Economy

US: Jobless claims fall. The number of Americans filing new claims for unemployment benefits fell for a second straight week, as labor market conditions remained tight despite the Federal Reserve's aggressive interest rate hikes. Initial claims for state unemployment benefits decreased by 10,000 to a seasonally adjusted 230,000 for the week ended Aug. 19, the Labor Department said on Thursday. The previous week's level was revised up by 1,000 claims. Economists polled by Reuters had forecast 240,000 claims for the latest week. (Reuters)

US: Core capital goods increased modestly in July . New orders for key US.-manufactured capital goods rose modestly in July, suggesting business spending on equipment could continue to grow after rebounding in the second quarter. Orders for non-defense capital goods excluding aircraft, a gauge of business spending plans, rose 0.1% last month after falling by a revised 0.4% the month prior, Commerce Department said. Economists polled by Reuters had forecast core capital goods orders would be up 0.1%. The economy grew at a 2.4% annualized rate in the second quarter, the government said in its advance estimate of GDP, exceeding widespread expectations that growth would slow amidst record-high interest rates. (Reuters)

EU: France's Le Maire vows to keep lowering taxes. France will accelerate the reduction of its debt while sticking to its policy of lowering taxes for households and businesses, Finance Minister Bruno Le Maire said.The French state must reduce public spending, he added, confirming that gas and electricity price caps would end. France is under pressure to bring finances into balance after Fitch in April cut the country's rating to AA- over concerns about potential political paralysis and social unrest following an unpopular pension reform. Prime Minister Elisabeth Borne said the French government has no plans to make households pay more taxes, but two government sources said other tax rises were under consideration, as ministers work on finalising the draft 2024 budget. (Reuters)

UK: Retail sales slide by most in over two years. British retail sales fell in August at the fastest rate since March 2021 and most stores are expecting another tough month ahead, an industry survey showed. The Confederation of British Industry's (CBI) monthly balance of retail sales, which compares volumes with a year ago, fell to -44 in August from -25 in July. Expectations for the month ahead improved to -21 from -32, but were still deeply negative. The quarterly business situation balance - a gauge of sentiment among retailers - fell to -14 from +6 in May, the lowest reading this year. The CBI data echoed industry data earlier this week that showed sales growth at British supermarkets slowed in August, reflecting lower inflation as well as a hit to demand from unsettled, unseasonably wet weather. (Reuters)

India: Diesel exports to Singapore set for highs in Aug, drop for Europe. India's diesel exports to Singapore are set to hit a 19- month high in August and exceed 330,000 metric tons, boosted by cheaper freight costs and low inventories in the Asian oil hub, traders and analysts said. The country's exports of the fuel for August to Europe, on the other hand, are poised to fall to their lowest this year, according to one shiptracker, as shipments to the east are more profitable, but that situation may not last. (Reuters)

South Korea: Bank of Korea stands pat as inflation eases, growth risks heighten. South Korea's central bank held rates steady for a fifth straight meeting, with the governor tempering the hawkish stance as policymakers turn their attention to fine-tuning monetary settings amid softer inflation and slowing growth.The Bank of Korea's (BOK) seven-member monetary policy board unanimously voted to keep the base rate unchanged at 3.50%, as it did on four previous meetings this year, and in line with the forecast from all 43 economists surveyed by Reuters. The BOK retained its economic growth expectation for this year at 1.4%, unchanged from its May forecast, but cut next year's to 2.2% from 2.3%. Inflation forecasts were unchanged, it said in a statement accompanying the rate decision. (Reuters)

Indonesia: Bank Indonesia holds rates steady, plans new way to attract inflow. Indonesia's central bank left interest rates unchanged, as expected, saying current levels are sufficient to keep inflation in check, while strengthening efforts to stabilise the rupiah currency. Bank Indonesia (BI) plans to issue new rupiah denominated securities, using its holdings of government bonds as the underlying asset, as a new monetary instrument aimed at attracting foreign portfolio capital flows, Governor Perry Warjiyo said. BI kept the benchmark 7-day reverse repurchase rate at 5.75% for its seventh straight monthly policy review, as widely expected by economists surveyed by Reuters. (Reuters)

Markets

TNB (Outperform: TP: RM12.42): To boost RE investments by nearly six fold. Tenaga Nasional Bhd (TNB) plans to step up its renewable energy (RE) investments by six-fold to prepare for its future energy transition (ET). TNB’s allocated ET for 2018-2024 stood at RM6bn from a total of RM45bn allocated on the domestic grid. The group now plans to invest about RM90bn within five years, from 2025 to 2030, on the national grid, of which RM35bn will be spent on ET-related investments, while the remaining RM54bn on non-ET. (Bernama)

Pintaras Jaya: Secures eight contracts worth RM160m in Singapore . Pintaras Jaya has secured eight piling contracts in Singapore worth a total of RM160m. The contracts were clinched through its Singapore-based wholly-owned unit, Pintary Foundations Pte Ltd, according to the group. The contract periods range from three months to 12 months, starting from April to Dec 2023. The piling and foundation player said the contracts are expected to contribute positively to its earnings for FY2024. (The Edge)

Genetec: Gets nod for Main Market transfer, provided it appoints more independent, women directors. Genetec Technology has secured approval from the Securities Commission Malaysia to transfer its listing to the Main Market, provided the group enhances its corporate governance by raising the number of independent directors on its board to over 50% and women directors to 30%. (The Edge)

MAHB: 2Q net profit rises to RM102.5m . Malaysia Airports Holdings (MAHB) net profit for 2Q FY2023 rose to RM102.5m versus a net loss of RM58.2m in the same quarter last year. Revenue grew 78.6% to RM1.23bn from RM689.8m previously, in tandem with increased passenger volumes, resumption of airline services and connectivity, reopening of China borders and increased Haj pilgrim’s quota. "Revenue from airport operations increased by 84.3% from RM626.8m to RM1,155.4m. (Bernama)

Batu Kawan: Anticipates challenges in manufacturing segment amid weak consumer demand . Batu Kawan expects its manufacturing segment, particularly the oleochemical businesses in Europe and China, to remain challenged with weakness in consumer demand. The company said its industrial chemical division also faces product price declines and higher energy and raw materials costs. (StarBiz)

Dutch Lady: Focuses on cash flow management amid challenging market . Dutch Lady Milk Industries (DLMI) will continue to strictly manage its cash flow to steer the company in a tough market and manage internal financing for the new facility construction in Bandar Enstek, according to MD Ramjeet Kaur Virik. DLMI is investing RM540m in the new world-class manufacturing plant under construction in Bandar Enstek. The manufacturing plant will be fully operational within the course of 2024. (StarBiz)

Sunway: Healthcare segment to steer growth for Sunway . Sunway is confident that most of its business units will be able to manage the headwinds and continue to perform satisfactorily. Sunway said its healthcare segment will continue to be one of the group’s main growth drivers, as the three existing hospitals continue to register strong growth. “Its pipeline of several new hospitals coming on stream in the next few years will provide future earnings growth. (StarBiz)

Market Update

The FBM KLCI might open lower today as US stocks fell after a Federal Reserve official warned that the central bank could raise interest rates again and remain higher for longer, offsetting enthusiasm about blockbuster earnings from chipmaker Nvidia. The benchmark S&P 500 lost 1.3% on Thursday in New York, having given up early gains. The tech-focused Nasdaq Composite fell 1.9%. Investors have turned their attention to the annual economic policy conference in Jackson Hole, Wyoming, where Boston Fed president Susan Collins said more rate increases might be needed to bring inflation down to the central bank’s 2% target. Europe’s region-wide Stoxx Europe 600 finished 0.4% lower and Germany’s Dax fell 0.7%. The FTSE 100 bucked the trend, closing 0.2% higher.

Back home, Bursa Malaysia ended marginally higher on Thursday with the key index rising 0.32% on bargain hunting, in sync with the upbeat regional market performance as foreign funds return to the region. At the closing, the FBM KLCI gained 4.56 points to 1,444.67 from 1,440.11 at Wednesday's close. In the region, Hong Kong’s Hang Seng index rose 2.1%, China’s CSI 300 added 0.7%, Japan’s Topix increased 0.4% and South Korea’s Kospi gained 1.3%.

Source: PublicInvest Research - 25 Aug 2023