Economy

US: Jobless claims inch up less than expected to 220,000. A report released by the Labour Department on showed first-time claims for US unemployment benefits edged up by less than expected in the week ended Sept 9th. The report said initial jobless claims crept up to 220,000, an increase of 3,000 from the previous week's revised level of 217,000. Economists had expected jobless claims to rise to 225,000 from the 216,000 originally reported for the previous week. (RTT)

US: Business inventories unchanged in July. US business inventories were unchanged in July as companies continued to carefully manage stocks in anticipation of weak demand because of higher interest rates. The unchanged reading in business inventories followed a 0.1% dip in June, the Commerce Department said. (Reuters)

US: Producer prices accelerate in Aug on gasoline. US producer prices increased by the most in more than a year in Aug as the cost of gasoline surged, the latest indication that the road to low inflation would be uneven. The producer price index for final demand rose 0.7% last month, the largest gain since June 2022, the Labour Department said. Data for July was revised slightly up to show the PPI advancing 0.4% instead of the previously reported 0.3%. (Reuters)

US: Retail sales climb much more than expected in Aug. The Commerce Department released a report showing US retail sales increased by much more than expected in the month of Aug. The report said retail sales climbed by 0.6% in Aug after rising by a downwardly revised 0.5% in July. Economists had expected retail sales to inch up by 0.2% compared to the 0.7% increase originally reported for the previous month. (RTT)

EU: Euro zone yields fall as ECB hikes but signals end of tightening. Eurozone government bond yields fell after the ECB hiked interest rates by 25 basis points to 4% but signalled it was likely finished with its tightening policy. Germany’s 10-year bond yield, the bloc’s benchmark, was last down 6 basis points (bps) at 2.594%. The yield, which moves inversely to the bond’s price, stood at 2.638% just before the decision. The increase in rates came as the ECB upgraded its inflation forecast for 2024 to 3.2%, confirming Reuters reporting, but said inflation would cool to 2.1% in 2025. (Reuters)

EU: Sweden inflation eases to 7.5%, lowest in 15 months. Sweden's consumer price inflation moderated in Aug to the lowest level in more than a year, primarily due to a plunge in electricity prices, data from Statistics Sweden showed. The consumer price index rose 7.5% YoY in Aug, slower than July's stable rate of increase of 9.3%. Economists had forecast inflation to ease to 7.7%. Further, this was the weakest inflation rate since May last year, when prices had risen 7.3%. (RTT)

UK: Rental inflation remains in double-digit. UK home rents continued to register double-digit growth as rental supply remained low, the property website Zoopla said in its Sept Rental Market Report. Rents for new lets increased 10.5% in July from a year ago, slower than the 12.2% rise in the previous month. Rental inflation has been in double-digit for 18 months, Zoopla said. Data showed that over the last three years, average rental cost of tenants rose by GBP 2,800. Zoopla's Executive Director Richard Donnell said the rented sector remained stuck in a period of low supply and high demand. (RTT)

China: Cuts reserve requirement ratio for second time this year. China's central bank reduced the reserve requirement ratio for the second time this year in yet another move to support the struggling economy. The weighted average RRR for banks will be about 7.4%, the People's Bank of China said in a statement. The RRR represents the amount of cash that banks must hold as reserves. This reduction will not be applicable to financial institutions that implemented a 5-percent RRR. The move is set to release about CNY500bn into the system and reduces funding costs. (RTT)

India: Wholesale Prices Fall 0.52% In Aug. India's wholesale prices declined for the fifth successive month in Aug, though at a slower-than-expected pace, provisional data from the Ministry of Commerce and Industry revealed. The wholesale price index, or WPI, dropped 0.52% YoY in Aug, following a 1.36% decrease in July. Economists had expected a 0.6% fall. The overall downward trend was primarily due to the fall in prices of mineral oils, basic metals, chemical and chemical products, textiles, and food products, the ministry said. (RTT)

Japan: Industrial production falls less than estimated. Industrial output in Japan declined less than initially estimated in July, the latest report from the Ministry of Economy, Trade and Industry said. Industrial production dropped 1.8% MoM in July, reversing a 2.4% rebound in June. The latest decline was revised from the 2.0% seen in the flash report published on Aug 30. Shipments dipped 1.8% monthly in July, while inventories advanced 0.6%. Data showed that the inventory ratio also showed an increase of 1.0%. (RTT)

Markets

Hextar Global (Neutral, TP: RM0.63): Propel Global sells 55% stake in Propel Chemicals for RM17m . PROPEL Global is selling its 55% equity stake in Propel Chemicals SB (PCSB) to Hextar Kimia SB for RM16.5m in cash. (The Malaysian Reserve) Comment: Financial details are scant at this juncture. The acquisition, as we understand however, is to enable Hextar Global to expand on its oil field chemical business, ultimately strengthening the Group's earnings profile. The oil and gas space is relatively robust currently. We maintain our Neutral call with an unchanged 63sen target price.

Tenaga National (Outperform, TP: RM11.50): TNB unit secures court permission to challenge IRB’s additional RM78.49m tax assessment . Tenaga Nasional’s (TNB) indirect 70%-owned subsidiary Southern Power Generation SB has been allowed to proceed with its challenge of additional tax assessments from the Inland Revenue Board amounting to RM78.49m via a judicial review. (The Edge)

Pharmaniaga: Appeal for second private placement dismissed by Bursa Malaysia . Bursa Malaysia has rejected Pharmaniaga’s appeal for a second standalone private placement proposal due to the company’s financial distress. Pharmaniaga, classified under PN17, disclosed that its appeal submitted on 1 Aug 2023, was dismissed by Bursa Malaysia in a letter dated 13 Sept 2023. (The Malaysian Reserve)

MyEG: Immigration job intact . MyEG Services’ contract to renew foreign workers' permit for the Immigration Department Malaysia appears to be intact. MyEG Services has been in the news following allegations by a member of parliament that the company was illegally collecting fees for renewal of foreign workers' permit, despite having its services suspended by the Immigration Department since Feb 2023. (New Straits Times)

Sunsuria: Partners Australia’s Icon Group to provide cancer treatment services in Malaysia . Property developer Sunsuria has partnered with Australian integrated cancer care provider Icon Group to set up and operate oncology centres in the country. Its wholly owned subsidiary Sunsuria Healthcare SB inked a shareholder’s agreement with Icon Asia Holdings Pte Ltd to form a JV company called Icon Sunsuria SB. (The Edge)

Bintai Kinden: In deal to settle Serdang Baru debts owed to it . Bintai Kinden Corp, a mechanical and electrical engineering services specialist, has sealed a major deal with Windsor Serdang SB to wipe out all pending debts from Serdang Baru Properties SB that are owed to Kejuruteraan Bintai Kindenko SB. (New Straits Times)

XOX: Inks fresh MOU with Ipoh City Council for technology collaboration . Mobile virtual network operator XOX has entered into a fresh MOU with the Ipoh City Council for a proposed technology collaboration, 16 months after the two parties had signed the first MOU to lay out the parameters, framework and intent of the parties for the partnership. (The Edge)

Ecofirst: Teo Seng Kian appointed as exec director, ceases to be alternate director . Ecofirst Consolidated announced Datuk Teoh Seng Kian as its executive director and said he has ceased to be its alternate director. (The Edge)

Market Update

US markets popped higher overnight as investors cheered positive developments in the IPO market while also welcoming a relatively encouraging set of economic numbers. The listing of chip design company Arm, this year’s largest tech IPO with a ~25% gain, could kick-start interest in an otherwise sleepy market to-date. On the data front, August’s producer price index showed factory-based inflation in check, while retail sales came in better than expected. On the day, the Dow Jones Industrial Average gained almost 1% as both the S&P 500 and Nasdaq Composite rose 0.8%. European markets were also higher even as the European Central Bank (ECB) hiked rates by 25bps to a record 4.0%. Investors are now divided on the ECB’s subsequent rate path however. The basic resources sector was the biggest gainer on the day following news of China cutting its reserve requirement ratio for most banks by 25bps. Germany’s DAX and France’s CAC 40 were 1.0% and 1.2% higher respectively. UK’s FTSE 100 jumped 2.0% higher. Asian markets ended the day mostly in positive territory even as US inflation numbers came in higher than expected. China’s Shanghai Composite Index only inched 0.1% higher, with news of the reserve requirement cut coming in after-hours. The Hang Seng Index and Nikkei 225 rose 0.2% and 1.4%, as did South Korea’s KOSPI (+1.5%) and Australia’s ASX 200 (+0.5%).

Source: PublicInvest Research - 15 Sept 2023