Economy

US: Consumer sentiment deteriorates more than expected in Sept . Preliminary data released by the University of Michigan showed consumer sentiment in the US deteriorated by more than expected in the month of Sept. The report said the consumer sentiment index fell to 67.7 in Sept from 69.5 in Aug. Economists had expected the index to edge down to 69.1. The bigger than expected drop by the headline index came as the current economic conditions index plunged to 69.8 in Sept from 75.7 in Aug. Meanwhile, the University of Michigan said the index of consumer expectations rose to 66.3 in Sept from 65.5 in Aug. (RTT)

US: Factory output rises slightly, limited by auto production . Production at US factories barely rose in Aug as a drop in motor vehicle assemblies masked a rebound in output of other consumer goods and business equipment. The 0.1% increase in factory output followed a revised 0.4% gain a month earlier, according to Federal Reserve data published. Excluding auto production, manufacturing output increased 0.6%, the largest gain since the start of the year. Total industrial production, which also includes mining and utilities, rose 0.4%. The median forecast in a Bloomberg survey of economists called for 0.1% increases in both factory output and total industrial production. (Bloomberg)

US: Higher fuel prices lift US import prices; underlying trend soft . US import prices increased more than expected in Aug as the cost of energy products surged, but underlying imported price pressures remained subdued, which bodes well for the overall domestic inflation outlook. Import prices increased 0.5% last month, the Labor Department said. Data for July was revised lower to show prices rising 0.1% instead of the previously reported 0.4%. Economists polled by Reuters had forecast import prices, which exclude tariffs, gaining 0.3%. In the 12 months through Aug, import prices dropped 3.0% after decreasing 4.6% in July. (Reuters)

EU: ECB’s Holzmann says latest interest rate hike might not be last. Stubborn euro-area inflation could force the ECB to raise interest rates again, according to Governing Council member Robert Holzmann. The Austrian policymaker defended the decision to lift the deposit rate for a 10th straight time this week, and said the conclusion that the current level of borrowing costs will substantially advance the fight against price rises shouldn’t be understood as the ECB going soft. “We definitely can’t say that this was the final hike,” Holzmann said in an interview in Santiago de Compostela, Spain, where he’s attending a gathering of European finance chiefs. “The likelihood isn’t big, but there is a risk more tightening might be needed.” (Bloomberg)

EU: Eurozone trade surplus declines in July. The euro area trade surplus declined sharply in July as exports declined amid rising imports, data from Eurostat showed. The trade surplus declined sharply to a seasonally adjusted EUR2.9bn from EUR8.6bn in the previous month. Exports decreased 1.7% from a month ago, while imports grew 0.7% in July. On an unadjusted basis, the trade balance posted a surplus of EUR6.5bn compared to a deficit of EUR36.3bn in the same period last year. The unadjusted trade balance turned positive as imports registered a double-digit annual decline of 18.2% in July. (RTT)

EU: France inflation exceeds initial estimate . France's consumer price inflation exceeded the initial estimate in Aug but harmonized inflation figure was confirmed, the statistical office INSEE reported. At 4.9%, consumer price inflation was higher than July's 4.3% and the provisional estimate of 4.8% for Aug. At the same time, the statistical office INSEE confirmed the EU measure of inflation at 5.7% in Aug, up from 5.1% a month ago. Meanwhile, core inflation decelerated to 4.6% from 5.0% in July, data showed. The increase in consumer price inflation was led by the 6.8% rebound in energy prices. The increase in tobacco prices was almost stable at 9.9%. (RTT)

China: Industrial output, retail sales growth tops expectations . China's industrial production and retail sales growth accelerated more than expected in August as the stimulus measures are beginning to underpin the nascent recovery, but the downturn in the property market continued dimming the growth prospects. Industrial production posted a faster annual increase of 4.5%, the National Bureau of Statistics reported. Output growth was expected to improve to 3.9% in Aug from 3.7% in July. Likewise, growth in retail sales strengthened to 4.6% from 2.5% in the previous month. This rate was also better than economists' forecast of 3.0%. (RTT)

Indonesia: Trade surplus falls to USD3.1bn . Indonesia's foreign trade surplus decreased in Aug from a year ago as exports fell faster than imports, figures from Statistics Indonesia showed. The trade surplus shrank to USD3.1bn in Aug from USD5.8bn in the same month last year. Economists had expected a surplus of USD1.55bn. In July, the surplus was USD1.29bn. Exports logged a double-digit annual decrease of 21.1% in Aug, versus an expected fall of 22.0%. The decline was largely attributed to lower overseas demand for non-oil and gas. (RTT)

Markets

Sime Darby (Neutral, TP: RM2.41): Ramsay confirms receiving non-binding offers for Ramsay Sime Darby Health Care. Australia's Ramsay Health Care Ltd said a sale process was commenced, which resulted in the receipt of a number of non binding indicative offers for Ramsay Sime Darby Health Care SB, its JV with Sime Darby. A select number of parties are now in a due diligence process expected to conclude towards the end of October. (The Edge)

Siab: Downsizes rights issue, proposes special issue to support RM122m Taghill acquisition. Siab Holdings has downsized a proposed rights issue to raise funds for its RM122m acquisition of Taghill Projects SB. The group also proposed a 100m special share issue at 12 sen per share or RM12m to third-party investors, in its bid to part-fund the acquisition of the G7 contractor, which remains a cash and share deal. (The Edge)

Solid Automotive: To dispose of JB land for RM48m. Solid Automotive has proposed to sell a 4.05-hectare parcel of land in Johor Bahru for RM48, using the proceeds for investment purposes, capital expenditure and working capital. Wholly-owned subsidiary Solid Autotech SB has entered into a SPA with Ferrotec Power Semiconductor Malaysia SB in respect of the proposed disposal. The disposal consideration of RM48m represents a premium of RM5m or 11.63% from the market value of RM43m. (The Edge)

Handal Energy: Plans capital reduction, private placement and bonus warrants. Offshore crane services provider Handal Energy is planning to undertake a RM90m capital reduction to eliminate its accumulated losses, followed by a private placement involving up to 40% of its issued shares to raise RM9.7m to repay its borrowings and trade payables, and an issuance of bonus warrants. (The Edge)

Rapid Synergy: Sells properties in Perak for RM7m gain. Precision tool-making company Rapid Synergy has disposed of 6,653/10,000 undivided share of a parcel of land in Manjung, Perak, measuring 303,487sqft, to Yokado SB for RM22.89m cash. The parcel of land comes together with a one-storey commercial shopping complex and a one-storey temporary building comprising a futsal court and a commercial lot. (The Edge )

OneTech Solutions: Board dismisses major shareholder's requisition for EGM to limit directors' salary, re-audit financials. Software solutions provider OneTech Solutions Holdings, a LEAP Market listee, has dismissed its major shareholder's requisition for an EGM to vote on four resolutions, including salary and benefit limits for directors and the managing director, and to re-audit the group's financials, saying the requested meeting and proposed resolutions are invalid and so cannot be held or tabled. (The Edge)

KKB Engineering: Initiates arbitration against Shapadu to resolve dispute over hook-up, commissioning projects in Sarawak. KKB Engineering said its 60.81%-owned OceanMight SB (OMSB) has initiated arbitration proceedings against Shapadu Energy Services SB, which it subcontracted to undertake certain hook-up and commissioning projects in Sarawak, to resolve a dispute between them over the projects. (The Edge)

Market Update

The FBM KLCI might open lower today after Wall Street stocks fell on Friday, as signs of weak demand from the world’s top chipmaker hit Big Tech shares. The benchmark S&P 500 dropped 1.2% on the day, while the tech-dominated Nasdaq Composite fell 1.6%. For the week, the indices shed 0.2% and 0.3%, respectively. Technology stocks led the market lower on Friday after a report that Taiwan’s TSMC had asked its major suppliers to delay the delivery of high end chipmaking equipment. Meanwhile, Europe’s region-wide Stoxx 600 index advanced 0.3%, giving up part of its earlier gains, which came as investors cheered signs that Eurozone interest rates may have peaked. The CAC 40 in Paris rose 1%, the Dax in Frankfurt added 0.6% and the FTSE 100 in London gained 0.5%. The European Central Bank on Thursday increased rates by a quarter of a percentage point to a record high of 4%, but signalled that the current level could suffice in bringing inflation back to target.

Back home, Bursa Malaysia bounced to close at its intra-day high on Friday as China’s better-than-expected latest economic data lifted regional sentiment. At the closing bell, the FBM KLCI bagged 9.45 points to 1,459.03 from Thursday’s close of 1,449.58. In the region, Hong Kong’s Hang Seng rose 0.8% and Tokyo’s Topix gained 1%. China’s CSI 300 index of Shanghai- and Shenzhen listed stocks briefly rallied following the data release before falling back to end the day down 0.7%. China’s economy has struggled to rebound after disruptive zero-Covid measures were lifted late last year, and investors are on high alert for signs that recent stimulus measures may be gaining traction.

Source: PublicInvest Research - 18 Sept 2023