Economy

US: Strong retail sales, factory output point to robust US growth in third quarter. US retail sales increased more than expected in Sept as households stepped up purchases of motor vehicles and spent more at restaurants and bars, cementing expectations that economic growth accelerated sharply in the third quarter. The economy's enduring strength has defied the handwringing since late 2022 about a possible recession this year. Its stamina was underscored by other data on Tuesday showing production at factories rising solidly last month despite strikes in the automobile industry. (Reuters)

US: Yields surge as retail sales spur higher rate outlook. Treasury yields surged after US retail sales last month rose more than expected and lifted the two- and five-year notes to 17- and 16- year highs, as investors bet the Fed will keep interest rates higher for longer. The 10-year note, a benchmark for mortgage rates and a widely held safe haven, jumped almost 15 basis points in its largest one-day gain since late July, while the two-year surged almost as much in its biggest daily advance since early July. (Reuters)

US: Manufacturing output rises solidly in Sept. Production at US factories increased more than expected in Sept despite strikes in the automobile industry curbing motor vehicle output, further evidence that the economy exited the third quarter with momentum. Manufacturing output rose 0.4% last month, the Fed said. Data for Aug was revised lower to show production at factories dipping 0.1% instead of nudging up 0.1% as previously reported. Economists polled by Reuters had forecast factory output would tick up 0.1%. (Reuters)

EU: German investor morale brightens in Oct, ZEW. German investor morale improved more than expected in Oct, the ZEW economic research institute said, as market experts forecast a further decline in inflation while warning the economic situation remained challenging. The expectations index rose for the third straight month, suggesting respondents of this survey expect the economic situation in Germany to improve over the coming six months. (Reuters)

UK: Average earnings growth slows. The UK average earnings growth slowed in three months to Aug, data from the Office for National Statistics showed. Average earnings excluding bonuses grew 7.8% in three months to Aug. The rate came in line with expectations but slower than the 7.9% increase seen in three months to July. Nonetheless, this was one of the highest annual growth rates since comparable records began in 2001. Including bonuses, average total pay advanced 8.1% annually, weaker than the forecast of 8.3%. (RTT)

Japan: Tertiary activity index falls 0.1%. Japan's tertiary activity index declined slightly in Aug after rebounding strongly in the previous month, according to data from the Ministry of Economy, Trade, and Industry. The seasonally adjusted tertiary activity index dropped 0.1% MoM in Aug, reversing a revised 1.1% rise in July. Among the individual components, transport and postal activities, real estate, finance and insurance, information and communications, and goods rental and leasing decreased in Aug. (RTT)

Australia: RBA board has low tolerance for higher inflation, minutes show. The board of the Reserve Bank of Australia has a low tolerance for a slower return of inflation to the 2-3% target than expected, the minutes of the monetary policy meeting held on Oct 3 said. Any further action on interest rates will depend on the incoming data and how these alter the economic outlook and the evolving assessment of risks. (RTT)

Singapore: Non-oil domestic exports fall further. Singapore's non-oil domestic exports continued to decrease sharply in Sept, though the pace of decline has softened since August, data from Enterprise Singapore showed. Non-oil domestic exports fell 11.6% YoY in Aug, much slower than the 22.5% slump in the previous month. Electronics exports dropped 11.6% in Aug from last year, and non-electronics shipments contracted 13.6%. In Aug, the decrease in non-oil domestic exports was primarily the result of weaker outflows to Taiwan, Indonesia, and Malaysia. (RTT)

Markets

Eversendai Resources: Forms JV company with Saudi Arabiabased Algihaz to execute steel projects in the kingdom. Eversendai Resources has entered into partnership with Saudi Arabia-based Algihaz to form a JV company to execute structural steel projects in Saudi Arabia. The construction company said the JV company shall be named as Eversendai Algihaz Structures LLC. (The Edge)

Central Global: Wins RM15.2m water supply job in Lahad Datu. Central Global has secured a RM15.2m sub-contract to supply plant, machinery, labour and material for a water supply construction project in Lahad Datu, Sabah. The sub-contract was awarded by Mahiribu SB, a third-party main contractor employed by the Ministry of Rural and Regional Development. Central Global, which is 28.9%-owned by its managing director Chew Hian Tat, said the contract work includes site clearing, earthworks, piling works, piping works, and reservoir pumping system. (The Edge)

MyEG Services: Receives two-year extension for immigration services from government. MyEG Services has received a letter of acceptance from the Ministry of Home Affairs dated Oct 16, 2023, granting an extension for their immigration related services for a period of two years. The exact value of this extension will depend on the number of transactions performed during this period, it told. As part of the requirements for this extension, MYEG will need to complete a system enhancement. It will resume accepting applications for Immigration-related services once this system enhancement is completed. (The Malaysian Reserve)

AME-REIT: Buys third industrial property in Iskandar Malaysia. AME-REIT has completed the acquisition of its third industrial property of Plot 16 at i-Park @ Indahpura (Plot 16 Indahpura) in IM. The property was acquired from its sponsor, AME Elite Consortium Bhd, for RM26.5m. In statement, AME REIT said the 98,249-sq-ft property has been fully leased to HQPack SB, its sixth facility in i-Park @ Indahpura, for a 10-year term with an option to renew for a further three years. (StarBiz)

EG Industries: To issue 225.12m free warrants to shareholders. EG Industries has proposed a bonus issue of 225.1m free five-year warrants, to finance its daily operations and pare debts. The bonus issue is on the basis of one warrant for every two existing shares held by the entitled shareholders on the entitlement date. The electronic manufacturing services provider said the proposed free warrants will be subject to shareholders' approval at the upcoming extraordinary general meeting. The gross proceeds from the exercise will be used as working capital to fund its day-to-day operations. (BTimes)

ARB: Proposes to distribute shares in Nasdaq-listed unit to shareholders. ARB intends to distribute the bulk of its 94.56% stake in its Nasdaq-listed subsidiary, ARB IOT Group Ltd, to its shareholders through a dividend-in-specie. Up to 23.6m shares or a 88.95% stake in ARB will be distributed on the basis of 14 shares for every 1,000 shares in ARB. The proposal comes after two rounds of distribution-in-specie in September by ARB’s whollyowned subsidiaries to transfer the shareholdings in ARB IOT Group to be directly held under the Malaysian listed entity. (The Edge)

MARKET UPDATE

The FBM KLCI might open without much fanfare today after the Nasdaq ended lower while the Dow and S&P 500 were nearly flat on Tuesday as Treasury yields rose and shares of chipmakers fell after the Biden administration said it planned to halt shipments of advanced artificial intelligence chips to China. The Philadelphia SE Semiconductor index was down 0.8%and shares of NVidia fell 4.7%, even though the world's most valuable chipmaker said it does not expect a near-term meaningful impact on financial results from the curbs. The Dow Jones Industrial Average rose 13.11 points, or 0.04%, to 33,997.65, the S&P 500 lost 0.43 points, or 0.01%, to 4,373.2 and the Nasdaq Composite dropped 34.24 points, or 0.25%, to 13,533.75. Meanwhile, European stocks edged lower on Tuesday as a slew of downbeat earnings and higher government bond yields outweighed gains in energy shares and slight easing of concerns about risks stemming from the Middle East conflict. The pan-European STOXX 600 index slipped 0.1%.

Back home, Bursa Malaysia closed higher on Tuesday, in tandem with the better performance in regional bourses, taking the cue from the upbeat Wall Street performance overnight. At the closing, the FBM KLCI rose 5.17 points to end at an intraday high of 1,444.13 from Monday’s closing of 1,438.96. The regional markets finished broadly lower with the Hang Seng down 2.33% while China's Shanghai Composite lost 0.64% and Japan's Nikkei 225 eased 0.55%.

Source: PublicInvest Research - 18 Oct 2023