Economy

Global: Cooling demand squeezes factory activity in Europe and Asia . Factories in Europe and Asia struggled in Nov due to weakening global demand, with the pressure unlikely to let up in the months ahead. Business surveys by S&P Global pointed to shrinking activity and a dire outlook in wide parts of both regions. Asian manufacturers are bracing for a further pullback in spending from US and European customers, where the fastest inflation in decades is weighing on companies and households. The pace of the euro area’s downturn slowed, however, a signal that a widely expected recession may turn out to be less severe than initially feared. (Bloomberg)

US: Consumer spending solid in Oct; weekly jobless claims fall . US consumer spending increased solidly in Oct, while inflation moderated, giving the economy a powerful boost at the start of the 4Q as it navigates a high interest rate environment. Consumer spending, which accounts for more than two-thirds of US economic activity, jumped 0.8% after an unrevised 0.6% increase in Sept, the Commerce Department said. Oct's gain was in line with economists' expectations. Spending last month was boosted by wage gains amid labour market resilience, one-time tax refunds in California, which saw some households receiving as much as USD1,050 (RM4,626) in stimulus cheques, and cost-of-living adjustments for food stamp recipients. (Reuters)

US: Manufacturing index indicates first contraction since May 2020 . Activity in the US manufacturing sector contracted for the first time in over two years in the month of Nov, according to a report released by the Institute for Supply Management. The ISM said its manufacturing PMI slipped to 49.0 in Nov from 50.2 in Oct, with a reading below 50 indicating a contraction. Economists had expected the index to edge down to 49.8. With the slightly bigger than expected decrease, the manufacturing PMI fell to its lowest level since hitting 43.5 in May of 2020. "The US manufacturing sector dipped into contraction, with the Manufacturing PMI at its lowest level since the coronavirus pandemic recovery began," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee. (RTT)

UK: House prices fall more sharply after mortgage costs jump, says lender . UK house prices are falling more sharply than expected after a jump in borrowing costs quelled demand, Nationwide Building Society said. The mortgage lender said home prices fell 1.4% in Nov, the fastest drop since June 2020. Excluding the pandemic, prices have not fallen this sharply since the global financial crisis more than a decade ago. Economists had expected a 0.4% drop. The decline could be the start of a more protracted downturn, reflecting Britain's lurch into a recession and spiralling inflation that has caused the tightest cost-of-living squeeze in memory. The BOE has boosted its benchmark lending rate to 3% from near zero a year ago, meaning those who remortgage in the next year may see their payments double. "Interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum," Robert Gardner, Nationwide's chief economist, said in a statement. (Bloomberg)

China: New home prices in China fall further in Nov . Prices for new homes in China fell for a sixth straight month in Nov, increasing the government's challenge in stabilising the property development industry, a private survey showed. Pandemic-control lockdowns were hampering sales, real estate industry managers said. New home prices had been 0.06% lower in Nov than in Oct, when the monthly decline was 0.01%, said China Index Academy, one of the country's largest independent real estate research firms. Falling values are weakening the position of already cash-strapped developers with unsold stock. The government moved in Nov to ease the industry's liquidity crunch, which has stifled activity in a sector that accounts for a quarter of the economy and has been a key driver of growth. (Reuters)

Japan: Consumer confidence lowest since June 2020 . Japan's consumer sentiment weakened to the lowest since June 2020, data from the Cabinet Office showed. The seasonally adjusted consumer confidence index declined to 28.6 in Nov from 29.9 in Oct. This was the lowest since June 2020, when the reading was 28.3. Among the four sub-indexes, the indicator measuring the overall livelihood decreased to 26.5 in Nov and that for income growth contracted to 34.2. The index reflecting households' willingness to buy durable consumer goods fell to 21.4 and the index for employment declined to 32.4. The latest survey was conducted on Nov 15 among 8,400 households. (RTT)

Markets

Apex Equity (Neutral, TP: RM1.03): SC goes to court to prevent ACE Group from taking control of Apex Equity. Apex Equity's second largest shareholder, ACE Group, is back on the radar of the SC with the regulator going to the court to prevent the group from taking control of the stockbroking firm. (The Edge)

KNM: Calls off RM1.0bn Borsig sale to GSV. KNM Group’s proposed EUR220.8m (RM1.0bn) sale of its key subsidiary Borsig GmbH has fallen through, after KNM decided not to extend the deal’s long-stop date from the latest Nov 30 deadline. (The Edge)

Ireka: Slapped with RM98m suit linked to JV agreement. Ireka Corp has been slapped with a RM97.9m suit from a JV partner linked to obligations of a JV agreement for a development project. The dispute is related to a JV agreement entered between the company, ASPL M9 Ltd, and Urban DNA SB with the primary objective of overseeing the development of the RuMa project. (The Edge)

Ranhill Utilities: Unit bags RM50m contract from MMHE. Ranhill Utilities has announced that 51% owned subsidiary Ranhill Worley SB, has bagged a RM50m contract from Malaysia Marine and Heavy Engineering SB. (StarBiz)

TCS Group: Wins RM120m PJ contract. TCS Group has secured a RM119.6m contract from Eupe PJ South Development SB, a wholly-owned subsidiary of Eupe Corp. The contract comprises one block of 34-storey serviced apartments and one block of a 12-storey attached car park building. (StarBiz)

TAFI: Clinches RM23.6m construction job in Labuan. TAFI Industries has bagged a RM23.6m contract to construct the Ministry of Health’s staff quarters in Labuan. The contract is expected to contribute positively to the earnings and net tangible assets of the company for the FY2023. (The Edge)

YLI: To dispose of two lands in Penang for RM17.3m. YLI Holdings is disposing of two parcels of freehold land in Penang to ZW Packaging SB for RM17.3m in cash. The two pieces of land have a combined size of 4.7 acres, both located in Seberang Perai Tengah. (The Edge)

LYC Healthcare: Inks deal to distribute diabetic supplement in Malaysia and Singapore. LYC Healthcare has inked an exclusive distribution agreement with CuraLife Spain SLU to distribute a diabetic supplement product known as Curalin in Malaysia and Singapore. Curalin is a herbal dietary supplement with proven efficacy in promoting a healthy glycaemic response and energy levels. (The Edge)

Advancecon: Partners with Perak govt to initiate centralised labour quarters project. Advancencon is collaborating with the Perak State Development Corporation to initiate a pilot project for the development of centralised labour quarters in Perak, with the aim of supporting the growth rate of the state’s industrialisation and economic development. (The Edge)

Top Builders: Fails to submit quarterly report, remains suspended. Trading in shares of Top Builders Capital remained suspended after it failed to submit its quarterly report for the financial period ended Sept 30 to Bursa Malaysia Securities. (StarBiz)

Market Update

The FBM KLCI might open lower today as the dollar sold off and Treasuries rallied on Thursday after a closely watched measure of inflation came in lower than expected and a speech from Jay Powell raised hopes that the Federal Reserve would soon slow its rate rises. The US core personal consumption expenditures index, the Fed’s preferred inflation gauge, rose 0.2% in October from the previous month, according to data from the commerce department. Wall Street had expected an increase of 0.3%. A separate survey from the Institute for Supply Management showed cost pressures in the US’s manufacturing industry were cooling at the fastest pace since 2020. Equity markets, however, were more muted. The S&P 500 slipped 0.1% after posting its first back-to-back monthly advances since 2021. The Nasdaq Composite inched up 0.1%, while Europe’s region-wide Stoxx 600 rose 0.9%.

Back home, Bursa Malaysia ended higher for the second consecutive day on Thursday, with the key index rising by 0.18% as continuous buying interest was seen in the heavyweight plantation counters. At the closing bell, the benchmark FBM KLCI rose by 2.71 points to 1,491.51 from Wednesday's closing of 1,488.8. In the region, Hong Kong's Hang Seng Index rose 0.75% to 18,736.44, the Shanghai Composite Index gained 0.45% to 3,165.47, and Japan's Nikkei 225 added 0.92% to 28,226.08.

Source: PublicInvest Research - 2 Dec 2022