Economy

US: Mortgage rates fall for a second week but hold above 7%. Key US mortgage interest rates fell for a second week but held above 7% and remained near the highest in decades. The average contract rate on 30-year-fixed-rate mortgages declined to 7.12% from 7.18% the prior week. Mortgage rates climbed steadily over the past two years on the back of the Fed’s rate hikes, and they recently spiked to the highest rate in more than two decades. (Reuters)

US: Jobless claims hit lowest level since Feb; productivity strongest in years. The number of Americans seeking jobless benefits for the first time fell unexpectedly last week to the lowest level since Feb, pointing to a US job market that remains relatively tight even as other recent data indicate it has begun to soften. Initial claims for state unemployment benefits fell 13,000 to 216,000 in the week ended 2 Sept from a revised 229,000 in the prior week. (Reuters)

EU: Eurozone Q2 GDP growth revised down. The euro area economy logged only a marginal growth in the second quarter reigniting fears of a recession after the net trade acted as a drag on growth. The 20-nation currency bloc grew by a marginal 0.1% in the June quarter. The rate was revised down from 0.3% estimated on 16 Aug. Nonetheless, the first quarter figure was revised up to 0.1% from the previous estimate of nil growth. (RTT)

EU: France payroll employment growth slows in Q2. Payroll employment in France grew at a slower pace in the second quarter as significantly less jobs were created compared to the previous three months. Payroll employment grew 0.1% or by 21,000 newly created jobs sequentially in the second quarter. In the previous three months, salaried employment grew 0.4% or by 101,800 jobs. (RTT)

UK: House prices log biggest fall in 9 months. UK house prices declined at the fastest pace in nine months in Aug as rising mortgage rates and high inflation continue to weigh on housing affordability and demand. House prices registered a monthly drop of 1.9%, following a 0.4% drop in July. This was the biggest fall since Nov 2022 and also marked the fifth consecutive decrease. The YoY fall in house prices was 4.6%, which was also bigger than the 2.5% drop in July. (RTT)

China: Exports and imports register slower decline. China's exports declined at a slower pace in Aug as the weaker yuan made shipments more competitive and imports decreased less than expected on improving commodity demand. Exports slid 8.8% on a yearly basis in Aug but slower than the 14.5% decline in July. (RTT)

Markets

Sapura Energy (Underperform, TP: RM0.02): Granted standstill period extension by MCF financiers till March 2024. Sapura Energy has secured a six-month extension to its standstill period from its multi-currency financing (MCF) financiers under the Corporate Debt Restructuring Committee (CDRC) regime, pushing the end-date to March 10, 2024. The CDRC’s decision to extend the standstill period past the coming Sept 9 expiry date was in consideration of the current progress of the group’s proposed restructuring schemes. (The Edge)

Destini: Wins RM19m contract to supply rocket motor to RMAF. Destini has secured a two-year contract worth RM19.04m for the procurement and supply of FZ Rocket Motor to the Royal Malaysian Air Force (RMAF). The contract was granted by the Ministry of Defence (Mindef) to Destini for a period of two years until Sept 5, 2025. (The Edge)

MN Holdings: Clinches RM23.8m substation engineering contract in Johor from TNB. Underground utilities and substation engineering specialist MN Holdings has secured a RM23.8m substation engineering contract from Tenaga Nasional (TNB) to establish a new 132 kilovolt (kV) main intake substation (PMU) Bekok Switching Station (Air Insulated Switchgear) in Johor. (The Edge)

Pestech: Injunction dismissed by High Court in another setback in Gemas-JB double track dispute. The High Court has dismissed Pestech unit’s Erinford injunction application filed against Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd (SPYTL) in another setback in its legal tussle with the main contractor of the Gemas-Johor Bahru electrified double-track rail project. The Erinford injunction sought to preserve the status quo pending the conclusion of an appeal which PSB lodged on July 26. (The Edge)

SkyWorld: Acquires 1.3-acre land in Ho Chi Minh City for RM68m. SkyWorld Development is acquiring 1.3 acres (0.53 hectare) of land in Ho Chi Minh City, Vietnam. It acquired the land by way to purchasing 100% stake or 1.7m shares of 100,000 Vietnamese dong (RM19.51) each in Thuan Thanh Trading Production and Real Estate Trading Joint Stock Company for about VND350bn or RM67.9m. (The Edge)

Mah Sing: To form JV company to venture into industrial real estate development. Mah Sing Group has signed a shareholders’ agreement with The South Sea Capital SB (TSSC) to form a JV to venture into industrial real estate properties development. MS1 and MS2 will hold 50% and 20% equity interest respectively in the JV company, named Mah Sing South Sea Industrial Development SB. (The Edge)

IPO: Industrial paint manufacturer Smart Asia seeks ACE Market listing to fund expansion. Industrial paint and coating maker Smart Asia Chemical plans to list on the ACE Market of Bursa Malaysia to fund the establishment of a new factory in Perak to quadruple its annual manufacturing capacity. The company’s IPO will involve the issuance of 93.5m shares. (The Edge)

Market Update

The FBM KLCI might open softer after a drop in Apple’s shares pulled US stock indices lower on Thursday, as news that China would broaden a ban on the use of iPhones helped push the tech giant’s market capitalisation wipeout over the past two sessions to nearly USD200bn. Wall Street’s benchmark S&P 500 fell 0.3% and the technology-focused Nasdaq Composite declined 0.9%, extending losses from the previous trading session. Apple shares closed 2.9% lower on Thursday, pushing their decline since Tuesday’s closing bell to 6.4% in one of their steepest two-day sell offs this year. In Europe the region-wide Stoxx Europe 600 ended the day 0.1% lower, marking its seventh successive day of losses. Germany’s Dax also declined 0.1%. In Europe, the Stoxx Consumer Products and Services index closed 0.7% lower at its lowest level since the start of this year, as investors worried that an economic slowdown in China could lower demand for the region’s exports.

Back home, Bursa Malaysia ended lower on Thursday, in line with weaker sentiments on regional markets, as investors remained cautious over the bearish economic outlook. At the closing bell, the FBM KLCI had eased 0.55 of a point to end at 1,460.07, from 1,460.62 at Wednesday’s close. The regional markets finished broadly lower today with shares in Hong Kong leading the region. The Hang Seng dropped 1.34% while China's Shanghai Composite lost 1.13% and Japan's Nikkei 225 gave away 0.75%.

Source: PublicInvest Research - 8 Sept 2023