Economy

US: Yields slide on worries Israeli raids inside Gaza could escalate conflict. US Treasuries rallied as investors worry Israel's military conducting raids inside the Gaza Strip could escalate violence in the Middle East, but poor bond auctions this week suggest yields may rise as investor caution increases. Treasury yields, which move inversely to price, advanced after data showed US consumer prices in Sept rose more than expected, suggesting the Fed might need to raise rates further to tame high inflation. (Reuters)

US: Fed's Harker says rate hikes likely over amid ongoing disinflation. Philadelphia Federal Reserve President Patrick Harker said he believes the US central bank is likely done with its cycle of interest rate hikes amid an ongoing waning in price pressures. "Absent a stark turn in what I see in the data and hear from contacts, I believe that we are at the point where we can hold rates where they are," Harker said in a virtual speech to the Delaware State Chamber of Commerce. (Reuters)

US: Import prices inch up much less than expected in Sept. The Labour Department released a report showing US import prices inched up by much less than expected in the month of Sept, although the report also showed a bigger than expected increase in US export prices. The report said import prices crept up by 0.1% in Sept after climbing by an upwardly revised 0.6% in Aug. Economists had expected the pace of import price growth to match the 0.5% increase originally reported for the previous month. (RTT)

US: Consumer sentiment weakens in Oct. US consumer sentiment fell sharply in Oct as households anticipated higher inflation over the next year, a survey showed. The University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 63.0 this month compared to 68.1 in Sept. Economists polled by Reuters had forecast a preliminary reading of 67.2. The survey's reading of one-year inflation expectations increased to 3.8% this month from 3.2% in September. (Reuters)

US: Will tighten curbs on China’s access to advanced chip tech. The Biden administration will tighten sweeping measures announced last Octo to restrict China’s access to advanced semiconductors and chipmaking gear, as the US seeks to prevent its geopolitical rival from developing cutting-edge tech that could give it a military edge. The latest rules aim to refine and close loopholes from last year’s curbs, according to people familiar with the matter. The Biden administration seeks to strengthen controls on selling graphics chips for artificial intelligence applications and advanced chipmaking equipment to Chinese firms, the people said, asking not to be named because the rules aren’t yet public. (Bloomberg)

EU: Eurozone industrial production recovers in Aug. Eurozone industrial production recovered in Aug driven by the rebound in capital goods and durable consumer goods output, Eurostat said. Industrial output grew by more-than-expected 0.6% on a monthly basis in Aug, in contrast to the 1.3% decrease in the previous month. Output was forecast to rise 0.1%. Among sub-sectors of production, capital goods output grew 0.3% after a 3.1% fall. Likewise, durable consumer goods output increased 1.2%, reversing July's 1.3% decrease. (RTT)

EU: French inflation steady at unrevised 4.9%. France's consumer price inflation held steady in Sept, as initially estimated, the latest data from the statistical office INSEE showed. The consumer price index climbed 4.9% YoY in Sept, the same rate of increase as in the previous month. That was in line with the flash data published on Sept 29. The annual price growth in energy accelerated to 11.9% in Sept from 6.8% in Aug amid a sharp rebound in costs for petroleum products. (RTT)

UK: Asking prices of UK homes show smallest Oct rise since 2008. Asking prices for homes in Britain have risen at their slowest pace for the time of year since 2008, property website Rightmove said in a latest sign of how the climb in borrowing costs has slowed the housing market. Average asking prices for homes increased by 0.5% between Sept. 10 and Oct. 7 from the previous four weeks, well below the average increase for the period of 1.4%, Rightmove said. (Reuters)

China: Stock market regulator announces restrictions on securities lending. China's securities regulator said it would restrict securities lending businesses and tighten scrutiny on improper regulatory arbitrage. The statement from the China Securities Regulatory Commission announced that steps will be taken to strengthen management of securities lending and relending businesses, including higher margin requirements, and restricting lending of shares by strategic investors and senior management in newly listed companies. (Reuters)

China: Exports fall less than expected. China's exports declined less than expected in Sept, data from the General Administration of Customs showed. Exports registered a decrease of 6.2% in Sept compared to the previous year. This was slower than the expected decline of 7.6% and the 8.8% fall seen in Aug. At the same time, imports also decreased 6.2% annually, slower than the 7.3% fall in Aug. Imports were forecast to drop 6.0%. Consequently, the trade surplus rose to USD77.7bn from USD68.4bn in Aug. The expected level was USD70.0bn. (RTT)

Singapore: Central bank keeps policy unchanged. Singapore central bank kept its monetary policy unchanged as the current setting is assessed to be 'sufficiently tight' to dampen imported inflation and curb domestic cost pressures. The Monetary Authority of Singapore decided to maintain the prevailing rate of appreciation of the S$NEER policy band. There will be no change to its width and the level at which it is centered. The MAS applies the exchange rate against a basket of currencies within an undisclosed band as its monetary policy tool. The central bank has tightened its policy five straight times in the current tightening cycle including out-ofcycle moves last year in Jan and July. (RTT)

Markets

Hibiscus (Trading Buy, TP: RM1.20): Secures approval to acquire 42.5% stake in Central North Sea oil field. Hibiscus Petroleum has received conditional approval for its proposed acquisition of a 42.5% stake in Rapid Oil Production Ltd’s licence for an undeveloped oil field known as Fyne Field. Hibiscus said the approval by the North Sea Transition Authority is subject to the legal transfer of the farm-in-interest being done in a form approved by the authority. It is also subject to the acquisition being completed by Jan 9, 2024. (The Edge)

TIME dotCom: EPF raises holdings in TIME dotCom to 9% after buying another 1.47% stake. The Employees Provident Fund (EPF) has raised its stake in TIME dotCom to 9% after acquiring a 1.47% stake in the telecommunications service provider and data centre operator. The pension fund acquired an aggregate 27.9m shares and disposed of 769,500 shares on Oct 10 — translating to a net acquisition of 27.1m shares or 1.47% stake. (The Edge)

KNM: To present SOA at creditors meeting soon. KNM Group says the postponed court-convened meeting on Oct 12 to a later date was ordered by the Court to address the concerns of the minority of creditors in value. The PN17 company stated it then held an informal creditors meeting on the same day where all the creditors were invited to attend for the purpose of engagement and addressing any queries they may have on the proposed debt restructuring plan or scheme of arrangement (SOA). (StarBiz)

One Glove: To reduce RM120m capital to write off accumulated losses. One Glove Group plans to undertake a capital reduction of RM120m to eliminate accumulated losses of the glove manufacturing company. The balance, if any, will be credited to a capital reserve account of the company, which will be used towards setting off future losses. In the minimum scenario, the firm will bring down its capital to RM80.5m, from RM200.5m, by cancelling the share capital, according to a bourse filing. In the maximum scenario, the firm will bring down its capital to RM172.3m, from RM200.5m, by cancelling the share capital. (The Edge)

Dolphin International: Holds off plans to raise RM22.8m via rights issue. Dolphin International has decided not to proceed with a rights issue that it had proposed early this year for now, as it intends to relook into the exercise in its entirety and revise the utilisation of the proceeds to be raised. Dolphin said the decision came after taking into consideration the group’s recent financial performance, as well as the changes in its financial needs. (The Edge)

Hexza: Continues to reweigh Nviadia share holding. Hexza Corp continued to reweigh its holding in listed equity with the sale of 10,000 shares in Nvidia Corp in the open market on Oct 11 for RM21.8m and the purchase of 185,000 shares in Symbotic Inc for RM36.7m on the same day. According to its filings with Bursa Malaysia, Hexza stated it made a gain of RM17.9m on the Nvidia shares. The sale of shares comes a week after Hexza made a gain of RM29.9m from the sale of 18,000 Nvidia shares in the open market on Sept 29 for RM37m. (StarBiz)

MARKET UPDATE

The FBM KLCI might open lower today after the S&P 500 and the Nasdaq closed lower on Friday as deteriorating consumer sentiment data and the Middle East conflict soured investors on riskier bets and overshadowed upbeat quarterly earnings from some of the largest US banks. Wall Street's three major indices opened higher but lost ground after a preliminary reading on US consumer sentiment showed a sharp fall in October. The Dow managed a small gain. The Dow Jones Industrial Average rose 39.15 points, or 0.12%, to 33,670.29, the S&P 500 lost 21.83 points, or 0.50%, at 4,327.78 and the Nasdaq Composite dropped 166.99 points, or 1.23%, to 13,407.23. European markets finished broadly lower on Friday with shares in Germany leading the region. The DAX was down 1.55% while France's CAC 40 lost 1.42% and London's FTSE 100 gave away 0.59%.

Back home, Bursa Malaysia ended mixed as investors remained cautious while digesting Budget 2024 announcements. At the closing bell, the FBM KLCI inched up 0.32 points to 1,444.14 from Thursday’s close of 1,443.82. Regional markets finished also broadly lower on Friday with shares in Hong Kong leading the region. The Hang Seng dropped 2.33% while China's Shanghai Composite lost 0.64% and Japan's Nikkei 225 was lower by 0.55%.

Source: PublicInvest Research - 16 Oct 2023