Economy

US: Slowing US inflation boosts hopes Fed done with rate hikes. US consumer prices were unchanged in Oct as Americans paid less for gasoline, and the annual rise in underlying inflation was the smallest in two years, bolstering the view that the Federal Reserve was probably done raising interest rates. Though rents continued to rise last month, the pace of the increase slowed considerably from Sept. (Reuters)

US: Consumer prices unexpectedly unchanged in Oct. With a sharp pullback in gasoline prices offsetting a continued increase in shelter prices, the Labour Department released a report showing US consumer prices came in unchanged in the month of Oct. The Labour Department said its consumer price index was unchanged in Oct after climbing by 0.4% in Sept. Economists had expected consumer prices to inch up by 0.1%. (RTT)

EU: Eurozone economy flirts with recession. Euro area is on the brink of recession as the economy of the single currency bloc failed to grow in three out of the last four quarters, latest data from the statistical office Eurostat showed. Confirming the previous estimate, gross domestic product shrunk 0.1% quarterly, reversing the 0.2% expansion in the second quarter. Another quarter of contraction would push the economy into a technical recession. YoY economic growth softened to 0.1% from 0.5% a quarter ago. The rate matched the preliminary flash estimate published on Oct 31. (RTT)

EU: Eurozone bond yields struggle for direction ahead of US data. Euro zone government bond yields struggled for direction as investors await US inflation data, which could affect the Fed policy outlook. Analysts said euro area borrowing costs would keep tracking US Treasury yields, while remarks from ECB officials pushing against expectations for rate cuts offset the impact of a bleak economic outlook in the bloc. (Reuters)

EU: German ZEW investor confidence rises more than expected. Germany's investor sentiment rose more than expected in Nov and moved into the positive territory for the first time in seven months amid an improvement in economic expectations, survey results from the think tank ZEW showed. The economic sentiment index rose for the fourth month in a row to 9.8 points from -1.1 in Oct. Economists had forecast a score of 5.0 points. The reading moved into the positive territory for the first time since April, when it was at 4.1 points. (RTT)

EU: Dutch economy remains in recession. The Dutch economy shrank for the third straight quarter in the three months ending Sept, mainly due to a decline in investments in fixed assets and a fall in inventory changes, preliminary data from the Central Bureau of Statistics showed. GDP fell 0.2% sequentially in the Sept quarter, following a 0.4% decline in the previous quarter. It was the third successive quarterly contraction, and the country remained in a technical recession. (RTT)

EU: Polish GDP expands 1.4% in Q3. Poland's economy expanded at a faster rate in the 3Q, preliminary data from Statistics Poland showed. GDP rose 1.4% sequentially in the third quarter, following a revised 0.3% increase in the second quarter. Economists had expected a 2.2% growth for the month. On a YoY basis, GDP recovered 0.5% in the 3Q versus a 0.3% fall in the previous quarter. (RTT)

UK: UK wage growth slows amid cooling labour market. UK wage growth eased in the third quarter and vacancies declined further reflecting the loosening labour market conditions, data from the Office for National Statistics showed. Excluding bonuses, regular pay growth was 7.7% in the three months to Sept, in line with expectations but slower than the revised 7.9% rise in the period through Aug. Although this was slightly down on the previous periods, it remains among the highest growth rates since records began in 2001, the ONS said. (RTT)

Japan: Economy shrank 0.5% in Q3. Japan's economy contracted a bigger-than-expected 0.5% in the three months to Sept, official data showed. The data, released by the Cabinet Office, was worse than market expectations of a 0.1% contraction in the world's number three economy. Private demand, including private residential and corporate investment, was down 0.6%. Exports grew just 0.5%, compared with 3.9% in the previous quarter. Imports were up 1.0%. (Bloomberg)

India: Wholesale prices fall 0.52%, more than forecast. India's wholesale prices declined for the seventh straight month in Oct, and at a faster-than-expected rate, data published by the National Statistical Office showed. The wholesale price index, or WPI, dropped 0.52% YoY in Oct, after a 0.26% decline in Sept. Economists had expected a 0.20% fall. The overall downward trend was primarily due to the fall in prices of chemicals and chemical products, electricity, textiles, basic metals, food products, and paper products, the ministry said. (RTT)

Australia: Consumer sentiment deteriorates in Nov. Australia's consumer confidence deteriorated in November as the interest rate hike added further pressure on family finances and reignited fears of rising cost of living and the prospect of further rate rises to come, survey results from Westpac showed. The Westpac-Melbourne Institute Index of Consumer Sentiment fell to 79.9 in Nov from 82.0 in Oct. (RTT)

Markets

Reservoir Link (Trading Buy, TP: RM0.40): Acquires SAG Renewables for RM10.5m. Reservoir Link Energy Bhd (RLEB) is acquiring SAG Renewables SB (SAGR) for RM10.5m for the proposed acquisition of 1m shares, representing a 100% equity interest in SAGR. RLEB said the proposed acquisition represents an opportunity for the group to expand its revenue-generating assets. “The identified assets have been installed on 13 sites for nine clients and operational since 2022. (The Star)

Comment: SAGR owns and operates 13 solar PVs with a combined capacity of 2.5MWp. Although the acquisition price is at a slight premium, we believe it is still fair given no construction risk, with the contracts secured by Supply Agreements for Renewable Energy (SARE). Nevertheless, we estimate the contribution is insignificant to its bottomline (less than RM200,000/year). Hence, we make no changes to our forecast.

IHH Healthcare (Outperform, TP: RM7.63): Unit sues Japan's Daiichi Sankyo over Fortis deal. IHH Healthcare filed a claim against Daiichi Sankyo in mid-Oct seeking damages in excess of JPY20bn in relation to its stake buy in India's Fortis Healthcare. On Oct, 16, its unit filed a claim against Daiichi Sankyo stating it caused losses to the company by preventing it from proceeding with open offers to buy a stake in Fortis Healthcare in 2018. (BTimes)

Malakoff (Outperform, TP: RM0.70): To build, operate & maintain solar PV systems at Gas Malaysia sites. Malakoff Corporation will develop, operate and maintain solar photovoltaic systems at three Gas Malaysia sites. Malakoff had signed a solar power purchase agreement (SPPA) with Gas Malaysia (Gas Malaysia) for the development. Malakoff will also be installing EV charging stations at Gas Malaysia HQ and its office at Jalan Gurney here. (BTimes)

KPS (Neutral, TP: RM0.65): Sued over alleged land fraud in Kuala Langat. The dispute involves two parcels of land measuring 9.21 acres that were part of a mining scheme under KPS at Brooklyn and Sungai Kelambu in Kuala Langat. The trio sought damages in compensation for the two lands they sold to the third party by KPS based on market rate, or based on the previous land assessments made by the Inland Revenue Board Malaysia. (The Edge)

JF Technology: Partners with HFC Industry ink agreement to form JV company in Malaysia. JF Technology (JFT) signed a joint venture agreement (JVA) with HFC Industry HK Ltd (HFCI) to incorporate HFC Tech SB (HTSB), a joint venture company in Malaysia. The joint-venture's principal activities include designing and manufacturing electromagnetic interference (EMI) shielding materials, thermal interface materials and absorbing materials. (BTimes)

AirAsia: To launch new routes to India. AirAsia plans to launch new routes to India as the airline boosts its robust presence there, linking millions of Indian travellers to an extensive network of 130 destinations across Asia and the Asia Pacific. India has always been a key market for the group and following recent changes to its operations in the country, the airline remains committed to serving the market. (BTimes)

MARKET UPDATE

The FBM KLCI might open higher today after US inflation fell more than expected to 3.2 % in October, the first decline in four months, prompting Treasury yields to fall sharply and Wall Street stocks to climb. Tuesday’s consumer price data compares with a 3.7% rise in the 12 months to September. The 3.2% year-on-year figure was also marginally below expectations of 3.3%. The yield on the ratesensitive two-year Treasury, which moves inversely to prices, was down 0.21 percentage points at 4.83 % on Tuesday evening in New York. The yield on the benchmark 10-year Treasury dropped to a three-month low of 4.43 % before retracing some of that move to be down 0.18 percentage points at 4.45 %. The S&P 500 rose 1.9%, its biggest one-day jump since April. The Nasdaq Composite climbed 2.4%. European markets also finished broadly higher with shares in Germany leading the region. The DAX added 1.76% while France's CAC 40 rose 1.01% and London's FTSE 100 tacked on 0.27%.

Back home, Bursa Malaysia's barometer index ended on a positive note on Tuesday as domestic sentiment was lifted by earnings optimism, while bargain hunters nibbled on heavyweight shares after a recent sell-off. At the closing bell, the FBM KLCI bagged 6.54 points to 1,451.72 compared to last Friday’s closing of 1,445.18. Stocks in China struggled for direction on Tuesday as lending data in October signalled soft credit demand, adding to signs that the recovery process in the world’s second-largest economy was still complicated. The blue-chip CSI 300 Index was flat at 0.1%, while the Shanghai Composite Index gained 0.3% at market close. Meanwhile, Hong Kong’s Hang Seng Index slipped 0.2%.

Source: PublicInvest Research - 15 Nov 2023