Economy

US: Services index indicates modestly slower growth in Sept. Reflecting slower rates of growth in new orders and employment, there was a modest slowdown in the pace of growth in US service sector activity in the month of Sept. The services PMI edged down to 53.6 in Sept from 54.5 in Aug, although a reading above 50 still indicates growth. The modest decrease matched economist estimates. The slight pullback by the headline index came as the new orders index slumped to 51.8 in Sept from 57.5 in Aug, while the employment index dipped to 53.4 in Sept from 54.7 in Aug. (RTT)

US: Factory orders rebound much more than expected in Aug. New orders for US manufactured goods rebounded by much more than anticipated in the month of Aug. The factory orders surged by 1.2% in Aug after tumbling by 2.1% in July. Economists had expected factory order to rise by 0.3%. The bigger than expected rebound by factory orders reflected a sharp increase in orders for non-durable goods, which spiked by 2.1% in Aug after jumping by 1.5% in July. Meanwhile, the durable goods orders inched up by 0.1% in Aug after plummeting by 5.6% in July. (RTT)

EU: Eurozone producer prices log double-digit decline in Aug. Eurozone producer prices registered a double-digit annual decline in Aug due to the sharp fall in energy prices. Producer prices slid 11.5% from a year ago in Aug, following July's 7.6% decrease. Prices were expected to fall 11.6%. However, excluding energy, producer price inflation eased to 1.0% in Aug from 1.6% in the previous month. Data showed that energy prices plunged 30.6% annually after easing 24.2% a month ago. In addition, prices of intermediate goods dropped 4.5%. (RTT)

EU: Euro area private sector stuck in recession. Eurozone private sector ended 3Q with another contraction as weak demand weighed on output across the manufacturing and services sectors. The HCOB final composite output index advanced to 47.2 in Sept from 46.7 in the previous month. Moreover, the score was slightly above the flash 47.1. At 48.7, the services PMI, improved from 47.9 in Aug. The initial estimate for Sep was 48.4. Despite the improvement in the PMI readings, the private sector continued to remain in the negative territory. Total order books declined the most since Nov 2020. There was a considerable slump in new business in non-domestic markets. In order to sustain activity, firms turned to their backlogs of work. The work-in-hand was the fastest since June 2020. (RTT)

UK: Services activity shrinks most in 8 months. The UK service sector contracted the most since Jan largely due to subdued demand and cutbacks to non-essential spending among clients. The Chartered Institute of Procurement & Supply final services PMI posted 49.3 in Sept, down from 49.5 in Aug. The score remained below the neutral 50.0 threshold for the second month in a row but it was above the flash reading of 47.2. Respondents cited sluggish business conditions, risk aversion among clients and downward pressure on demand in the wake of rising borrowing costs as reasons for reduced business volumes. Reflecting lower spending among domestic and overseas clients, total new work dropped fractionally. Backlogs of work dropped for the fourth straight month and at the second-fastest pace since Feb 2021. Job shedding in the service sector was the steepest since the start of 2021. (RTT)

Japan: Services activity maintains solid expansion in Sept. Japan's service sector activity showed a further strong expansion in Sep, though rate growth eased amid a slower rise in new business inflows. The au Jibun Bank Services PMI dropped to 53.8 in Sep from 54.3 in Aug. However, a reading above 50.0 suggests expansion in the sector. New orders grew for the thirteenth successive month in Sept, which was more evident in domestic markets. Despite lower capacity, outstanding business increased only fractionally in the latest survey period, the survey said. While the most recent round of input price inflation slowed from that witnessed in Aug, Japanese service firms continued to report significant rises in operating expenses during Sept. (RTT)

South Korea: Inflation jumps 3.7% on year in Sept. Consumer prices in South Korea were up 3.7% on year in Sep. That exceeded expectations for a gain of 3.4%, which would have been unchanged from the Aug reading. On a monthly basis, consumer prices rose 0.6% - again topping forecasts for a rise 0.3% but slowing from 1.0% in the previous month. (RTT)

New Zealand: Holds key rate; policy to remain restrictive. New Zealand's central bank decided to hold its benchmark rate unchanged and suggested that they will remain restrictive to ensure that inflation returns to the target. The Monetary Policy Committee of the Reserve Bank of New Zealand, led by Governor Adrian Orr, maintained the Official Cash Rate at 5.50%, in line with expectations. The RBNZ MPC decided to keep the interest rate at a restrictive level to ensure that inflation returns to the 1 to 3% target range and to support maximum sustainable employment. (RTT)

Markets

Malakoff (Outperform, TP:RM0.70): Inks deal with MMC to generate 500MW of solar power. Malakoff Corp has inked a MOU with ports under the MMC Group of Companies, namely Northport (Malaysia) Bhd, Johor Port Bhd, Pelabuhan Tanjung Pelepas SB and Penang Port SB, to explore the collective potential through collaboration, and to explore various green power initiatives, including any solar power programme under the government’s initiatives, such as the Corporate Green Power Programme (CGPP). Malakoff said that through the MOU, the company and MMC Ports are set to embark on a transformative partnership within the CGPP, where Malakoff will assume the pivotal role of a solar power producer, while MMC Ports will serve as the esteemed corporate consumer. It said this strategic collaboration paves the way for MMC Ports to tap into renewable energy (RE) through a virtual acquisition of solar power. (The Edge)

KIP REIT: Unitholders greenlight RM80m KIPMall Kota Warisan acquisition. KIP Real Estate Investment Trust (KIP REIT) on Wednesday voted in favour of the REIT’s proposal to acquire KIPMall Kota Warisan in Sepang for RM80m. The resolution was duly passed at its extraordinary general meeting (EGM) after 87 unitholders who collectively hold 226.64m units in KIP REIT, which represent 99.98% of voting units voted for the acquisition. KIPMall Kota Warisan houses a one-and-a-half-storey retail centre, with a net lettable area of approximately 17,300 sq m on a freehold land in Dengkil, Sepang in Selangor. (The Edge)

VSTECS: Facilitates Alibaba’s first private cloud project in Malaysia with Sarawak Information Systems. VSTECS is facilitating a private cloud project between Alibaba Cloud and Sarawak Information Systems (Sains). VSTECS in a statement said this is Alibaba Cloud’s first private cloud project in Malaysia, and paves the way for advanced cloud computing and cutting-edge technologies to reach governmental bodies, businesses, organisations, and educational institutions across East Malaysia. Sains is a prominent information and communications technologies (ICT) systems integrator and solutions provider in Sarawak that is wholly owned by the state government. (The Edge)

Globaltec Formation: Secures environmental permit for Indonesia's first coal bed methane development. Globaltec Formation (GFB) has secured the environmental permit for Indonesia's Tanjung Enim plan of development (POD), marking a significantmestone towards developing and commercialising Indonesia's first coal bed methane (CBM) development. CBM is a form of natural gas found in coal deposits or coal seams and considered an unconventional gas asset. Trading in GFB's shares were halted for an hour following the announcement to Bursa Malaysia Securities. It will resume at 10am. (NST)

Hexza: Makes RM30m from Nvidia share sale. Hexza Corp has announced that it made a gain of RM29.93m from the sale of an aggregate of 18,000 shares of US-listed tech Nvidia Corp for a total gross cash sum of US$7.9m or RM37m in the open market on the Nasdaq stock exchange. The Nvidia shares were initially purchased between 9 June 2017 and 27 Feb 2023 at an average cost of US$93.15 per Nvidia share. Hexza stated it disposed of the quoted securities to lower the group’s risk of exposure to a single high-value counter after taking into consideration the overall market conditions of Nvidia shares. (StarBiz)

MARKET UPDATE

The FBM KLCI might open stronger today after US stock indices closed higher Wednesday, with the Dow breaking a three day losing streak, as bond yields eased after weaker-than-expected labor market data. The Dow Jones Industrial Average closed up 127.17 points or 0.39% today to 33,129.55 and the S&P 500 index \finished up 34.30 points or 0.81% to 4,263.75. Meanwhile, the Nasdaq Composite gained 176.54 points or 1.35% to 13236.01. Stocks ended higher as Treasury yields retreated, after payroll processor ADP said US private-sector employment rose by a tepid 89,000 in September. That was the smallest increase in two and a half years. In Europe, the Stoxx Europe 600 Index dropped 0.14% to 440.08. The FTSE 100 Index declined 0.77% to 7,412.45, the French CAC 40 Index was flat at 6,996.73 and the German DAX was flat at 15,099.92.

Back home, Bursa Malaysia ended trading in the red on Wednesday, taking a cue from the unabated volatility on Wall Street overnight, with its key index down by 0.29%. At the closing bell, the FBM KLCI trimmed 4.17 points to 1,415.84 from Tuesday’s closing of 1,420.01. Stocks in the region mostly decreased Wednesday, with the Hang Seng Index down 0.8% at 17,195.84, while Japan's Nikkei 225 Index dropped 2.3% to 30,526.88.

Source: PublicInvest Research - 5 Oct 2023