Economy

US: Services index unexpectedly indicates faster growth in Aug. Activity in the US service sector unexpectedly grew at a faster pace in the month of Aug. Services PMI rose to 54.5 in Aug from 52.7 in July, with a reading above 50 indicating growth in the sector. The new orders index climbed to 57.5 in Aug from 55.0 in July, while the employment index jumped to 54.7 in Aug from 50.7 in July. The business activity index also crept up to 57.3 from 57.1. (RTT)

US: Senate confirms Jefferson as Fed vice chair, Cook to new term on board. The US Senate confirmed Philip Jefferson as vice chair of the Fed in an 88-10 vote that signalled broad bipartisan support for the US central bank's second-in-command as policymakers near a potential watershed moment in their battle against inflation. Senators also confirmed Fed Governor Lisa Cook to a fresh 14-year term at the central bank, though they did so in a 51-47 vote that broke along partisan lines. (Reuters)

US: Trade deficit widens as imports rise slightly more than exports. US trade deficit widened in the month of July. The report said the trade deficit increased to USD65.0bn in July from a revised USD63.7bn in June. Economists had expected the trade deficit to rise to USD65.8bn from the USD65.5bn originally reported for the previous month. The wider trade deficit came as the value of imports increased by slightly more than the value of exports. The value of imports climbed by 1.7% to USD316.7bn, while the value of exports rose by 1.6% to USD251.7bn. (RTT)

EU: German factory orders slump adds to recession concerns. Germany's manufacturing sector orders decreased in double-digits on a monthly basis in July, which was much more than forecast, largely due to a big order for air and spacecraft in the previous month, and added fuel to worries that the biggest euro area economy may be headed for a recession. Factory orders fell a calendar-and-seasonally adjusted 11.7% in July. This was much worse than the 4% slump economists had forecast. (RTT)

EU: Ireland jobless rate remains stable at 4.1%. Ireland's unemployment rate remained stable in Aug after falling slightly in the previous month. The seasonally adjusted unemployment rate came in at 4.1% in Aug, the same as in July. In the corresponding month last year, the rate was 4.2%. The seasonally adjusted number of unemployed fell to 111,500 in Aug from 112,200 in July. Ireland's youth unemployment rate, which applies to the 15-24 age group, rose to 11.2% from 10.8%. (RTT)

UK: Construction growth slows on housing downturn, weak demand. The British construction sector expansion slowed in Aug as the growth in the commercial and civil engineering segments were not strong enough to offset a steep slump in house building and sharply weakening demand due to rising borrowing costs. PMI, dropped to 50.8 in Aug from 51.7 in July. The score was expected to fall to 50.5. A reading above 50 suggests growth, while any score below 50 indicates contraction in the sector. (RTT)

Taiwan: CPI growth hits 7-month high, topping 2% in Aug. Taiwan's CPI registered the highest YoY growth in seven months, breaching 2% largely on the back of higher rising food and fuel prices. CPI rose 2.52% from a year earlier in Aug, well above the 2% alert set by the central bank, the first time the level was breached in three months after 1.75% in June and 1.88% in July. In addition, the Aug CPI growth was the highest since Jan, when inflation stood at 3.05%. (Focus Taiwan)

Australia: Posts 0.4% growth for GDP in Q2. Australia's economy expanded by more than expected in the second quarter, driven by exports and public investment, while household consumption remained weak as decade-high interest rates worked to cool demand. Real GDP rose 0.4% in the second quarter, slightly beating forecasts of 0.3%. That compared with an upwardly revised 0.4% growth in the first quarter. Annual growth was at 2.1%, above expectations for 1.8%. (Nikkei Asia)

Markets

UEM Edgenta: Sets aside RM100m capex to boost "green" ventures in Sarawak. UEM Edgenta has allocated RM100m for its 'Sustainable Zero-Capex Program". This is part of UEM Edgenta's foray into energy efficiency and sustainable asset management targeting growth in healthcare support, infrastructure and technology. Buildings and asset owners, including Sarawak government owned-companies and government-linked companies are part of the initiative's targets. (BTimes)

YTL-REIT: To buy five-star hotel from parent. YTL Hospitality REIT (YTL-REIT) has entered into a sale and purchase agreement with YTL Corp, to acquire the Hotel Stripes Kuala Lumpur, Autograph Collection on Jalan Kamunting in Kuala Lumpur for RM138m. The proposed related-party transaction would then see YTL-REIT leasing the property for 15 years, with the option to extend the lease by another 15 years. (StarBiz)

HSS: Partners with ProPick in AI drone tech JV. HSS Engineers (HEB) and ProPick Digital Solutions & Consulting SB will form a JV company offering cutting-edge AI-empowered drone technology to the engineering sector. HEB will hold a 70% stake in the JV called HSS-ProPick Technologies SB, with ProPick holding the balance. (StarBiz)

Ancom Nylex: Teams up with HELM AG to spearhead Mimos' AI project for local farmers. Malaysian farmers will have free access to satellite data and artificial intelligence technology to improve yields through better use of chemicals and fertilisers under an initiative spearheaded by Mimos, a government agency under the Ministry of Science and Technology (MOSTI). Mimos is teaming up with HELM AG and Ancom Nylex (ANB) to apply digital agriculture solutions through SKYFLD, a digital agriculture platform. (BTimes)

Powerwell: To buy 55% in M Electrical & Engineering. Powerwell Holdings is set to buy a 55% stake in M Electrical & Engineering for RM8.25m to complement its offerings. The stake will be acquired from Chen Choong Hee. The group will capitalise on M Electrical & Engineering’s expertise in panel assembly, wiring craftsmanship, inspections and electrical switchboard testing, all of which will complement its industry presence. (StarBiz)

Aneka Jaringan: Plans another private placement to fund projects. Aneka Jaringan Holdings has proposed to undertake another such cash call to raise RM15.51m to fund its ongoing construction projects. The exercise will involve the issuance of up to 94.7m shares — 10% of its share base — to independent third party investors at an issue price to be determined later. (The Edge)

Seal Inc: Invests RM15m in two Perak firms in move to diversify into RE busines. Seal Incorporated is subscribing for RM15m worth of shares in two companies, in a move to diversify into the renewable energy (RE) business. It is subscribing for 387,500 new RCPS in Hutan Melintang Power Plant SB (HMPP) for RM5m. The group is also subscribing for 222,234 RCPS in Ikhtiar Gawa SB (IGSB) for RM5m, and another 5m RCPS in IGSB for RM5m. (The Edge)

Market Update

The FBM KLCI might open lower today as US Treasuries sold off on Wednesday, taking stocks along with them, after data showing unexpected strength in the country’s vast services sector supported the thesis that a “soft landing” for the domestic economy could mean interest rates remain elevated for an extended period. Wall Street’s benchmark S&P 500 fell 0.7%, with the tech and consumer discretionary sectors the worst performers. The tech-focused Nasdaq Composite declined 1.1%. In Europe, the region-wide Stoxx Europe 600 ended the day 0.6% lower, marking its sixth successive day of declines. France’s Cac 40 gave up 0.8% and Germany’s Dax lost 0.2%. A day earlier, the eurozone-wide composite purchasing managers’ index came in below market expectations, adding to signs that the single-currency bloc is struggling under the weight of high interest rates.

Back home, Bursa Malaysia ended higher on Wednesday, driven by bargain-hunting in selected financial and energy blue chips amid a mixed performance in regional markets. At the closing, the FBM KLCI rose 5.79 points to end at 1,460.62 from 1,454.83 at Tuesday’s close. Rising oil prices hit stock markets in China — the world’s largest importer of the fossil fuel — where the benchmark CSI 300 fell 0.2%. Elsewhere, the Nikkei 225 gained 0.62% while the Hang Seng lost 0.04%.

Source: PublicInvest Research - 7 Sept 2023