Economy

US: Fed officials head toward another pause after surge in yields. Top Fed officials are coalescing around the idea that tighter financial conditions after a recent surge in US Treasury yields may substitute for additional increases in their benchmark interest rate. Fed Vice Chair Philip Jefferson told a conference that he would remain cognizant of the tightening in financial conditions through higher bond yields in assessing the future path of policy, echoing similar comments from other policymakers in recent days. (Reuters)

US: Higher bond yields may leave less for Fed to do on rates. The recent rise in long-term US Treasury yields, and tighter financial conditions more generally, could mean less need for the Fed to raise interest rates further. Logan, one of the Fed's more hawkish policymakers, noting that financial conditions have become notably tighter in recent months, even though the US central bank has not raised its short-term policy rate since July. (Reuters)

EU: Czech trade gap narrows in Aug. The Czech trade deficit narrowed in Aug due to the sharp fall in imports. The trade deficit narrowed to CZK3.85bn from CZK7.24bn in July. In the same period last year, the shortfall was CZK29.3bn. Exports posted an annual decline of 6.0% in Aug, slower than the 5.4% decrease in July. At the same time, the annual fall in imports deepened to 12.2% from 9.4% in the previous month. (RTT)

EU: Norway GDP contracts in Aug. Norway's economy contracted in Aug due to subdued household spending and exports. GDP posted a contraction of 0.2% on month in Aug, in contrast to the 0.3% expansion in July. The Mainland Norway also shrank 0.2% in Aug, offsetting the 0.2% expansion seen in July. Reflecting a decline in car purchases, household consumption dropped 0.1%, while government expenditure advanced 0.6%. Gross fixed capital formation expanded 0.8%, reversing a fall of 6.9% in July. (RTT)

EU: German industrial production shrinks for fourth month. German industrial output fell for a fourth month in August as factory weakness weighs on Europe’s biggest economy. Production declined 0.2% from July, led by construction and energy. Economists in a Bloomberg survey had estimated a fall of 0.1%. The index for output recorded its lowest level this year. (Bloomberg)

EU: Ireland construction sector shrinks at slower pace. Ireland's construction sector posted a slower contraction in Sept as new orders moved close to stabilization. The construction PMI rose to 48.6 in Sept from 44.9 in Aug. Although a score below 50.0 indicates contraction, the latest fall was the softest in the current sequence of decreasing activity. (RTT)

Australia: Building approval data due on Tuesday. Australia will on Tuesday release Aug numbers for building approvals, highlighting a modest day for Asia-Pacific economic activity. Approvals are expected to rise 7.0% on month following the 8.1% contraction in July. Australia also will see Sept results for the business confidence and conditions surveys from NAB; in Aug, their scores were +2 and +13, respectively. (RTT)

Markets

Alliance Bank (Neutral, TP: RM3.80):To relocate headquarters to Oxley's 24-storey tower in RM405.8m deal. Alliance Bank Malaysia is acquiring a 24-floor office suite in Jalan Ampang, developed by Oxley Holdings Ltd. (The Edge)

Comments: We are neutral on this development, though the acquisition is intended to improve the visibility and branding of the Group in addition to enhance the working environment for its employees. We deem the pricing fair for a prime location property, with funding not an issue considering its healthy cash balance and its ability to tap the capital market. Our Neutral call and RM3.80 TP are unchanged.

Reservoir Link (Trading Buy, TP: RM0.40): Executive director Thien Chiet Chai is now executive deputy chairman. As at March 16, 2023, Thien owned a direct stake of 5.63% in Reservoir Link and an indirect stake of 26.92% through Reservoir Link Holdings SB — his private vehicle that he co-owns with Reservoir Link CEO and MD Datuk Wan Hassan Mohd Jamil and ED Mad Haimi Abu Hassan. (The Edge)

T7 Global: Bags contract worth RM21m from TNB to supply smart meters. T7 Global has secured a contract award worth RM21.m from Tenaga Nasional (TNB). It subsidiary T7 Wenmax SB is to supply and deliver 79,800 units of Single Phase Radio Frequency Smart Meters together with 19,950 units of Three Phase Radio Frequency Smart Meters, in line with TNB’s ongoing implementation of the Advanced Metering Infrastructure. (The Edge)

AWC: Exercises call option, buys rest of rail specialist Trackwork for RM5.5m. AWC had on Oct 9 served a written notice to Trakniaga SB to exercise the call option by requiring Trakniaga to dispose of all the remaining shares in Trackwork. The sale shares represent the balance of 40% equity interest in Trackwork not already held by AWC. This is in accordance with the terms and conditions of the shareholders’ agreement entered into in Feb 2018. (The Edge)

DNeX: To boost revenue with new superapp, charge traders monthly fee starting Jan 2022. Dagang NeXchange (DNeX) expects to expand its revenue through the introduction of its new TradeSwift DagangNet superapp, developed by its wholly-owned unit Dagang Net Technologies SB, which intends to implement a monthly fee ranging from RM25 to RM28 for users starting Jan 2023. (The Edge)

Catcha Digital: Acquires two digital media firms. Catcha is investing RM3.43m to buy the remaining 49% stake in Ittify SB, the Group already owns the other 51% stake in Ittify. The second acquisition involves Catcha acquiring a 30% equity interest in Headline Media SB for RM1.24m, with an option to acquire another 50% stake within 36 months. (The Edge)

Rapid Synergy: To dispose of freehold property for RM32.4m. Rapid Synergy is disposing of a freehold land in Desa Sri Hartamas, together with a five-storey commercial building, for RM32.39m. The building, known as Wisma Rapid, comprises 39 units of commercial lots with a basement car park level. Rapid Synergy expects to recognise a gain of RM20.1m from the disposal of the land measuring 1,338 sq m to Segi Permai SB. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks staged a comeback Monday as investors shook off pressures driven by the deadly Israel-Hamas conflict. The Dow Jones Industrial Average was higher by 0.59%, or 197.07 points, to close at 33,604.65. The S&P 500 gained 0.63%, ending at 4,335.66. The tech-heavy Nasdaq Composite added 0.39%, landing at 13,484.24. Meanwhile, European stocks finished lower Monday, with the Stoxx Europe 600 index dropping 0.26% to 443.79. The German DAX dropped 0.67% to 15,128.11, the French CAC 40 index dropped 0.55% to 7,021.40 and the FTSE 100 index was flat at 7,492.21.

Back home, the FBM KLCI ended in positive territory driven by energy-related stocks amid the stronger oil market due to tensions in the Middle East. At the closing bell, the barometer index rose 0.38 of a point to 1,417.26 from last Friday’s close of 1,416.88. Elsewhere, the Hang Seng gained 0.18% and shares in China were unchanged with the Shanghai Composite at 3,096.92.

Source: PublicInvest Research - 10 Oct 2023