Economy

US: Continuing jobless claims rise for sixth week as labour cools. Recurring applications for unemployment benefits rose for a sixth straight week, indicating those losing their jobs are starting to have more trouble finding new ones. Continuing jobless claims, a proxy for the number of people receiving unemployment benefits, increased to 1.8m in the week ended Oct 21, the highest level since April. Initial claims also rose to 217,000 in the week ending Oct 28. (Bloomberg)

US: Productivity grows by most since 2020, labour costs decrease. US labour productivity advanced by the most in three years, helping to alleviate the inflationary impact of recent wage growth. Productivity, or non-farm rose at a 4.7% annualised rate in the third quarter after climbing 3.6% in the prior period, data from the Bureau of Labour Statistics showed. Unit labour costs decreased at a 0.8% rate after climbing 3.2% in the second quarter. It marked the first decline since late 2022. (Bloomberg)

EU: German unemployment increases in Oct. Germany's unemployment increased notably in Oct amid weak economic activity, data released by the Federal Labour Agency revealed. The number of people out of work increased 30,000 after Sept's rise of 12,000. The actual increase was double the expected rise of 15,000. (RTT)

EU: Eurozone manufacturing activity slump on orders, production. Euro area manufacturing activity shrunk substantially in Oct due to accelerated contractions in new orders and production, the purchasing managers' survey results published by S&P Global revealed. The HCOB manufacturing PMI dropped to a three-month low of 43.1 in Oct from 43.4 in Sept. The score was slightly above the flash 43.0. (RTT)

EU: ECB can’t close door to further rate hikes. The ECB fight against inflation might require another increase in interest rates, according to Executive Board member Isabel Schnabel. “After a long period of high inflation, inflation expectations are fragile and renewed supply-side shocks can destabilize them, threatening medium-term price stability,” she said. “This also means that we cannot close the door to further rate hikes.” (Bloomberg)

UK: BOE keeps rates unchanged at 15-year high, playing down talk of cuts. The BoE left its benchmark lending rate at a 15-year high, with governor Andrew Bailey saying it was “much too early” to be thinking about cuts. The central bank’s MPC voted six-three to maintain the key rate at 5.25%. Dissenters pushed for another quarter-point increase to choke off what they saw as persistent upward pressures on prices, according to minutes of the decision released. (Bloomberg)

China: Inflation near zero. The strength of China’s recovery will be a key focus of the week ahead. We expect mixed signals. Credit growth will probably show recent incentives are working to encourage borrowing. Trade looks set to shrink less than in the prior month, but this would be due to statistical base effects — not a sign of demand perking up at home or abroad.(Bloomberg)

Japan: Compiles USD113bn package to cushion inflation. Japan's government compiled a package of measures to cushion the economic blow from inflation that will involve spending of more than JPY17trn (USD113bn), a move that could worsen the country's already tattered finances. To fund part of the spending, the government will compile a supplementary budget for the current fiscal year of JPY13.1trn, according to the plan approved by the cabinet. (Reuters)

Japan: GDP likely shrank in Q3 as China slowdown hits exports. Japan's economy likely shrank in the July-Sept period, the first contraction in four quarters, according to a Reuters poll, heightening challenges for the central bank's exit from ultra-loose monetary policy. (Reuters)

Singapore: Sees first drop in assets under management since 2011. Singapore reported a 10% drop in financial assets managed locally amid a “challenging environment” for global investors last year, the central bank said. Assets under management in the city state fell to SGD4.9trn (USD3.6trn or RM17.06trn) in 2022, even though it attracted “healthy” net inflows, the Monetary Authority of Singapore (MAS) said. That’s the first drop since 2011, according to MAS data. (Bloomberg)

Markets

BCorp: IPC becomes substantial shareholder in Salcon with 5.43% stake. Berjaya Corp’s (BCorp) 100%-owned subsidiary, Inter-Pacific Capital SB (IPC) has become a substantial shareholder of Salcon. In a filing with Bursa Malaysia, BCorp said IPC acquired an aggregate of 55m Salcon shares, including share dividend of 1.22m Salcon shares received by IPC in May 2023, representing a total of 5.43% equity interest in Salcon. (StarBiz)

AAX: Appeals to exit PN17 status. AirAsia X (AAX) has submitted an appeal to Bursa Malaysia Securities (Bursa Securities) against the latter’s recent rejection of the airline’s application for proposed relief and to be completely uplifted from the Practice Note 17 (PN17) category. The medium to long-haul low-cost carrier said it has a renewed focus and determination on exiting the PN17 status. The foremost short-term goal for the airline is to emerge from the PN17 status as smoothly and swiftly as possible to boost the postpandemic upward trajectory for future sustainable and profitable growth. (FMT)

MSM Malaysia: Drops legal proceedings against Gas Malaysia Energy. MSM Malaysia Holdings has agreed to discontinue the legal proceedings against Gas Malaysia Energy and Services SB (GMES) over a disputed sum of RM10.32m relating to gas supply to its wholly-owned unit MSM Sugar Refinery (Johor) SB (MSM Johor). The sugar refinery company told Bursa that Notices of Discontinuance were filed to the Kuala Lumpur High Court on Nov 1 to signify the conclusion of the Writ Action with each party to bear its own costs and without liberty to file afresh. (The Edge)

Atrium REIT: Acquires Shah Alam property for RM41m cash in related-party deal. Atrium Real Estate Investment Trust’s (Atrium REIT) asset manager Atrium REIT Managers SB (ABSB) has acquired buildings and leasehold land in Shah Alam, Selangor from a related party, Amazing Blitz SB (ABSB), for RM41m cash. In a filing with Bursa, the REIT said the purchase consideration represents a marginal discount of RM500,000 or 1.2% to the appraised market value of RM41.5m as appraised by an independent valuer on Oct 3, 2023. (The Edge)

Yoong Onn: Acquires 60% stake in Singapore-based T.C. Homeplus for RM38m. Yoong Onn Corp has proposed to acquire a 60% stake in Singapore-based T.C. Homeplus for SDG10.95m (RM38.16m). The home linen and bedding accessories retailer told Bursa Malaysia on Thursday that it had entered into a share sale agreement with several Singaporean individuals, Wong Fun Ngian, Wong Fun Foong, Ang Teng Poh and Lim Ting Han, for the stake acquisition. (The Edge)

IPO: Plytec public portion oversubscribed 6.72 times. Plytec Holding’s initial public offering (IPO) en route to a listing on the ACE Market of Bursa Malaysia saw the public issue of 30,303,100 shares made available for application by the public being oversubscribed by 6.72 times. In a statement, the engineering construction company said the IPO comprised a public issue of 106,060,600 new ordinary shares. An additional 75,757,500 shares were offered by way of private placement to bumiputra investors, approved by the Ministry of Investment, Trade and Industry (Miti). (StarBiz)

MARKET UPDATE

The FBM KLCI might open stronger today after US stocks recorded their best day in six months as bond yields tumbled after the Federal Reserve and other central banks signalled a possible end to the interest rate rise cycle that has hammered financial markets for more than a year. Thursday’s rally for stocks and bonds — whose prices move inversely to yields — followed what investors viewed as dovish remarks by Fed chair Jay Powell on Wednesday after the US central bank held rates steady for a second consecutive meeting. The S&P 500 stock index gained 1.9 % for its best one-day performance since March, helped by strong earnings from the likes of Starbucks, which ended the day up 9.5 %. The Dow Jones Industrial Average rose 1.7% and the Nasdaq Composite added 1.8%. On Thursday, the Bank of England also voted 6-3 to hold rates steady at 5.25% while Norway’s central bank left its rates unchanged too. European markets closed sharply higher today with shares in Germany leading the region. The DAX was up 3.11% while France's CAC 40 added 1.85% and London's FTSE 100 rose 1.42%.

Back home, Bursa Malaysia finished the day marginally higher on Thursday as bargain hunting emerged following Wednesday's selldown. At the closing bell, the FBM KLCI closed 0.3%, or 4.44 points higher, to 1,439.77 from Wednesday's closing of 1,435.33. Elsewhere, the Nikkei 225 gained 1.10% and the Hang Seng rose 0.75%. The Shanghai Composite lost 0.45%.

Source: PublicInvest Research - 3 Nov 2023