Economy

US: Wholesale inflation rose 0.5% in Sept, more than expected. A measure of wholesale prices rose more than expected in Sept, indicating simmering inflation pressures for the US economy. The PPI, which measures costs for finished goods that producers pay, increased 0.5% for the month, against the Dow Jones estimate for a 0.3% rise, the Labor Department reported. That was less than the 0.7% increase in Aug. Excluding food and energy, core PPI was up 0.3%, versus the forecast for 0.2%. Excluding food, energy and trade services, the index rose 0.2%, in line with the estimate. (CNBC)

US: White House announces new efforts to crack down on 10bn in junk fees. The White House will announce new initiatives to rein in 10bn worth of surcharges tied to goods and services, or junk fees, in partnership with two of the nation’s leading consumerprotection agencies. Those sneaky fees might not matter a lot to the wealthiest Americans, but they sure do matter for hardworking Americans sitting around the kitchen table trying to stay on top of their bills and have a little left over. (CNBC)

US: 10-year treasury yield continues falling despite hot wholesale inflation data. The 10-year US Treasury yield fell as investors assessed wholesale inflation data that came in hotter than expected. The yield on the 10-year Treasury was down by more than 6bps at 4.591%. Earlier in the session, the 10-year yield hit a low of 4.544%, or its lowest level since 29 Sept. The 2-year Treasury yield was slightly higher at 4.993%. Yields and prices have an inverted relationship and one basis point equals 0.01%. Yields came off their lows of the session after the release of PPI. PPI showed a rise of 0.5% in Sept. (CNBC)

US: Janet Yellen sees limited economic impact from war in Israel. The war between Israel and Hamas is unlikely to have a significant impact on the global economy. Stock markets around the world have largely brushed off the conflict, with Wall Street posting gains Tuesday partly boosted by a fall in oil prices. Global oil prices had surged earlier in the week on fears that the war could cause wider instability in the oil-producing Middle East. One risk is the potential for tighter enforcement of sanctions on Iran, which has backed Hamas in the past but denies involvement in the latest assault. (CNN)

China: Car sales increase in Sept. China's car sales increased in Sept and exceeded 2m ahead of holidays, data released by the China Passenger Car Association showed. Car sales rose nearly 5.0% in Sept from a year ago. At the same time, energy vehicle sales surged 22.1% from the last year to 746,000 units. The association said energy passenger car sales logged a sharp annual increase of 33.8% in the first nine months of the year. The CPCA observed that people opted to buy new cars as they avoided housing investment amid the property market downturn. Exports of passenger car sales surged 50% on a yearly basis in Sept, data showed. (RTT)

Japan: Machine tool orders fall 11.2%. Japan's machine tool orders declined for the ninth straight month in September largely due to weak domestic demand, preliminary data from the Japan Machine Tool Builders Association, or JMTBA showed. Machine tool orders dropped 11.2% YoY in Sept, though slower than the 17.6% fall in the previous month. Domestic demand was 14.1% lower in Sept compared to last year, and foreign orders contracted 9.7%. On a monthly basis, machine tool orders surged 16.7% in Sept, compared with a 0.4% increase in the prior month. (RTT)

Taiwan: Trade surplus grows sharply on export recovery. Taiwan's foreign trade surplus increased notably in Sept from a year ago as exports rose amid a fall in imports, preliminary figures from the Ministry of Finance revealed. The trade surplus climbed to USD10.32bn in Sept from USD5.1bn in the corresponding month last year. The surplus also grew from USD8.6bn in Aug. Further, exports rose for the first time since Sept 2022. Strong exports climbed 3.4% YoY in Sept, reversing a 7.3% plunge in the prior month. Meanwhile, economists had forecast a 3.0% fall. (RTT)

Markets

IHH (Outperform, TP: RM7.63): 90%-owned Acibadem eyes further Europe expansion to offset lira devaluation. IHH Healthcare is ramping up efforts to expand its presence in Europe and to attract more international patients in a bid to maintain profitability amid the severe devaluation of the Turkish lira from hyperinflation. Although the group had mainly relied on organic growth in the past, management will pay attention to profitable acquisition [targets]. (The Edge)

Bumi Armada (Outperform, TP: RM0.65): Unit secures USD105.5m term loan facility. Bumi Armada has secured a syndicated term loan facility of USD105.5m. The loan has a final maturity date of Sep 25, 2028, Bumi Armada, it will be used to refinance Tranche 2 of the group’s existing USD660m facility, which matures in May next year. (The Edge)

KNM: Heeschen ups stake ahead of key EGM to oust current chairman and directors. Germany billionaire Andreas Heeschen has upped his stake in KNM Group to 8.249% following the acquisition of a further 13.6m shares or a 0.336% stake in the open market. Interestingly, Heeschen’s purchase of the shares occurred a few days before the group's EGM, which is scheduled for Oct 16. (The Edge)

Nextgreen: Forms JV with P Teguh Services to supply biodiesel. Nextgreen Global is partnering with private company P Teguh Services SB to venture into the trading, supply and export of biodiesel, edible cooking oil and related products, such as equipment and facilities. The venture will maximise the value of palm oil waste and circular economy (waste-to-value) concept of the Nextgreen group. (The Edge)

APB Resources: To acquire Serba Dinamik office building in Shah Alam for RM38m. APB Resources has proposed to acquire a 16-storey Serba Dinamik building in Shah Alam, Selangor for RM38m, subject to the approval from the High Court. The proposed acquisition will enable APB Resources to utilise the said property for its own purposes and generate income through renting it out. (The Edge)

TSR: Secures RM104m infrastructure contract. TSR Capital has bagged a RM104m contract involving infrastructure works at the Kwasa Damansara township development in Sungai Buloh, Selangor. The contract is for a duration of 30 months and is expected to be completed by April 2026. (The Edge)

Straits Energy: Bags RM28m underground cables job. Straits Energy Resources has bagged a contract worth RM27.7m for the installation, testing and commissioning aluminium XLPE underground cables and accessories for asset development for Tenaga Nasional. The contract period is one year, with an option to extend for another one year. (The Edge)

Hektar REIT: Proposes 20% private placement to raise RM53.6m. Hektar REIT has proposed to undertake a private placement of up to 20% of the total number of issued units of the company to third-party investors to be identified later. The indicative issue price of the placement units is assumed to be 53 sen each. Based on the indicative issue price, the proposed private placement is expected to raise gross proceeds of up to RM53.64m. (The Edge)

MARKET UPDATE

The FBM KLCI might open stronger today as Wall Street's major indices closed higher after Wednesday's choppy session with the release of minutes from the US Federal Reserve's last meeting showing caution among policy makers that helped fuel investor hopes that rates would stay steady. Fed officials pointed to uncertainties around the economy, oil prices and financial markets as supporting "the case for proceeding carefully in determining the extent of additional policy firming that may be appropriate," according to the minutes released on Wednesday from the Sept. 19-20 meeting. The Dow Jones Industrial Average rose 65.57 points, or 0.19%, to 33,804.87, the S&P 500 gained 18.71 points, or 0.43%, to 4,376.95 and the Nasdaq Composite added 96.83 points, or 0.71%, to 13,659.68. European markets finished mixed with the DAX gained 0.24%, while the CAC 40 led the FTSE 100 lower. They fell 0.44% and 0.11% respectively.

Back home, Bursa Malaysia just managed to close out the session in positive territory on Wednesday on the back of banking and gaming stocks amid advances by regional peers and ahead of Budget 2024 on Friday. At the closing bell, the FBM KLCI edged up 1.32 points to 1,436.49 from Tuesday’s closing of 1,435.17. Regional markets finished broadly higher today with shares in Hong Kong leading the region. The Hang Seng jumped 1.29% while Japan's Nikkei 225 added 0.60% and China's Shanghai Composite tacked on 0.12%.

Source: PublicInvest Research - 12 Oct 2023