Economy

US: Fed gets an Aug inflation curveball to keep hikes alive. Fed officials hoping for evidence of a clear decline in inflation and a slowing economy got some of each from data since their last meeting, but likely not enough of either to downplay the possible need for further rate increases later this year. Overall consumer prices rose month-over-month at the fastest pace in 14 months in Aug, and while that was driven largely by volatile energy costs, a measure of underlying inflation also accelerated unexpectedly. (Reuters)

US: Posts Aug budget surplus after student loan cost reversal. The US government posted a rare Aug surplus of USD89bn due to a USD319bn reversal of costs from President Joe Biden's student loan forgiveness plan after the Supreme Court struck down the program in June, the Treasury Department said. The Aug surplus, the first for that month since 1955 compares to a year-earlier deficit of USD220bn. Receipts last month totalled USD283bn, down 7% or USD21bn from a year earlier, while outlays came to USD194bn after the student loan reversal, down 63% or USD329bn. (Reuters)

US: Consumer prices accelerate in Aug on gasoline. US consumer prices increased by the most in more than a year in Aug amid a surge in the cost of gasoline, but a moderate rise in underlying inflation could encourage the Fed to keep interest rates on hold. The CPI increased by 0.6%last month, the largest gain since June 2022, the Labour Department said. The CPI had risen 0.2% for two straight months. (Reuters)

EU: Eurozone industrial production declines for first time in 4 months. Eurozone industrial production declined for the first time in four months in July driven by the deterioration in capital goods and durable consumer goods output, data from Eurostat showed. Industrial output fell 1.1% on a monthly basis in July, in contrast to the 0.4% rise in June. This was the first fall since April and also the biggest decline since March, when output was down 4.5%. Moreover, the rate was bigger than the expected 0.7% decline. (RTT)

UK: Economy shrinks in July. The UK economy contracted in June on weaker out-turns in the services and industrial sectors, suggesting that the region is heading for a mild recession in the second half of the year. Real GDP fell 0.5% in July, offsetting June's 0.5% increase, the Office for National Statistics reported. The latest figure was also worse than economists' forecast of 0.2% decline. The main contributor to the fall in GDP was a 0.5% drop in services output, which had increased 0.2% in June. (RTT)

Hong Kong: Q2 industrial output expands 2.6%. Hong Kong's industrial production advanced in the Q2, primarily driven by strong gains in the output of miscellaneous manufacturing industries and textiles and apparel, provisional data from the Census and Statistics Department showed. The index of industrial production for manufacturing industries as a whole rose 2.6% annually in the Q2, though slower than the 3.8% increase in the previous quarter. (RTT)

Japan: Large manufacturers' sentiment strengthens in Q3. Confidence among Japanese large manufacturers improved in the 3Q, a quarterly business outlook survey from the Ministry of Finance showed. The business survey index of large manufacturers rose to 5.4 in the 3Q from -0.4 in the 2Q. The score was forecast to rise to 0.2. At the same time, the BSI for large non manufacturers climbed to 6.0 in the Sept quarter from 4.1 a quarter ago. (RTT)

South Korea: Jobless rate falls to 2.4%. South Korea's unemployment rate decreased in Aug, data from Statistics Korea showed. The unemployment rate dropped to a seasonally adjusted 2.4% in Aug from 2.8% in July. In the corresponding month last year, the unemployment rate was 2.6%. On an unadjusted basis, the jobless rate also declined to 2.0% in Aug from 2.7%, indicating 573,000 unemployed people in the country. (RTT)

Markets

CIMB Group (Outperform, TP: RM6.70): Gains ground on ambitious emissions target . CIMB Group Holdings continues to gain strong traction on its sustainability commitments and has already met between 22% and 143% of its 2024-2030 targets. Ahead of its 2024 sustainability commitments, the banking group has mobilised RM60bn in sustainable financing and increased the target to RM100bn, RM150m in corporate social responsibility initiatives over five years and 100,000 hours a year in staff volunteer activities. (StarBiz)

BCorp: Buys 2.45% stake in BFood . Berjaya Corp’s (BCorp) wholly-owned subsidiary, Teras Mewah SB, has acquired 43m shares, or a 2.45% equity interest, in Berjaya Food (BFood). The direct business transactions were done for RM29.57m cash or at an average purchase price of 68.8 sen per BFood share. The stake buy brought its direct and deemed interest in BFood to 970.27m shares, representing 55.31% equity interest. (StarBiz)

DNeX: Proposes private placement of up to 10% of total issued shares to third-party investors . Dagang Nexchange (DNeX) has proposed a private placement of up to 10% of its total number of issued shares to third-party investors to be identified and determined later. Based on the indicative issue price of 41.5 sen per placement share, the proposed private placement is expected to raise gross proceeds of up to RM133.44m under the maximum scenario. (StarBiz)

HHRG: Acquires entire 1.18m shares in Kulim Property SB for RM4.5m . HHRG, formerly known as Heng Huat Resources Group, has entered into an agreement with several shareholders of Kulim Property SB (KPSB) to acquire KPSB’s entire equity of 1.18m shares for RM4.5m. The acquisition was valued at RM4.5m and is considered a related party transaction as the shareholders of KPSB are also major shareholders of HHRG. (The Edge)

OneTech: Receives major shareholder and former MD's requisition for EGM to limit directors' salary, re-audit financials . OneTech Solutions Holdings has received a written requisition from Lau King Yew, who holds a 45% stake in the company, requesting for an EGM to vote on resolutions including salary and benefit limits for directors and the managing director, as well as a re-audit of the group's financials. (The Edge)

JHM Consolidation: In JV for automotive lighting in SEA . JHM Consolidation has entered into a MoU with Jiangsu Dekai Auto Parts Co Ltd (Dekai) to establish a joint venture between the two companies for designing, manufacturing, marketing, and selling automotive lighting products in Malaysia and other Southeast Asian countries. DEKAI is a Chinese manufacturer of automotive lighting products. The joint venture entity will be named JHM Dekai Auto Lighting SB. (The Malaysian Reserve)

Malaysian Genomics: CEO quits after three years in the job . Malaysian Genomics Resource Centre (MGRC) CEO Sasha Omar Firdaus Aamir resigned on Wed after three years of being in the genomics and biopharmaceutical specialist's top job. Sasha Omar, 48, has resigned, citing to pursue his personal interest. Sasha Omar became CEO in Sept 2020. Prior to his appointment as CEO of the company, he was the chief operating officer since Feb 2014. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks advanced and Treasury yields fell on Wednesday as investors shrugged off a higher than expected inflation report. The benchmark S&P 500 equity index manage to carve out a 0.1% gain by the closing bell in New York, after having dipped into negative territory. Traditionally defensive sectors such as utilities, consumer staples and healthcare were among the best-performing segments. The technology-focused Nasdaq Composite gained 0.3%. New data showed US consumer prices climbed at an annual rate of 3.7% in August, up from 3.2% in the previous month and marginally above analysts’ forecasts. Core inflation fell from 4.7% to 4.3% over the same period, in line with expectations, but surprised to the upside on a monthly basis, adding 0.3% compared to July. Europe’s region-wide Stoxx 600 ended the day 0.3% lower, extending losses from the previous session, while France’s CAC 40 and Germany’s Dax fell 0.4%.

Back home, Bursa Malaysia’s barometer index unexpectedly made a positive ending with slight gains despite cautious trading throughout the day. At the closing, the FBM KLCI improved by 0.15 of a point to end at its intraday high of 1,453.54. The regional markets edged lower on Wednesday, with China’s benchmark CSI 300 down 0.6% while Hong Kong’s Hang Seng and Japan’s Topix each gave up 0.1%.

Source: PublicInvest Research - 14 Sept 2023