Economy

US: Treasury seen boosting auction sizes as budget deficit worsens. The US Treasury is likely to boost the size of auctions for bills, notes, and bonds in 4Q when it announces its financing plans this week to fund a worsening budget deficit. Investors are paying close attention to this week's quarterly refunding announcement as a sharp jump in long-term Treasury yields has been partly attributed to concerns about the US fiscal deficit. Since the end of July, the 10-year yield has climbed more than 100 bps. (Reuters)

EU: German inflation eases in Oct to lowest level in two years, 3Q GDP shrinks. Inflation in Germany eased noticeably in Oct, falling to its lowest level since Aug 2021, pointing to a substantial cooling in headline inflation in the eurozone. German inflation eased in Oct to 3.0%, the federal statistics office said. German consumer prices, harmonised to compare with other EU countries, had risen by 4.3% YoY in Sept. Core inflation fell to 4.3% in Oct from 4.6% in the previous month. (Reuters)

UK: High inflation and slowdown signs: the BoE's tough tradeoff. The BoE is expected to keep interest rates at their 15-year high as it battles an inflation rate that is more than three times as high as its target, despite growing signs of strain in the economy. British inflation remains the highest among the world's rich economies, and the BoE's run of 14 back-to-back interest rate increases between late 2021 and Aug this year to contain it is hitting the housing market, jobs and consumer spending. (Reuters)

China: Govt debt supply surges in Oct to 2023 high. China’s central and local governments extended their borrowing spree in Oct to reach a new monthly high, buoyed by Beijing’s fiscal stimulus to support the economy. The country is on track to sell CNY2.6trn (RM1.7trn) of onshore sovereign notes and local government bonds during the month, higher than any other month this year, according to Bloomberg calculation based on Chinabond data.. (Bloomberg)

Australia: Tight rental market forces tenants to make tough choices. Australia's red-hot rental housing market could be reaching a breaking point for affordability as tenants grapple with rising costs of living. Nationwide vacancies are at all-time lows and prices are up 30% over three years, forcing renters into unenviable situations. Rent is now one of the country's biggest drivers of inflation, which at an annual rate of 5.4% in the Sept quarter is well above the central banks' targeted band of 2% - 3% and could lead to further interest rate hikes as early as next week. (Reuters)

Markets

MyEG: Gets three-year extension for JPJ-related online services. MyEG Services has received a three-year contract extension from the Road Transport Department (JPJ) of its appointment as a collecting agent for the provision of vehicle registration services, driver and vehicle licensing, and electronic payment of summons services. This comes just two weeks after the e-government service provider was granted a two-year extension of its immigration related services contract. (The Edge)

KNM: Seeking one-year extension to submit regularisation plan. A day prior to the Oct 31 deadline to submit its regularisation plan, KNM Group, which was recently embroiled in a boardroom tussle, announced that it needs another year to work on its regularisation plan. According to a bourse filing, the oil and gas engineering group submitted the extension of time application to Bursa Securities, seeking a one-year extension to Oct 30, 2024 to submit its regularisation plan. (The Edge)

BCorp: Boosts its stake in BFood to 57.43%. Berjaya Corp (BCorp) has acquired about 37.25m ordinary shares representing about 2.12% equity interest in Berjaya Food (BFood) for RM26.59m cash, or at an average purchase price of about 71.4sen per BFood share. In a filing with Bursa Malaysia, BCorp said acquisitions of shares were done from Sept 26 to Oct 27 via a direct business transaction and in the open market. (StarBiz)

Sasbadi: Looks at M&A route to growth. Sasbadi Holdings is looking at M&As as it seeks to accelerate growth and to enter new business segments. A key strategy to achieve this for financial year ending Aug 31, 2024 (FY24) and beyond is through M&As that strategically fill niches which our group has little/no market presence in. Sasbadi said by acquiring the right companies, the group can swiftly launch into new business segments with significant market share. (StarBiz)

Ranhill Utilities: Eyes joint development of water facility project in Indonesia with China Energy Engineering. Ranhill Utilities plans to team up with China Energy International Group Co Ltd (CEIG) for the proposed development of a public-private regional drinking water supply facility project in Indonesia. In a bourse filing on Monday, Ranhill said it had inked a MoU with CEIG to jointly pursue the Ir H Djuanda/Jatiluhur II water supply project, as well as co-develop and cooperate on other potential projects in Southeast Asia. (The Edge)

Mitrajaya: Clinches RM84.5m contract for 31-storey block development in KL. Mitrajaya Holdings Bhd’s unit, Pembinaan Mitrajaya Sdn Bhd accepted a RM84.5m contract for the construction of 31-storey block development in Mukim Batu, Kuala Lumpur. The unit clinched the two-year contract from GDP X Properties Sdn Bhd and the project is expected to be completed by Dec 2025. (The Edge)

DNeX: Bags petroleum production and facility abandonment job from Petronas. Dagang NeXchange’s (DNeX) 90%-owned subsidiary Ping Petroleum SB has secured a contract from Petroliam Nasional (Petronas) in relation to the production of petroleum and abandonment of petroleum facilities. DNeX said the abandonment decommissioning work will cover petroleum facilities located in the Abu Cluster, about 250km off the east coast of Peninsular Malaysia. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after Wall Street rallied on Monday, kicking off what promises to be a hectic week that includes a heavy earnings docket, economic data and the Federal Reserve's two-day monetary policy meeting. All three major US stock indices closed up more than 1%, bouncing back from the previous week's sell-off. Interest rate sensitive megacap stocks, led by Microsoft Corp, Amazon.com, and Apple Inc provided the most upside muscle. On Tuesday, the Federal Open Markets Committee (FOMC) is expected to convene for a two-day monetary policy meeting, which is expected to culminate in a decision to let the Fed funds target rate stand at 5.25%-5.50%. European markets finished higher with the FTSE 100 added 0.45% while France's CAC 40 rose 0.44% and Germany's DAX tacked on 0.20%.

Back home, Bursa Malaysia closed marginally lower on Monday amid regional markets’ mixed performance. At the closing bell, the FBM KLCI decreased 2.7 points to 1,439.2 from last Friday's closing of 1,441.9. Regional stocks ended mixed. Hong Kong stocks were flat at 17,406.36, while the Nikkei 225 Index of Japanese companies declined 1.0% to 30,696.96.

Source: PublicInvest Research - 31 Oct 2023