Economy

US: Payrolls soared by 336,000 in Sept, defying expectations for a hiring slowdown. Job growth was stronger than expected in Sept, a sign that the US economy is hanging tough despite higher interest rates, labor strife and dysfunction in Washington. Nonfarm payrolls increased by 336,000 for the month, better than the Dow Jones consensus estimate for 170,000 and more than 100,000 higher than the previous month. The unemployment rate was 3.8%, compared to the forecast for 3.7%. The payrolls increase was the best monthly number since Jan. Wage increases, however, were softer than expected, with average hourly earnings up 0.2% for the month and 4.2% from a year ago, compared to respective estimates for 0.3% and 4.3%. (CNBC)

US: Restaurant employment recovers to pre-pandemic levels. US restaurant employment reached pre-pandemic levels in Sept for the first time in three-and-a-half years, signalling a potentially broader recovery for the leisure and hospitality industry. The number of Americans employed in food service increased by 61,000 in Sept from the prior month, Bureau of Labor Statistics (BLS) data released as part of the monthly US employment report showed. Food service and hospitality workers accounted for the majority of jobs added in the wider leisure and hospitality sector, which added 96,000 jobs last month. The gains in restaurant and bar employment last month were almost double the average of 37,000 jobs added monthly over the past year. (Reuters)

US: Trade deficit narrows in Aug as exports jump and imports fall. With the value of exports jumping and the value of imports falling, the Commerce Department released a report showing the US trade deficit narrowed much more than expected in the month of Aug. The Commerce Department said the trade deficit shrank to USD58.3bn in Aug from a revised USD64.7bn in July, falling to the lowest level since Sept 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. (RTT)

EU: Hungary industrial production plunges 6.1%. Hungary's industrial production decreased for the eighth straight month in Aug, preliminary figures from the Hungarian Central Statistical Office showed. The volume of industrial production dropped a working-day-adjusted 6.1% yearly in Aug, much faster than the 2.6% fall a month ago. The majority of the manufacturing subsections contributed to the production decline in Aug. The volume of production fell in the manufacture of computer, electronic, and optical products, as well as in that of food products, beverages, and tobacco products, the agency said. Without adjustments, industrial output slid 5.3% yearly in Aug versus a 2.6% fall a month ago. On a monthly basis, industrial production fell 2.4% in Aug, reversing a 2.8% rebound in the previous month. (RTT)

EU: Estonian inflation eases to 4.2%, lowest in 27 months. Estonia's CPI eased further in Sept to the lowest level in more than two years amid a slowdown in prices in a broad number of categories, preliminary figures from Statistics Estonia showed. The CPI rose 4.2% YoY in Sept, slower than the 4.6% gain in Aug. Further, this was the weakest rate of inflation since June 2021, when prices had risen 3.8%. Prices for food and non-alcoholic beverages grew 9.7% annually in Sept, but slower than the 12.9% increase in Aug. Similarly, costs for miscellaneous goods and services climbed 6.6 percent versus an 8.1 percent surge a month ago. At the same time, housing costs fell notably by 6.9% from last year, and transport charges were 1.1% lower. On a monthly basis, consumer prices remained flat in Sept versus a 0.5% rise in the prior month. (RTT)

EU: Czech retail sales fall further. The Czech Republic's retail sales declined for the sixteenth successive month in Aug, as sales of both food and non-food items dropped, data from the Czech Statistical Office showed. Retail sales, except motor vehicles and motorcycles, fell a calendar-adjusted 2.8% YoY in Aug, after a 2.1% drop in the previous month. Sales of food, beverages, and tobacco contracted 3.2% annually in Aug, and those of non-food products decreased by 4.1%. At the same time, retail sales of automotive fuel in specialised stores grew 3.7%, and sales and repairs of motor vehicles and motorcycles increased notably by 7.3%. Data also showed that retail sales via mail order or the internet advanced 3.7%. Compared to the previous month, retail sales declined 0.8% in Aug. (RTT)

EU: France trade gap widens in Aug. France's trade deficit widened slightly in Aug, data from Bank of France showed. The trade balance posted a deficit of EUR8.2bn in Aug versus a shortfall of EUR8.11bn in July. In the same period last year, the trade deficit was EUR14.75bn. Exports registered a monthly fall of 3.3%. At the same time, imports also decreased in Aug, down by 2.7%. YoY, exports advanced 1.3%, while imports plunged 10.0%. (RTT)

Japan: Household spending slips 2.5% on year in Aug. The average of household spending was down 2.5% on year in Aug, coming in at 293,161 yen. That beat expectations for a decline of 4.3% following the 5.0% decline in July. On a monthly basis, household spending jumped 3.9%, again topping forecasts for a gain of 0.9% following the 2.7% fall in the previous month. The average of monthly income per household stood at 544,043 yen, down 6.9% on year. (RTT)

India: Central bank stands pat on rates, hints at open market bond sales. India's central bank left its benchmark interest rate unchanged for the fourth straight session but cited high inflation as a major risk to stability and sustainable growth and raised the possibility of open market bond sales to absorb excess liquidity. The MPC of the Reserve Bank of India unanimously decided to hold the policy repo rate at 6.50%. The repo rate was kept unchanged for the fourth straight session. The RBI has lifted the benchmark rate by 250bps since May 2022 to tame high inflation. (RTT)

Markets

LBS (Outperform, TP: RM0.67) and MGB (Outperform, TP: RM1.15): Partner with MGTC to take lead in renewable energy. The collaboration will establish a consortium comprising LBS, MGB, Midwest Green SB (MWG), and MGTC, with the primary objective of with the primary objective of revolutionising the solar energy landscape by integrating cutting-edge green technologies into the next evolution of solar farming encompassing carbon capture storage, crop cultivation, and water harvesting. (BTimes)

Dutch Lady: To double production at new manufacturing facility next year. Dutch Lady Milk Industries (DLMI) plans to double production next year after shifting to its new RM540m facility in Bandar Enstek, deploying eight production lanes. The facility sits on 12.9 hectares and production is scheduled to commence mid- 2024. (The Edge)

Solarvest: Inks MoU with Leader Energy to explore renewable energy-related prospects in SEA. Leader Energy Holding (LEH) has signed a MoU with Solarvest Holdings (SHB) to explore and develop sustainability-related prospects within the SEA region. Under the MoU, the collaboration will primarily focus on exploring and developing renewable energy, including solar energy, battery energy storage systems, energy-as-a-service, and other sustainable energy applications. (BTimes)

Waja Konsortium: To raise up to RM32m to fund construction business, working capital. Waja Konsortium, formerly known as ConnectCount Holdings has proposed to undertake a private placement of up to 30% of its issued shares to raise up to RM31.67m, mainly to fund its construction business and for working capital. The last time it conducted a private placement raised RM25.12m in April 2021, involving up to 30% of its issued shares, was completed in May 2022. (The Edge)

KNM Group: Heeschen-led shareholders claim they can resolve debt issues in next three to six months. The shareholders of KNM Group who are looking to take over the board of the financially-distressed oil and gas engineering group say they plan to repay the group’s RM1.2bn debt owed to creditors in the next three to six months. (The Edge)

Iconic Worldwide: Unit seeks over RM25m in damages for glove-machine dipping contract dispute. Iconic Medicare SB (IMED), a wholly-owned unit of Iconic Worldwide, has filed its defence and counterclaim against Latex Form SB (LFSB), asserting that LFSB fundamentally breached the contract regarding the purchase and fabrication of six units of glove-dipping machines at IMED's Batu Kawan factory, valued at RM38.28m. IMED counterclaimed for damages exceeding RM25m. (The Edge)

IPO: Minox International oversubscribed by 143.76 times. This represents the fourth-highest oversubscription rate out of the 27 IPOs so far in 2023. MIG's listing entails a public issue of 90m shares, or 25% and an offer for sale of 18m shares, or 5%, to selected investors by way of private placement. The company is raising RM22.5m at an IPO price of RM0.25 per share. (BTimes)

MARKET UPDATE

The FBM KLCI might open higher today after a blowout US jobs report on Friday has intensified debate about whether the Federal Reserve will raise interest rates again this year, with economists and analysts divided over the strength of the data and how far it will influence the direction of monetary policy. Employers added 336,000 new roles in September, figures from the Bureau of Labour Statistics showed. That was sharply higher than an upwardly revised figure of 227,000 for August, and well above consensus estimates of 170,000. Equity investors find reasons for optimism Wall Street’s benchmark S&P 500 and the technology-heavy Nasdaq Composite initially dropped following the hot jobs data. But those declines soon reversed, with both stock indices closing up more than 1% on the day. European stocks climbed Friday, as the Stoxx Europe 600 index closed up 0.82% to 444.93. The German DAX added 1.06% to 15,229.77, the French CAC 40 index increased 0.88% to 7,060.15 and the FTSE 100 index rose 0.58% to 7,494.58.

Back home, Bursa Malaysia closed marginally higher on Friday, due to bargain-hunting after the recent selloff amid a better performance by regional peers. At the closing bell, the FBM KLCI edged up 1.28 points to 1,416.88 from Thursday’s closing of 1,415.60. In the region, Hong Kong’s Hang Seng Index rose 1.58% to 17,485.98, Singapore's Straits Times Index gained 0.70% to 3,177.21, and South Korea’s Kospi added 0.21% to 2,408.73.

Source: PublicInvest Research - 9 Oct 2023