Economy

US: Weekly jobless claims unexpectedly fall . The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, but could rebound in the weeks ahead as a partial strike by the United Auto Workers (UAW) union forces automobile manufacturers to temporarily lay off workers because of shortages of some materials. Initial claims for state unemployment benefits dropped 20,000 to a seasonally adjusted 201,000 for the week ended Sept 16, the Labor Department said. (Reuters)

US: Leading economic index decreases for 17th straight month in Aug . A report released by the Conference Board showed its reading on leading US economic indicators fell by slightly more than expected in the month of Aug. The Conference Board said its leading economic index decreased by 0.4% in Aug after dipping by a revised 0.3% in July. Economists had expected the leading economic index to fall by 0.3% compared to the 0.4% drop originally reported for the previous month. "With Aug's decline, the US Leading Economic Index has now fallen for nearly a year and a half straight, indicating the economy is heading into a challenging growth period and possible recession over the next year," said Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board. (RTT)

EU: Economic growth remains a big challenge for Germany . Economic growth remains a big challenge for Germany, German Finance Minister Christian Lindner said. "Growth remains a major challenge," he said. "We have to strengthen growth in Germany, not through government demand programmes that could fuel inflation, but more on the supply side," Lindner said at an event organised by Handelsblatt. He said that fighting inflation is a priority for the government, with a "moderately restrictive" fiscal policy, in line with the ECB's tightening of monetary policy. (Reuters)

UK: BOE keeps rates unchanged for first time in almost two years . The Bank of England halted the most aggressive cycle of interest-rate rises in more than three decades amid falling inflation and mounting fears of recession. The central bank held its key rate at 5.25%, ending a series of 14 successive hikes since Dec 2021, when rates were just 0.1%. Five members of the Monetary Policy Committee voted to leave rates unchanged and four wanted to raise them to 5.5%. Governor Andrew Bailey, who had the casting vote, chose to hold. The pound fell to the weakest since March against the dollar as traders trimmed bets on further interest-rate hikes. (Bloomberg)

Taiwan: Flags continued tight monetary policy, trims GDP forecast. Taiwan's central bank flagged continued tight monetary policy as it keeps a close eye on inflation, and trimmed its 2023 growth forecast for the export-reliant economy. Taiwan is a major producer of semiconductors used in everything from cars to smartphones and sluggish global demand has affected its many tech manufacturers. With global demand hit by high inflation, rising interest rates and the impact of the Ukraine war on global demand, its economy slipped into recession in the first quarter though it returned to slight growth in the April-June quarter. (Reuters)

Thailand: Weakening baht not all bad for economy — PM . Thailand's central bank is monitoring the weak baht, which is not entirely bad for the economy and could help the key export and tourism sectors, the prime minister said in remarks aired, as the baht hit multi-month lows. Srettha Thavisin, speaking during a visit to the US, said the government was not interfering in the central bank's duty. The Thai currency's depreciation was driven by capital outflows due to interest rate differentials, Srettha told reporters. (Reuters)

Indonesia: Bank Indonesia keeps key rate unchanged at 5.75%. Indonesia's central bank left its benchmark rate unchanged for the eighth consecutive meeting to ensure lower and more controlled inflation within the target corridor this year. The Board of Governors of Bank Indonesia, led by Governor Perry Warjiyo, decided to hold the seven-day reverse repo rate at 5.75%. The deposit facility rate was retained at 5.00% and the lending facility rate at 6.50%. The central bank had hiked the benchmark rate by 225 bps in the latest tightening cycle that began in Aug 2022. (RTT)

Hong Kong: Inflation steady at 1.8%. Hong Kong's consumer price inflation remained stable in Aug after easing in the previous three months, data released by the Census and Statistics Department showed. The consumer price index, or CPI, climbed 1.8% YoY in Aug, the same as in July. Clothing and footwear prices alone grew 6.6% annually in August, and utility costs were 5.7% higher. Food prices showed an increase of 2.2%, while those for durable goods dropped by 2.5%. (RTT)

Markets

Maxis (Neutral, TP: RM3.90): High Court allows Maxis unit to start judicial review on RM104m IRB tax assessment. Maxis’ wholly-owned subsidiary, Maxis Broadband SB (MBSB) has been granted leave for judicial review by the High Court on Thursday in respect of a RM104m penalty for its 2022 tax assessment. The High Court also granted a stay of all further proceedings, including the enforcement of the 2022 tax notice until the full and final determination of the judicial review. (The Edge)

7-Eleven: To sell Caring stake at higher price tag of RM675m to BIG Pharmacy. 7-Eleven Malaysia Holdings will dispose of its 75% stake in Caring Pharmacy Group to BIG Pharmacy Holdings at a higher price tag of RM675m, from RM637.5m announced previously. The convenience store chain operator, via Convenience Shopping (Sabah) SB (CSSSB), has signed a sale and purchase agreement (SPA) with BIG Pharmacy for the cash disposal. This follows a binding term sheet that CSSSB received from BIG Pharmacy’s subsidiary back in June, which was announced on July 21 this year. (The Edge)

Toyo Ventures: Makes bid for summary disposal of RM49m suit. Toyo Ventures Holdings is looking to have a USD10.36m (RM48.62m) lawsuit it faces from KS Lee Energy Llp, in relation to a terminated agreement linked to a coal-fired power plant project in Vietnam, to be disposed of prior to going to full trial. The printing ink and precision mould maker said its wholly-owned subsidiary Toyo Ink Group Bhd (TIGB), the defendant in the suit has filed an application for summary disposal of the suit. (The Edge)

Tanco: In JV for RM500m GDV residential project in Puchong Perdana. Tanco Holdings has entered into a JV agreement with Accession Development Sdn Bhd to develop a residential project in Pekan Puchong Perdana, Petaling, Selangor. An indirect wholly owned unit of Tanco, Palm Springs Development SB, will undertake the design features and components of the project, followed by tabulating an estimated GDV no less than RM500m. The JV entails 91% being Palm Springs' stake with Accession having the remaining portion. (The Edge)

AZRB: Plans 10% private placement to raise RM12.7m for working capital. Ahmad Zaki Resources Bhd (AZRB) plans to undertake a private placement of 10% of its share base to raise RM12.7m to fund the engineering and construction group’s working capital requirements. Nearly all of the proceeds, RM12.6m, has been earmarked for working capital for the group's engineering and construction division, while the remaining RM100,000 will defray the exercise’s estimated expenses. (The Edge)

DXN: To explore setting up integrative medicine facility. DXN Holdings has entered into a MoA with the Malaysia Holistic and Herbal Organisation (MHHO) to explore a collaboration with an aim to establish an integrative medicine facility. The manufacturer of health food supplements said the proposed facility would offer integrative traditional and complementary services by incorporating traditional, complementary medicine, and indigenous medicine with modern medicine. (StarBiz)

Market Update

The FBM KLCI might open lower today after Treasury yields touched a 16-year high as global stocks and bonds slid after strong US economic data added to investors’ fears that interest rates will stay higher for longer to combat persistent inflation. Wall Street’s benchmark S&P 500 closed 1.6% lower in a broad-based sell-off, and the tech-focused Nasdaq Composite declined 1.8%. The Stoxx Europe 600 slid 1.3%, led by declines for basic materials stocks, as investors feared an extended period of higher interest rates would curb economic demand. Meanwhile, the German DAX and French CAC tumbled 1.3% and 1.6% respectively. The UK FTSE 100 finished 0.7% lower after the Bank of England paused its hiking cycle, keeping the policy rate at 5.25%.

Back home, Bursa Malaysia closed lower for the fourth consecutive day on Thursday, due to cautious sentiments within the regional economies. At the closing bell, the FBM KLCI had fallen 3.35 points to 1,448.21, from Wednesday’s close at 1,451.56. In the region, China’s benchmark CSI 300 was down 0.9% and Hong Kong’s Hang Seng finished 1.3% lower. Brent crude settled 0.3% lower at $93.30 a barrel on Thursday, while the US equivalent West Texas Intermediate was flat at $89.63 a barrel, remaining near the 10- month peak they hit earlier this week.

Source: PublicInvest Research - 22 Sept 2023