Economy

US: Business activity ticks up while euro zone gauge fans recession fears. US business activity ticked higher in Oct while output in the euro zone took a surprise turn for the worse, surveys showed, underscoring the diverging path for central bankers in the two regions and fanning fears the bloc may slip into recession. In the US, the manufacturing sector pulled out of a five-month contraction on a pickup in new orders, and services activity accelerated modestly amid signs of easing inflationary pressures. (Reuters)

EU: Germany to overtake Japan as third-largest economy, helped by weak yen. Germany’s economy is projected to dislodge Japan’s as the world’s third largest in 2023, helped by a slide in the yen against the dollar and the euro. The IMF latest projections estimate Germany’s nominal GDP at USD4.43trn (RM20.9trn) this year, compared with USD4.23trn for Japan. That would leave Germany lagging only the US and China in terms of economic size. The projections come as the yen teeters close to the 160 mark against the euro and remains within striking distance of the 33-year low against the dollar that sparked a second round of currency intervention in October last year. The euro last reached 160 yen in Aug 2008. The yen weakness has largely been caused by fundamental differences in monetary policy. (Bloomberg)

EU: Private sector activity shrinks for fifth month. Driven by the deepening downturn in both services and manufacturing activity, the euro area private sector shrank for the fifth month in a row in Oct with output falling the most over a decade if the pandemic period is excluded. The flash composite output index posted 46.5 in Oct, down from 47.2 in Sept, the purchasing managers' survey data from S&P Global and Hamburg Commercial Bank AG showed. Excluding the pandemic months, private sector activity shrunk the most since March 2013. Things are moving from bad to worse, HCOB Chief Economist Cyrus de la Rubia said. "We wouldn't be caught off guard to see a mild recession in the Eurozone in the second half of this year with two back to back quarters of negative growth," the economist added. (RTT)

UK: Is losing jobs at the sharpest pace since the pandemic. The UK economy lost jobs again in the quarter though Aug, marking the longest drop in employment since the depths of the coronavirus pandemic and a sign that inflationary pressures may be abating. Employment fell 82,000 in June to Aug after a 133,000 drop in the period from May through July, the Office for National Statistics (ONS) said. It was third consecutive three-month period in which employment has fallen compared to the previous three months, the worst stretch since early 2021. The ONS changed the way it calculates the figures released after delaying its unemployment and employment figures “to produce the best possible estimates”. The new calculations indicate that the labour market may be slightly tighter than the ONS’ previous data had suggested. (Bloomberg)

China: To issue USD137bn sovereign debt to support economy. China's top parliament body has approved a CNY1trn (USD137bn) sovereign bond issue and passed a bill to allow local governments to frontload part of their 2024 bond quotas, state media said, in a move to support the economy. Funds raised from the new sovereign bonds will support the rebuilding of disaster-hit areas in the country and improve urban drainage prevention infrastructure to boost China's ability to withstand natural disasters, state news agency Xinhua said. That will widen the country's 2023 budget deficit to around 3.8% of gross domestic product from a previously set 3%, Xinhua said. (Reuters)

Japan: Private sector shrinks for first time since late 2022. Japan's private sector contracted in Oct for the first time since late 2022 due to a sharp fall in manufacturing output, flash survey results from S&P Global showed. The au Jibun Bank composite output index fell to 49.9 in Oct from 52.1 in the previous month. The score dropped below the neutral 50.0 mark for the first time since Dec 2022. The services Purchasing Managers' Index slipped to 51.1 from 53.8 a month ago. The score suggested that activity grew at the weakest pace in the YTD period amid worsening economic conditions. The flash manufacturing PMI held steady at 48.5 in Oct, signaling the fifth consecutive contraction in the sector. At the same time, the manufacturing output index registered 47.6 in Oct, down from 48.7 in the prior month. (RTT)

Markets

Privasia: Clinches RM42m contract from Education Ministry. Privasia Technology has clinched a RM42.09m contract to provide ICT equipment rental services in school computer labs in Perlis, Kedah and Penang. The group said its wholly owned unit Privasia SB accepted the contract from the Ministry of Education. The services are expected to comply with green requirements, and will be provided on a lease-to-use basis. (The Edge)

K-One: Unit appointed as Norwegian fish oil product distributor in M'sia. K-One Technology has been appointed as the distributor of Norwegian fish oil products in Malaysia by Norwegian Fish Oil AS. The products include Omega-3 Forte, Omega-3 Liquid, Omega-3 High Concentrated, Omega-3 Chewable, Krill & Omega3 Oil, Salmon Oil, and Cod Liver Oil. The group said its wholly owned subsidiary K-One Wellness SB had entered into an agreement with Norwegian Fish Oil AS to distribute the latter’s products. (The Edge)

Duopharma: Gets another six-month contract extension to supply products to govt hospitals and clinics. Duopharma Biotech has secured another six-month contract extension for the new approved products list (APPL) to supply pharmaceutical and non-pharmaceutical products to government hospitals and clinics. The group’s wholly-owned Duopharma (M) SB received the letter of extension from Pharmaniaga Logistics SB (PLSB). (The Edge)

AirAsia X: Records 80% passenger load factor in 3Q23. AirAsia X achieved a sound passenger load factor (PLF) of 80%, up by seven percentage points YoY even as capacity surged over nine times YoY to 1.01m seats in the 3Q23. AirAsia X said the performance came on the back of a 10 times YoY increase in the number of passengers, as over 807,000 passengers were carried in 3Q23 compared to nearly 80,500 passengers in the same period last year. (StarBiz)

TDM: Buys private maternity hospital in Klang for RM15m. TDM's healthcare subsidiary Kumpulan Medic Iman SB (KMI), is buying a private maternity hospital in Klang for RM15m. TDM said KMI has entered into a share sale agreement with Datuk Mohd Razif Abdul Aziz and Datin Norana binti Yacob to purchase a 100% interest in Hospital Bersalin Razif SB (HBR). TDM will fund the acqusition via bank financing. (BTimes)

Globetronics: Records weaker 3Q net profit of RM9.53m. Globetronics Technology said it expects a decline in profitability in 2023 after posting another quarter of weaker earnings in the 3Q23. The manufacturer of semiconductor-based products said contributing factors to the weaker performance include softer revenue forecasts from customers, the full-year tax impact of its expired pioneer status in one of the subsidiaries, the full impact of increased minimum wages and an increase in utilities costs. (StarBiz)

IPO: Plytec aims to raise RM37.1m from ACE Market IPO. PLYTEC Holding (PLYTEC), en route for a listing on the ACE Market of Bursa Malaysia Securities, aims to raise RM37.1m from its initial public offering (IPO). The construction engineering solutions, services, trading and distribution of building materials company said that through the IPO, the group expects to have an enlarged issued share capital of RM212.1m comprising 606m shares priced at 35 sen per share. (StarBiz)

MARKET UPDATE

The FBM KLCI might open stronger today after Wall Street ended higher on Tuesday as a spate of solid corporate earnings and upbeat forecasts stoked investor risk appetite and sparked a broad rally. All three major US stock indices advanced, with interest rate sensitive megacaps providing much of the upside lift as benchmark Treasury yields held steady, comfortably below their recent spike to 5%. The Dow Jones Industrial Average rose 204.97 points, or 0.62%, to 33,141.38, the S&P 500 gained 30.64 points, or 0.73%, to 4,247.68 and the Nasdaq Composite added 121.55 points, or 0.93%, to 13,139.88. European markets also finished higher with the CAC 40 added 0.63% while Germany's DAX rose 0.54% and London's FTSE 100 tacked on 0.20%.

Back home, Bursa Malaysia ended mixed on Tuesday as profit taking earlier in the day tapered off as bargain hunting sets in while the market awaits fresh catalysts. At the closing, the FBM KLCI erased 2.47 points to 1,435.65 from Monday’s closing of 1,438.12. In the region, the Shanghai Composite gained 0.78% and the Nikkei 225 rose 0.20%. Elsewhere, the Hang Seng lost 1.05%.

Source: PublicInvest Research - 25 Oct 2023