Economy

US: GDP growth unrevised at 2.1% in second quarter as economy shows resilience. The US economy maintained a fairly solid pace of growth in the second quarter and activity appears to have accelerated this quarter, but a looming government shutdown and an ongoing strike by auto workers are dimming the outlook for the rest of 2023. GDP increased at an unrevised 2.1% annualized rate last quarter, the government said in its third estimate of GDP for the April-June period. That was in line with economists’ expectations. (Reuters)

US: Weekly jobless claims show slight uptick from seven month low. After reporting first-time claims for US unemployment benefits fell to a seven-month low in the previous week, showing a slight increase in initial jobless claims in the week ended September 23rd. The Labor Department said initial jobless claims crept up to 204,000, an increase of 2,000 from the previous week's revised level of 202,000. (RTT)

EU: German inflation falls to lowest level since start of Ukraine war. German inflation fell in Sept to its lowest level since Russia launched its full-scale invasion of Ukraine, signalling what could be the beginning of the end for the high inflation that has weighed heavily on Europe's largest economy. German consumer prices, harmonised to compare with other European Union countries, rose by an annual 4.3% in September. Analysts polled by Reuters had forecast it slowing to 4.5% from 6.4% YoY in August. (Reuters)

China: Central bank to use 'precise, forceful' policy to bolster recovery. China's central bank said it would step up policy adjustments and implement monetary policy in a "precise and forceful" manner to support an economy whose recovery was improving with "increasing momentum". The PBOC will keep liquidity reasonably ample and maintain stable credit expansion, the bank said in a statement after a quarterly meeting of its monetary policy committee. (Reuters)

China: Industrial profits extend slump for Jan-Aug, pace of downturn eases. Profits at China's industrial firms extended a double-digit drop for the first eight months, but the pace of declines eased slightly as a flurry of policy support steps has started to stabilise parts of the stuttering economy. The 11.7% YoY fall in profits narrowed from a 15.5% contraction for the first seven months, in line with expectations and potentially suggests a modest recovery is beginning to take root for some businesses. (Reuters)

India: April-June current account gap widens sequentially, central bank says. India's current account deficit widened in the April-June quarter, from the previous three months, largely due to a higher trade deficit, lower surplus in net services and a drop in private transfer receipts, the central bank said. The current account deficit widened to USD 9.2bn, or 1.1% of GDP, in the first quarter of fiscal 2023/24, from USD 1.3bn, or 0.2% of GDP, in the Jan March quarter. The deficit was USD 17.9bn, or 2.1% of GDP, in the first quarter a year ago, the Reserve Bank of India's (RBI) release showed. The median forecast in a Reuters poll of 17 economists was for a deficit of USD 8.9bn, or 1% of GDP, for the latest first quarter. (Reuters)

Markets

Kerjaya Prospek (Outperform, TP: RM1.55) : Bags RM203m concrete structure job for Texas Instruments' Melaka factory. Kerjaya Prospek Group has secured a contract worth RM203.1m from Samsung-KP JV — the 30:70 joint venture between Kerjaya Prospek (M) SB and Samsung C&T (KL) SB, to undertake the concrete structure works of Texas Instruments Electronic Malaysia SB's factory in Melaka The job is part of the RM1.5bn contract awarded by Texas Instruments to the JV in Oct 2022. (The Edge)

Comment: Kerjaya Prospek’s 30% stake in the JV with Samsung C&T (KL) SB would render the contract awarded from Texas Instruments Electronic Malaysia SB valued at RM60.9m, net to the Group. Assuming a low-teen double-digit margin, this job would contribute 1-2% on average to the Group’s FY23-24 bottomline. Accounting this job win, YTD new wins amounted to RM1.2bn, representing 83.6% of our RM1.4bn target orderbook for FY23. All said, we are anticipating at least one job win worth approximately RM200-300m by 4QFY23. Our Outperform rating and TP of RM1.55 is affirmed.

Capital A: Forms partnership with Garuda . Capital A has formed a strategic partnership with Garuda Indonesia Group, the national flag carrier of Indonesia. In a statement, Capital A said the parties will explore opportunities for network expansion across various business lines. This include commercial airline services between AirAsia and Citilink, logistics services between Teleport and Garuda Indonesia Cargo as well as maintenance repair and overhaul services between Asia Digital Engineering, owned by Capital A, and Garuda’s subsidiary GMF AeroAsia. (StarBiz)

Ekovest: Lim Kang Hoo proposes consolidation of group businesses under Ekovest . Tycoon Tan Sri Lim Kang Hoo wants to group the various but similar business segments of his stable of companies under an enlarged Ekovest to streamline and rationalise the businesses and assets, consolidate his direct shareholding in the companies and avoid potential conflict of interests. (The Edge)

Sunway: Sunway, Umech and PDC to build industrial park. Sunway in collaboration with Umech Land SB, has signed a joint development agreement with Penang Development Corp (PDC) to develop a 559-acre industrial park in Batu Kawan. The project is expected to have a GDV of at least RM3.5bn. Sunway said in a statement that as part of the partnership, it and Umech are providing PDC with a land entitlement valued at RM646m. (StarBiz)

Jiankun: Proposes private placement to raise RM19m, one for-two bonus issue of free warrants . Jiankun International plans to raise RM19m through a placement of 95m shares to third party investors at an issue price of 20 sen per share. Proceeds from the proposed placement will be used to facilitate completion of a proposed land acquisition. (The Edge)

Censof: Secures three-year contract from Perkeso. Censof Holdings has secured a contract worth RM872,340.78 from Social Security Organisation (Perkeso). The company said its subsidiary Cognitive Consulting SB had received the letter of acceptance in relation to the renewal of subscription, supply, delivery, maintenance and support services for UiPath software as well as maintenance and support services for systems within Perkeso that utilise UiPath software. (The Edge)

Market Update

US markets ended higher overnight, though remaining on track for its worst month of the year. Investors continue to keep a wary eye on Treasury yields which have eased off multi-year highs, for now. All eyes will be on the Personal Consumption Expenditure due out later today, the US Federal Reserve’s preferred inflation guide. On the day, the Dow Jones Industrial Average and S&P 500 rose 0.4% and 0.6% as the Nasdaq Composite gained 0.8%. For the month however, all three benchmarks are poised to finish ~3%, ~5% and ~6% lower respectively. Over in Europe, markets also ended higher to end a 5-day losing streak. Preliminary numbers showed Germany’s inflation slowing more than expected. Crude oil prices are at their highest levels in a year however. Germany’s DAX and France’s CAC 40 gained 0.7% and 0.6% as UK’s FTSE 100 inched 0.1% higher. Asian markets were mostly lower earlier in the day as spiking US Treasury yields and crude oil prices dented sentiment. The Hang Seng Index and Nikkei 225 slumped 1.4% and 1.5%, with the former rocked by shares of embattled property giant Evergrande being suspended from trading. The Shanghai Composite Index inched 0.1% higher however. In a surprising move, Thailand’s central bank raised its benchmark rate by 25bps to 2.5%, citing the need to keep inflation growth within its targeted 2% to 3% range.

Source: PublicInvest Research - 29 Sept 2023