HEADLINES

Economy

US: Low weekly jobless claims assuage fears of labor market deterioration. The number of Americans filing new applications for jobless benefits declined last week as layoffs remained low, helping to allay fears that the labor market was deteriorating. The weekly jobless claims report from the Labor Department, the most timely data on the economy's health, also showed unemployment rolls shrinking to levels last seen in mid-June. It reduces the urgency for the Federal Reserve to deliver a 50bps interest rate cut this month. Initial claims for state unemployment benefits dropped by 5,000 to a seasonally adjusted 227,000 for the week ended 31 Aug., the lowest level since early July. Economists polled by Reuters had forecast 230,000 claims for the latest week. (Reuters)

US: Yellen says US labor market healthy despite slower hiring pace. US Treasury Secretary Janet Yellen said that the US still has a "good healthy labor market" even though the pace of job creation has slowed in recent months. Yellen told reporters in North Carolina that July's unemployment rate of 4.3%, a three-year high, is still very low by historical standards. The Labor Department's closely watched jobs data for August is due on Friday, with the unemployment rate forecast to ease slightly to 4.2%. (Reuters)

EU: German industrial orders unexpectedly rise in July. German industrial orders unexpectedly rose in July, but the increase was flattered by some large orders, making economists doubtful the sluggish sector was on the cusp of a sustained upturn. Orders rose in July by 2.9% on the previous month on a seasonally and calendar adjusted basis, wrongfooting analysts who had forecast a fall of 1.5%. In addition, the statistics office revised up data for June to show a 4.6% increase on the month from a previous figure of 3.9%. Large scale orders posted a 86.5% increase on the month. When these orders - such as for trains, ships and aircrafts were excluded, new orders in July were down 0.4% on the previous month. (Reuters)

UK: Firms expect selling price pressure to cool but not wages, BoE survey shows. British companies expect to raise selling prices by the smallest amount in nearly three years but wage growth shows no sign of cooling, a survey showed on Thursday in mixed news for BoE officials gauging inflation pressures. The BoE's Decision Maker Panel, which is closely watched by members of the Monetary Policy Committee, showed businesses during the three months to August expected selling prices to increase by 3.6% over the next year, the lowest reading since September 2021 and down from 3.7% previously. But forecasts for wage growth - a crucial metric for the BoE as it monitors price pressure - remained at 4.1% during the three months to August, unchanged from the July survey. (Reuters)

China: Central bank sees room to cut reserve buffers to boost growth. China still has room to lower the amount of cash banks must hold as reserves while it faces some constraints in cutting interest rates, a central bank official said on Thursday, as it seeks to bolster the country's flagging economic recovery. The People's Bank of China, which has steadily reduced interest rates and injected liquidity this year, is under pressure to do more to ensure the economy grows around 5% this year, in line with the government's target. The average reserve requirement ratio, or RRR, for financial institutions is around 7% at present, "so there is some room," Zou Lan, head of the bank's monetary policy department, said at a media briefing. (Reuters)

India: GDP to expand 7.2% in FY25 despite lower Q1 growth, says cenbank chief. Despite the moderation seen in India's first quarter GDP, the economy is likely to achieve full year growth of 7.2% as projected, the Reserve Bank of India Governor Shaktikanta Das said. India's economic growth slowed to 6.7% YoY in the April-June quarter, below the polled estimate of 6.9% and the RBI's projection of 7.1%, as a decline in government spending during national elections weighed. Das said agriculture should perform better during the rest of the year due to a good monsoon and aid a further pick-up in rural demand, while strong investment activity would also see a further boost from government capex picking up pace. "It is evident that India is on a sustainable growth path. (Reuters)

South Korea: Q2 GDP -0.2% QoQ, unchanged from advanced estimate. South Korea's economy shrank 0.2% in the second quarter, revised central bank data showed, unchanged from its advance estimate issued in July. It was the sharpest quarterly contraction since the fourth quarter of 2022 when the economy shrank by 0.5%. On an annual basis, gross domestic product was 2.3% higher in the April-June quarter, weaker than the 3.3% growth logged in the first quarter. (Reuters)

Markets

Inta Bina: Secures RM96.6m construction job. Inta Bina Group has secured another construction contract from Sime Darby Property worth RM96.6m to undertake main building and construction works for a 37-storey serviced apartment project in Putra Heights. Its wholly-owned subsidiary, Inta Bina SB, was awarded the contract by Sime Darby Property (Bukit Raja) SB. The project involves the construction of 246 business serviced apartments and 62 affordable business units, five levels of parking and other resident facilities. (The Edge)

Systech: In Pinetop data centre tie-up. Systech has teamed up with Pinetop Technology Venture SB to establish and operate data centres for an initial term of two years. Systech said the collaboration will see its wholly owned subsidiary SysAIU SB handling equipment sourcing and infrastructure for the data centres. This includes acquiring graphics processing units (GPUs), servers, storage systems, networking gear, cooling systems, and power supplies. SysAIU will also oversee the installation, configuration, maintenance, and upgrading of these systems to ensure they adhere to industry standards. (StarBiz)

Binastra: Bags RM283m construction job. Binastra Corp has received a RM283.3m contract for the main building works of a major residential development in Taman Desa, Kuala Lumpur from Kaisar Maxim SB. This project entails the construction of a total of 624 residential units across three 31-storey blocks, four podium levels and five levels dedicated for parking, amongst others. Construction is scheduled to commence on Sept 17, 2024, with an expected completion timeline of 32 months, Binastra stated. The company said this latest contract it its tenth contract for the financial year ending Jan 31, 2025 and brings its financial year-to-date contract wins to RM1.9bn, far exceeding last financial year’s total contracts won of RM612.2m. (StarBiz)

PPB: Optimistic on 2H outlook amid stronger ringgit. PPB Group is optimistic about its 2H2024 outlook, saying that the strengthening of the ringgit against the US dollar could lead to higher consumer spending and reduced raw materials cost. “I think we are optimistic in all the segments, and it should be better than the first half, and [thus,] we are quite confident to deliver satisfactory results,” PPB group managing director Lim Soon Huat said. Lim said the stronger ringgit is favourable to the conglomerate’s procurement of raw materials, which are mostly imported. (The Edge)

Sentoria: Announces voluntary resignation of its external auditors. Sentoria Group said Messrs Grant Thornton Malaysia PLT (GTM) has voluntarily resigned as the company’s external auditor. However, it did not specify the reason for its departure. Sentoria said it is now in the process of appointing new external auditors. Recently, the builder and developer has been in the spotlight due to a dispute with its former chief executive officer Datuk Loh Yuen Tuck. (The Edge)

Kerjaya Prospek Property: CEO resigns to pursue own interests. Kerjaya Prospek Property’s CEO Joanne Lee Sor Phaik has resigned from her role after only slightly more than a year helming the property developer. Kerjaya Prospek Property said Lee, 54, had stepped down "to pursue personal interest". According to the group's latest annual report, Lee was appointed to the position on July 13, 2023. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower as most US stocks fell Thursday following a mixed round of data on the economy, keeping them on track for their worst week since April. The S&P 500 slipped 0.3% for a third straight drop, and the Dow Jones Industrial Average lost 219 points, or 0.5%. The Nasdaq composite held up better than the rest of the market and added 0.3% thanks to gains for Tesla and a handful of other Big Tech stocks. Treasury yields also slipped a bit in the bond market following the mixed economic reports. One suggested US companies slowed their hiring last month, falling well short of economists’ forecasts for an acceleration. Another report, though, said fewer US workers filed for unemployment benefits last week than expected. That’s an indication layoffs remain low. A report released later in the morning offered more optimism, saying growth for businesses in the finance, health care and other services industries was stronger last month than economists expected. In stock markets elsewhere, indices were mixed across Asia and Europe. Japan’s Nikkei 225 fell 1.1% after strong data on growth in wages there raised expectations for another hike to interest rates. Back home, the FBM KLCI slipped 0.32% to 1,664.82 at the close.

Source: PublicInvest Research - 6 Sept 2024