Economy

US: Consumer prices rose 0.4% in Sept, more than expected. Prices that consumers pay for a wide variety of goods and services increased at a slightly faster than expected pace in Sept, keeping inflation in the spotlight of policymakers. The CPI, a closely followed inflation gauge, increased 0.4% on the month and 3.7% from a year ago, according to a Labor Department report. That compared to respective Dow Jones estimates of 0.3% and 3.6%. (CNBC)

US: Weekly jobless claims come in unchanged. First-time claims for US unemployment benefits came in unchanged in the week ended 7 Oct, the Labor Department revealed in a report released. Initial jobless claims came in at 209,000, unchanged compared to the previous week's revised level. Economists had expected jobless claims to inch up to 210,000 from the 207,000 originally reported for the previous week. (RTT)

EU: Romania Q2 GDP growth eases to 1.0%, more than estimated. Romania's economic growth moderated more than initially estimated in the second quarter, the latest data from the statistical office showed. On an unadjusted basis, GDP expanded 1.0% annually in the June quarter, slower than the 2.4% rise in the preceding three-month period. In the initial estimate, the rate of growth was 1.1%. On the expenditure side, the final consumption expenditure of households grew 1.1% over the year, and general government consumption increased by 1.6%. (RTT)

UK: Economy recovers on services output. The UK economy recovered in Aug solely driven by the rebound in the service sector, while industrial output and construction contracted again. GDP grew 0.2% in Aug from July, when the economy contracted by revised 0.6%. The monthly growth matched expectations. In the three months to Aug, GDP posted a 0.3% expansion compared with the quarter to May. Data showed that the service sector was the only positive contributing sector to the growth in Aug. (RTT)

UK: Lenders to cut secured credit availability to households, defaults to rise. British lenders expect the availability of secured credit to households to fall in the coming three months amid an expected fall in demand and the defaults rate are forecast to increase, the Credit Conditions Survey from the Bank of England showed. Banks said the availability of secured credit to households fell in three months to Aug and it is likely to fall slightly over the next three months. (RTT)

India: Inflation eases to within target band on lower food prices. India’s inflation slowed in Sept, returning to within the Reserve Bank of India’s target band, as food prices continued to ease. The CPI rose 5.02% from a year earlier, statistics ministry data showed. That was lower than 6.83% in Aug and compared with a median forecast of 5.4% in a Bloomberg survey of economists. (Bloomberg)

Markets

Wasco (Neutral, TP: RM1.00): Sells land in Klang for RM40m to fund working capital, debt repayment. Following the disposal, Wasco is expected to have a one-off net gain of RM31.8m. Meanwhile, Wasco said that the proposed disposal is expected to be completed by 1Q2024. (The Edge)

Comment: The land disposal is aligned with the Group’s transformation plan as per our report on 19th Sept 2023. The disposal of non-core assets will enable the Group to re-channel its capital and resources to its core businesses (Energy and Bioenergy). We expect the Group will close another one asset disposal by end of this year. Since this is a one-off transaction, we made no changes on our core earnings estimates and maintain our Neutral call and TP of RM1.00.

Capital A: Seeks USD200m from private credit for loan. Capital A group, is seeking a USD400m (RM1.8bn) loan, half of it from private credit funds, to refinance debt. The loan will be in the form of a revenue bond, with investors to be paid out of ticket sales from ten AirAsia flight routes. (The Edge)

Kumpulan Kitacon: CJ Century founder emerges as substantial shareholder with 14% stake. Founder of CJ Century Logistics Holdings Datuk Phua Sin Mo has emerged as a substantial shareholder of Kumpulan Kitacon Bhd with a 14% stake. Phua acquired the stake, comprising 70m shares, via a married deal — a pre-agreed transfer of shares — with Kumpulan Kitacon director Teow Choo Hing. Teow disposed of the shares at a mere 10 sen per share — an 84.96% discount to Oct 12’s close of 66.5 sen. (The Edge)

Propel Global: To acquire land in Pahang for RM14.7m for proposed commercial development to undertake a commercial development project with a GDV of RM68m. The company has inked agreements with the vendor, Goldhill Deluxe SB to purchase a 14,442 sq m parcel for RM13.95m, and another 6,197 sq m parcel for RM750,266. On the land, Propel Global plans to develop 34 units of three-storey shop lots. (The Edge)

SAM Engineering: To invest another RM200m in Thai equipment business. SAM Engineering & Equipment (M) plans to inject another RM200m into its equipment business in Thailand in its current financial year ending March 31, 2024 (FY2024) and the following year. SAM said that as it continues to win more projects, it may require additional investment. (The Edge)

HIL Industries: To buy property firm for RM46m in related party deal. HIL Industries has proposed to acquire a company that owns land near the Shah Alam-Klang border that has been earmarked for residential development, in a related party transaction. It is acquiring Broadwise Corporation SB (BCSB) for RM46m via internally generated funds and/or bank borrowings. (The Edge)

OpenSys: Bags RM105m job from Maybank to process outward cheque clearing. OpenSys (M) has secured an RM105m contract from Malayan Banking (Maybank) to process the bank’s outward cheque clearing for all branches nationwide. The contract sum is RM105m excluding 6% SST, noting that it will span a sevenyear period from Jan 1, 2024, to Dec 31, 2030. (The Edge)

MARKET UPDATE

The FBM KLCI might lower today after US stock and bond prices fell on Thursday after disappointing inflation data and a weak government debt auction. The yield on the 10-year Treasury, which rises when prices fall, jumped 0.1 percentage points to 4.70%. The sell-off began after the Bureau of Labor Statistics reported that inflation was higher than expected in September, and extended after the Treasury Department announced weak demand for its latest auction of long-term bonds. Stocks were resilient after the initial inflation report, but were dragged lower in the afternoon as the sell-off in bonds gathered pace. The S&P 500 and Nasdaq Composite each closed down 0.6% for the day. European markets finished mixed with the FTSE 100 gained 0.32%, while the CAC 40 led the DAX lower. They fell 0.37% and 0.23% respectively.

Back home, Bursa Malaysia finished higher on Thursday, tracking the strong regional market performance, with buying interest mainly in banking and telecommunication stocks, ahead of the tabling of Budget 2024 on Friday. At the closing, the FBM KLCI increased 7.33 points to 1,443.82 from Wednesday’s close of 1,436.49. The regional markets finished broadly higher with shares in Hong Kong leading the region. The Hang Seng jumped 1.93% while Japan's Nikkei 225 added 1.75% and China's Shanghai Composite tacked on 0.94%.

Source: PublicInvest Research - 13 Oct 2023