PublicInvest Research

PublicInvest Research Headlines - 7 Nov 2023

PublicInvest
Publish date: Tue, 07 Nov 2023, 09:57 AM
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

All materials published here are prepared by Public Investment Bank Berhad. For latest offers on Public Invest trading products and news, please refer to: https://www.publicinvestbank.com.my/pbswecos/default.asp

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Economy

US: Worst sales beats in years show weakening US consumer trends. Corporate America is delivering the bleakest sales reports in four years this earnings season, a sign that weakening consumer demand is limiting companies’ ability to raise prices further. With more than 80% of S&P 500 firms having reported, less than half have beaten revenue estimates for Q3— the lowest share since the same period in 2019. The pace of sales growth globally has also moderated to the lower end of their pre-pandemic ranges. (Bloomberg)

US: Job market cools, Fed’s job gets easier. Slowing jobs growth and cooling wage pressures may give US Fed policymakers renewed confidence the US economy is adjusting from the shock of the coronavirus pandemic, allowing inflation to ease further without more interest rate rises. Non-farm payrolls increased by 150,000 last month, below the pre-pandemic trend for only the third time since Dec 2020, and hourly earnings rose 4.1% from a year earlier, the smallest increase since June 2021. (The Star)

EU: German service sector activity contracts in Oct. The German service sector slipped back into contraction in Oct amid persistent weakness in demand. The HCOB final services PMI fell to 48.2 in Oct from 50.3 in Sep, sliding back below the 50 level that signals growth in activity. The service sector's performance continued to be undermined by a lack of incoming new work. There continued to be only limited spillover to the labour market, however, with employment decreasing just fractionally. (Reuters)

EU: Eurozone economy started Q4 on back foot, stoking recession fears. The downturn in eurozone business activity accelerated last month as demand in the dominant services industry weakened further, suggesting there is a growing chance of a recession in the 20-country currency union. The economy contracted 0.1% last quarter, and Monday's final Composite PMI for Oct indicated the bloc entered this quarter on the back foot. (Reuters)

EU: Aims to give push to debt adjustment rules. The EU is finalising a blueprint to overcome longstanding splits and revise its debt-adjustment rules as countries are under pressure to rein in spending while also investing in defence and clean tech. Spain, which is currently holding the EU’s rotating presidency, is expected to propose a new “landing zone” document to the bloc’s finance ministers. It would include the progress made over the past weeks as the basis to prepare the legal proposal for approval at their next formal meeting in Dec. (The Star)

UK: BoE marks half-time in lagged rate squeeze. The BoE reckons the UK economy has only felt half the effects of a near twoyear interest rate squeeze so far – and markets doubt it will allow it to take the whole dose. A brutal 5 ppts rate hiking cycle that started late in 2021 may well have ended, but its hit on household demand and economic activity to date may well double from here. (The Star)

UK: Probably already in recession. Britain is probably already in a recession after soaring interest rates and rising unemployment turned households more cautious about spending. There is a 52% chance of a mild recession in the second half of this year, as defined by two consecutive quarters of contraction. A recession would be a headache for UK Prime Minister Rishi Sunak, due to an election fight next year. A downturn could increase the chances of the BoE pivoting towards reducing interest rates, especially if inflation has come down sharply. (Bloomberg)

China: First deficit in foreign investment signals West's 'derisking' pressure. China recorded its first-ever quarterly deficit in FDI, underscoring Beijing's challenge in wooing overseas companies in the wake of a "de-risking" move by Western governments. Direct investment liabilities were a deficit of USD11.8bn during the July-Sep period. That's the first quarterly shortfall since China's foreign exchange regulator began compiling the data in 1998, which could be linked to the impact of "de-risking" by Western countries from China amid growing geopolitical tensions. (The Star)

Japan: Service activity posts slowest growth this year. Japan's services activity expanded at the slowest pace this year in Oct, reinforcing concerns that the key sector propelling economic growth is continuing to soften. The final au Jibun Bank Service PMI fell to 51.6 in Oct from 53.8 in Sep, beset by weak demand. The index was slightly above the flash reading of 51.1 and remained over the 50.0 threshold separating expansion from contraction. (Reuters)

Korea: Bank of Korea may keep policy tight another year. The BoK will probably keep interest rates elevated for another year to ensure inflation is brought under control, warning markets against rallying on premature expectations for a policy easing. Inflationary pressures are at the most stubborn in decades, and there is no evidence they are easing for good. (Bloomberg)

Markets

Sedania: Buys 51% stake in premium personal care products producer Tanamera for RM8.18m cash. Sedania Innovator has entered into a conditional shares sale agreement with the vendors to acquire 4.35m shares in Tanamera Group SB (TGSB) and simultaneously entered into a conditional subscription agreement with TGSB to subscribe for an additional 3.4m shares in TGSB’s enlarged capital for RM3.68m, resulting in TGSB becoming a 51%- owned subsidiary of Sedania. (The Edge)

KAB: To support PETRONAS LNG project. Kinergy Advancement Bhd (KAB) has been awarded a contract by Petronas Gas Bhd's subsidiary, Pengerang LNG (Two) SB, for the transformation of 137,000m sqm of liquefied natural gas carriers (LNGC) into a floating storage units (FSU). The letter of award encompasses engineering, procurement, construction and commissioning (EPCC) work of utility supply for FSU at the Regasification Terminal Pengerang (RGTP). The contract, valued at RM33.3m, is expected to be completed by end-2024. (StarBiz)

DXN: Files writ of summons, claims against China’s Fujian Anxi over stake disposal dispute. DXN Holdings’ wholly owned subsidiary DXN Corp (Ningxia) Co Ltd has filed a writ of summons and statement of claims against China’s Fujian Anxi Jinjiang Source Tea Technology Co Ltd (Fujian Anxi) over a stake disposal dispute. It filed the summons and claims after Fujian Anxi had failed to secure a commercial loan or make the payment related to group’s stake disposal in Florin (Fujian) Integrated Agricultural Science and Technology Co Ltd (Florin Fujian). (The Edge)

Edaran: Bags RM90m maintenance contract for customs operating system and MySST app. Edaran has secured a job to maintain the Royal Malaysian Customs Department’s (RMCD) customs operating system and MySST (Malaysia Sales & Services Tax) application (2023-2027) valued at RM89.9m, nearly three times the company’s market capitalisation. Edaran’s wholly owned unit Edaran IT Services Sdn Bhd accepted the contract to undertake maintenance of hardware, software, network, integration and application of Sistem Maklumat Kastam (SMK) and MySST from the Ministry of Finance. (The Edge)

Perak Corp: Granted another extension to Feb next year to submit regularisation plan. Perak Corp, a 52.9%-owned subsidiary of the Perak State Development Corp, has been granted a further six-month extension of time until 10 Feb 2024, to submit its regularisation plan to address the company’s financial condition. This marks the fourth time that Perak Corp has been granted an extension deadline from Bursa Securities. The original deadline on 11 Feb 2021, had been extended four times, first to 10 Aug 2022, then 10 Feb 2023, and more recently until 9 Aug. (The Edge)

Econpile: Signs MoU for elevated highway project with SKL. Econpile Holdings has signed a MoU for a proposed collaboration with Sungai Klang Link SB (SKL) to carry out construction works for an elevated highway project proposed by SKL to the government. The construction works include but are not limited to piling, pile-cap and foundation works. (StarBiz)

Yinson: Renewables unit starts operations in India. Yinson Holdings’ renewables business unit, Yinson Renewables (YR), has commenced operations at Nokh Solar Park in Rajasthan, India. Rising Sun Energy K Private Ltd (RSEK), which is YR’s indirect subsidiary, announced that its Nokh Solar Park in Rajasthan, India, had started commercial operations on Nov 3. (StarBiz)

MARKET UPDATE

The FBM KLCI might open with a positive bias today after US stocks closed slightly higher on Monday as investors awaited guidance from a host of Federal Reserve policymakers later in the week on the central bank's policy path, with a large amount of bond supply also due to hit the market. Equities last week posted their biggest weekly percentage gain in about a year, as a weaker-thanexpected U.S. payrolls report on Friday sent Treasury yields lower on the view the Fed was done hiking interest rates and could start cutting them next year. The Dow Jones Industrial Average rose 34.54 points, or 0.10%, to 34,095.86; the S&P 500 gained 7.64 points, or 0.18 %, at 4,365.98; and the Nasdaq Composite gained 40.50 points, or 0.30 %, at 13,518.78. The session marks the sixth straight advance for the Dow and S&P 500 and seventh straight gain for the Nasdaq. The streak is the longest for the S&P 500 since early June, since July for the Dow and since January for the Nasdaq. European markets finished mixed with the FTSE 100 gained 0.09%, while the CAC 40 led the DAX lower. They fell 0.48% and 0.05% respectively.

Back home, Bursa Malaysia ended the first trading day of the week on a positive tone, with the benchmark index rising 1.02% to more than an eight-month high, on broad-based buying momentum riding on the improving market sentiment regionally. At the closing bell, the FBM KLCI gained 14.74 points to end at its intraday high of 1,464.67 from Friday's closing of 1,449.93. Stocks in the region mostly grew Monday, with shares in Japan increasing for the fourth day and the Hong Kong market up for three consecutive days. The Hang Seng Index added 1.7% to 17,966.59, while the Nikkei 225 Index gained 2.4% to 32,708.48.

Source: PublicInvest Research - 7 Nov 2023

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