decline since late September. Investors sold stocks after the US central bank implemented its fourth consecutive 0.75 percentage point rate rise on Wednesday as it attempts to bring inflation down to its target of 2%. In Europe, the regional Stoxx Europe 600 added 1.8%.

Back home, the Malaysian stock market surged on Friday, closing at an intraday high amid a buoyant regional performance driven by hopes that China will soon relax its strict Covid-19 restrictions. At the closing bell, the benchmark FBM KLCI jumped 17.9 points, or 1.26%, to end at the intraday high of 1,438.28, compared to Thursday's close of 1,420.38. Chinese stocks soared, extending their weekly gains on hopes that Beijing would change its longstanding zero-Covid policy. The CSI 300 index of Shanghai and Shenzhen-listed shares gained 3.3%. Industrial metal prices skyrocketed on the news. Copper, a barometer of health for the global economy, powered 8% higher to breach USD8,000 a tonne for the first time in two months. Elsewhere, the Hang Seng in Hong Kong jumped 5.4%.

Source: PublicInvest Research - 7 Nov 2022