Economy

US: Trade deficit narrows in Aug as exports jump and imports fall. With the value of exports jumping and the value of imports falling, showing the US trade deficit narrowed much more than expected in the month of Aug. The trade deficit shrank to USD58.3bn in Aug from a revised USD64.7bn in July, falling to the lowest level since Sep 2020. Economists had expected the trade deficit to decrease to USD62.3bn from the USD65.0bn originally reported for the previous month. The narrower than expected trade deficit came as the value of exports jumped by 1.6% to USD256.0bn, while the value of imports fell by 0.7% to USD314.3bn. The increase in the value of exports largely reflected a surge in the value of exports of industrial supplies and materials, including crude oil. Exports of capital goods and consumer goods also saw notable growth, while exports of automotive vehicles, parts and engines slumped. (RTT)

US: Weekly jobless claims inch slightly higher. A day ahead of the release of the more closely watched monthly jobs report, showing initial jobless claims inched slightly higher in the week ended Sep 30th. The report said initial jobless claims crept up to 207,000, an increase of 2,000 from the previous week's revised level of 205,000. Jobless claims have edged slightly higher over the past two weeks after falling to a seven-month low of 202,000 in the week ended Sep 16th. Initial jobless claims edged up last week but remain close to 200,000, signalling that there are still very few layoffs. Meanwhile, the less volatile four-week moving average slipped to 208,750, a decrease of 2,500 from the previous week's revised average of 211,250. The four-week moving average once again dipped to its lowest level since hitting 207,250 in the week ended Feb 11th. (RTT)

EU: Spain's industrial output falls at faster rate. Spain's industrial output declined at a faster pace in Aug, largely due to lower energy and intermediate goods production. Industrial output declined 3.4% YoY in Aug, which was worse than the 2.2% decrease in July. The expected decline was 2.1%. Production has been falling since April. On an unadjusted basis, the annual decrease in industrial production was 3.6%, compared to a 2.1% fall seen a month ago. Production of energy and intermediate goods registered a strong decline of 6.2% and 4.3%, respectively. (RTT)

EU: German exports fall more than expected. Germany's exports declined more than expected in Aug highlighting the risk of the economy slipping into a recession in the second half of the year. Exports decreased 1.2% on a monthly basis in Aug, slower than the 1.9% drop in July. But the fall was bigger than economists' forecast of 0.4% decrease. At the same time, imports posted an unexpected fall of 0.4%, after a 1.3% slide in July. Imports were expected to climb 0.5%. As a result, the trade surplus fell to a seasonally adjusted EUR16.6bn from EUR17.7bn in July. Nonetheless, it remained above the forecast of EUR15.0bn. On a yearly comparison, exports declined at a faster pace of 5.8% after a 1.6% drop in July. The annual fall in imports worsened to 16.7% from 12.4% in the prior month. (RTT)

UK: Construction activity contracts most since 2020. The UK construction activity contracted at the fastest pace since May 2020 amid rising borrowing costs and weak demand. The Chartered Institute of Procurement & Supply construction PMI posted 45.0 in Sep, down from 50.8 in Aug. The score fell below the neutral 50.0 mark for the first time since June. Residential work was the worst performing area of the construction sector. This was followed by civil engineering activity. Respondents cited cutbacks to house building projects amid rising borrowing costs and weak demand conditions as reasons for the weakness in the residential work. Commercial building work contracted moderately in Sep. Total new business dropped for the third time in last four months. Moreover, the rate of decline was the steepest since May 2020. (RTT)

India: Services growth strengthens sharply on robust demand. India's service sector activity expanded at one of the fastest paces in thirteen years amid strong demand conditions. The services PMI, rose to 61.0 in Sep from 60.1 in Aug. A score above 50 indicates expansion in the sector. In Sep, strong new business influxes and effective marketing contributed to the increase in output. New orders grew substantially in Sep, at the second-fastest pace since June 2010. The surge in sales was largely linked to favourable market dynamics and fruitful advertising. There was also a sharp upturn in demand from abroad, particularly from clients based in Asia, Europe, and North America. Despite easing to a 3-month low, the overall rate of growth in new export business was marked and one of the quickest seen in series history. (RTT)

Taiwan: Inflation rises unexpectedly to 2.93%, highest in 8 months. Taiwan consumer price inflation increased further in Sep to the highest level in eight months, largely due to higher food costs. The CPI, rose 2.93% YoY in Sep, faster than the 1.88% rise in July. Economists had forecast inflation to ease to 2.1%. Food prices alone grew 4.78% annually in Sep, versus a 1.28% gain in the previous month. Prices for clothing were 1.15% higher compared to last year, and those for transportation and communication increased by 2.32%. (RTT)

Singapore: Retail sales growth improves in Aug. Singapore's retail sales growth accelerated in Aug. Retail sales climbed 4.0% YoY in Aug, faster than the 1.3% gain in July. Excluding motor vehicles, retail sales rose 3.7% annually in Aug after a 0.6% increase in the preceding month. In Aug, most industries recorded annual increases. Sales of food and alcohol grew the most, by 24.1% from a year ago, mainly driven by higher demand for alcoholic products. Similarly, sales at mini-marts and convenience stores showed a strong growth of 8.8%, and motor vehicle sales alone grew by 7.9%. (RTT)

Markets

Sunway: Says no valuation carried out by independent registered valuer on RM646m Batu Kawan land deal. Sunway has clarified that there was no valuation made by independent registered valuer on the 559-acre prime industrial land in Batu Kawan, Penang which it acquired from Penang Development Corp (PDC). The clarification came in response to Bursa Securities’ query, following a previous article published by The Edge on 4 Oct which outlined Penang Chinese Chamber of Commerce (PCCC) concerns regarding the land sale. While there was no valuation made by independent registered valuer. (The Edge)

LTKM: Terminates RM336m reverse takeover deal and sale of egg business. LTKM has scrapped the reverse takeover deal, which includes the planned RM336m acquisition of an entire stake in electronics manufacturing services (EMS) player Local Assembly SB. The reverse takeover deal was first proposed in April 2022, which would have seen the company sell its existing chicken egg production business to become an EMS provider. The deal also involved a corporate revamp with the emergence of new controlling shareholders in LTKM and change of its name to LA Technology Bhd. (The Edge)

SunCon: JV secures RM595m distribution centre construction job; unit wins RM190m data centre contract. Sunway Construction Group (SunCon) joint venture (JV) with construction firm Kajima (M) SB has won a RM595.38m contract to design and build a distribution centre warehouse for Daiso Malaysia Group SB in Pulau Indah, Selangor. The Kajima-SunCon JV inked a letter of acceptance with Daiso for the proposed design and construction of the Daiso global distribution centre (GDC) warehouse, according to a bourse filing on Thursday. (The Edge)

Jasa Kita: Sells land in KL for RM43m in related party transaction. Jasa Kita is disposing of a parcel of land for cash consideration of RM43.08m in a related party transaction. The leasehold piece of industrial land, measuring 14,294 square meters, is located within the PKNS Setapak industrial area in Kuala Lumpur. In a bourse filing, Jasa Kita said the group has entered into a sale and purchase agreement with Urban Reach SB (URSB), a 55% wholly-owned subsidiary of FCW Holdings to dispose of a parcel of the land. Jasa Kita is expected to record a disposal gain of RM37.54m from the land disposal. Jasa Kita said the proposed disposal provides an opportunity for the group to unlock its investment in the land at an attractive valuation as well as monetise non-core assets. (The Edge)

Kretam: Sees investment opportunities in Bahvest amid uptrend in gold prices. In explaining its series of transactions on Sabah-based gold miner Bahvest Resources, Kretam Holdings justified that it viewed the former as an investment with potential after taking into consideration the uptrend in gold prices in recent years. Earlier, the Bursa Securities queried Kretam on the transactions that saw its fully-owned subsidiary Innosabah Capital Holdings SB acquiring 12.95% or 160.58m shares of Bahvest, between 29 Nov 2022 and 2 Oct 2023. The series of acquisitions and disposals of Bahvest shares resulted in the current 12.22% stake. Meanwhile, Kretam also clarified that as it stands, the group has a net gain of RM5.97m through the 12.22% holdings in Bahvest. Separately, the group also highlighted that Datuk Freddy Lim and his son Lim Tshung Yu are directors of Kretam but are not directors of Bahvest. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today after Wall Street drifted to a quiet close Thursday as pressure from the bond market remained high due to worries about a too-hot US job market. The S&P 500 slipped 5.56, or 0.1%, to 4,258.19, a day before a highly anticipated report on the job market that could sway the Federal Reserve’s view on interest rates. The Dow Jones Industrial Average edged down by 9.98 points, or less than 0.1%, to 33,119.57. The Nasdaq composite dipped 16.18, or 0.1%, to 13,219.83. A more comprehensive report on the overall US job market is due Friday, and economists expect it to show hiring slowed to a pace of 163,000 jobs added in September from 187,000 in August. European markets finished mixed with the FTSE 100 gained 0.53% and the CAC 40 rose 0.02%. The DAX lost 0.20%.

Back home, Bursa Malaysia ended flat on Thursday on last-minute selling that halted the key index’s recovery. At the closing, the FBM KLCI eased 0.24 of-a-point to 1,415.60, from Wednesday’s closing of 1,415.84. In other markets, indexes moved only modestly across much of Asia. Japan’s Nikkei 225 was an outlier and jumped 1.8%. It’s been one of the world’s better stock markets this year.

Source: PublicInvest Research - 6 Oct 2023