Economy

US: Labor market steadily slowing; wholesale inventories revised down. The weekly jobless claims report from the Labor Department also showed unemployment rolls declining in late Nov after the so-called continuing claims hit a two-year high in the middle of the month. Initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 220,000 for the week ended Dec. 2, the Labor Department said. Economists polled by Reuters had forecast 222,000 claims for the latest week. The government reported this week that there were 1.34 job openings for every unemployed person in Oct, the lowest since Aug 2021. Slowing economic activity was highlighted by a third report from the Commerce Department's Census Bureau showing wholesale inventories declining 0.4% in Oct, instead of falling 0.2% as estimated last month. (Reuters)

US: Layoffs jumped in Nov led by retail and tech, report shows. US employers increased their announced job cuts in Nov, led by the retail and technology sectors, in a further sign that the labor market is beginning to slacken, a report showed. Announced job layoffs by US-based employers totaled 45,510 last month, up 24% from 38,836 in Oct, global outplacement firm Challenger, Gray & Christmas said in the report. While it was the first time since July the announced cuts were lower than the corresponding month a year ago, the year-to-date tally was the highest since 2020, when the economy was swooning amid the impact of the COVID-19 pandemic. Hiring plans also appeared to have weakened. U.S. employers in Nov announced plans to hire 15,566 workers, for a year-to-date total of 775,501. (Reuters)

EU: ECB to cut rates in Q2, earlier than thought; winter recession seen shallow. The ECB will cut interest rates in the second quarter of next year, earlier than previously thought, according to a slim majority of economists in a Reuters poll, as the economy enters a short and shallow winter recession. After inflation fell to 2.4% last month, ECB hawk Isabel Schnabel told Reuters the central bank could take further interest rate hikes off the table. All 90 economists in the Dec. 1-6 Reuters poll said the deposit rate would end 2023 at its current record high of 4.00% after the ECB's final decision of the year on Dec. 14. Taking recent commentary as a dovish signal, investors are now pricing in around 150bps of cuts starting Mar next year. But the Reuters survey was more in line with the "higher for longer" rates narrative. (Reuters)

UK: Labour market shows sign of cooling. Britain's labour market remains tight, despite a fall in job postings by employers over the course of 2023 and broader weakness in the economy, figures from recruitment platform Indeed showed. At the start of Dec last year, there were 48% more job postings on Indeed than before the COVID-19 pandemic. But on Dec. 1 this year, this had shrunk to 10%. The BoE is closely watching Britain's job market as it worries that labour shortages will keep wage growth high and make it hard to get inflation all the way back to its 2% target after it hit a 41-year high of 11.1% in Oct 2022. Indeed data showed advertised salaries in Britain in the three months to the end of Oct were 7.0% higher than a year earlier, compared with increases of 4.2% in the US and 3.8% in the euro zone. (Reuters)

UK: BoE to stay on hold through Q2 2024 despite cooling inflation. The BoE will keep Bank Rate at 5.25% on Dec 14 and through the second quarter of 2024, a Reuters poll showed, although a slim majority of participants said risks were tilted towards the first cut coming earlier than expected. British inflation cooled more than expected to 4.6% in Oct from 6.7% in Sep yet economists as a group now expect only a 25bps cut in the third quarter compared to 50 basis points in a Nov poll. That change in view came after BoE Governor Andrew Bailey recently said the central bank "will do what it takes" to get inflation to its 2% target. (Reuters)

China: Exports grow for first time in 6 months in relief for factories. China's exports grew for the first time in six months in Nov, suggesting factories in the world's second-largest economy are attracting buyers through discount pricing to get over a prolonged slump in demand. Exports grew 0.5% from a year earlier in Nov, customs data showed, compared with a 6.4% fall in Oct and beating the 1.1% drop expected in a Reuters poll. Imports fell 0.6%, dashing forecasts for a 3.3% increase and swinging from a 3.0% jump last month. In the short run, however, the pressure on Chinese manufacturers show little sign of easing off completely. (Reuters)

Japan: BOJ chief meets premier Kishida, explains focus on wages, demand. BoJ Governor Kazuo Ueda said he told Prime Minister Fumio Kishida the central bank will scrutinise the strength of domestic demand and next year's wage outlook in guiding monetary policy. While the meeting was a regular exchange of views held about once every quarter, it comes at a time of heightening market expectations that the BOJ will soon embark on an exit from decades of ultra-low interest rates. (Reuters)

Markets

Auto (Neutral): Govt to launch electric motorcycle use scheme, Tengku Zafrul. The Electric Motorcycle Use Scheme, which offers a RM2,400 rebate to qualified buyers for the purchase of electric motorcycles, will be launched Dec 8, said Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz. (StarBiz)

Vizione: Secures RM490m contract to design, develop apartments in Sabah. Vizione Holdings has secured a RM490m contract as a turnkey contractor to build three blocks of apartments in the Kota Kinabalu district in Sabah. The contract, slated to be completed within 36 months, is expected to contribute positively to the future earnings of the company. (The Edge)

Chin Hin Group: Seeking to raise up to RM500m via perpetual MTN. Chin Hin Group has filed its establishment of a perpetual medium-term note (MTN), in a bid to raise up to RM500m, with the SC. The proceeds raised from the issuance of the perpetual MTN shall be utilised for capital expenditures to finance acquisitions, refinance existing financing or borrowings or future financing, working capital, other general corporate purposes and defraying fees, as well as costs and expenses related to this programme. (The Edge)

Jentayu: Plans another placement to raise up to RM63m. Less than five months after completing a private placement in July, Jentayu Sustainables is planning another placement to raise up to RM63.0 for the clean energy solutions provider to fund its predevelopment expenditures, new projects and working capital. (The Edge)

PUB: Acquires carpet maker for RM2.5m. Paragon Union Bhd (PUB) has entered into an asset purchase agreement with Carpet Art Manufacturing Sdn Bhd (CAMSB) for the proposed acquisition of the latter’s assets for RM2.5m. PUB said CAMSB is principally involved in the manufacturing and supply of high quality handtufted and machined tufted carpets, trading in carpet and related products and general trading. (StarBiz)

Capital A: Unit ADE achieves milestone with 100th C-Check completion. Asia Digital Engineering (ADE), a wholly-owned subsidiary of Capital A Bhd specialising in aircraft maintenance, repair, and overhaul (MRO), has successfully completed its 100th C-Check in just two and a half years, setting a record since its establishment in Sept 2020. (The Edge)

LFE Corp: Exec chairman raises shareholding. LFE Corp has seen a change in the ownership of an 8.87% stake in the construction and mechanical and electrical (M&E) services group held through Resolute Accomplishment SB. LFE executive chairman Chuah Chong Ewe acquired the stake, comprising 98.37m shares. (The Edge)

IPO: Critical Holdings oversubscribed by 88.08 times. The public portion of ACE Market-bound Critical Holdings’ IPO has been oversubscribed by 88.08 times. A total of 13,038 applications for 1.66bn shares were received from the Malaysian public, representing an overall oversubscription rate of 88.08 times. (StarBiz)

MARKET UPDATE

The FBM KLCI might open higher today after the Nasdaq Composite Index led the major indices, gaining 1.4 % to finish at 14,339.99. The Dow Jones Industrial Average added 0.2 % at 36,117.57, while the broad-based S&P 500 gained 0.8 % to 4,585.59. Artificial intelligence players Google and AMD were among the winners Thursday as US stocks bounced in a move attributed to bargain hunting after losses earlier in the week. The big gains for both companies came one day after they unveiled new AI offerings, adding positive momentum to chip companies and other tech stocks. Google parent Alphabet won 5.3 % as it demonstrated its new Gemini artificial intelligence model that the company said could outperform human experts in several areas of problem-solving, math, physics, history, law, medicine and ethics. European shares paused on Thursday after recent strong gains, while data in Germany added to worries that the industrial sector will continue to drag on euro zone's largest economy. The panEuropean STOXX 600 slipped 0.3% after touching a more than four-month high on Wednesday, while Germany's DAX dipped 0.2% after scaling a fresh all-time high in the prior session.

Back home, Bursa Malaysia saw choppy trading throughout the day on Thursday, with China data further adding pressure to the global equities market, on top of earlier worries over oil market slump. At the closing bell, the FBM KLCI gave up 2.97 points to 1,442.85 from Wednesday's close of 1,445.82. In the region, Japan’s Nikkei 225 closed down 1.76% at 32,858.31 while South Korea’s Kospi ended 0.13% lower at 2,492.07. Elsewhere, Hong Kong’s Hang Seng index was down 0.71% at 16,345.89 while the Shanghai Composite index fell 0.09% at 2,966.21 points.

Source: PublicInvest Research - 8 Dec 2023