HEADLINES

Economy

US: Construction spending inches slightly higher in Sept. US construction spending crept up by 0.1% to an annual rate of USD2.149trn in Sept after inching up by 0.1% to a revised rate of USD2.146trn in Aug. Economists had expected construction spending to come in unchanged compared to the 0.1% dip originally reported for the previous month. The uptick by construction spending came as spending on construction increased by 0.5% to an annual rate of USD495.2bn in Sept. Spending on educational construction rose by 0.3% to a rate of USD104.2bn, while spending on highway construction climbed by 0.5% to a rate of USD141.0bn. (RTT)

US: Labor market staggers after blow from hurricanes, strikes. US job growth almost stalled in Oct as strikes in the aerospace industry depressed manufacturing employment while hurricanes shortened the collection period for payrolls, making it hard to get a clear picture of the labor market ahead of next week's presidential election. The Labor Department's closely watched employment report was the last major economic data before Americans head to the polls to choose Democratic Vice President Kamala Harris or Republican former President Donald Trump as the country's next president. (Reuters)

US: Manufacturing index unexpectedly dips to lowest level in over a year. A report released by the Institute for Supply Management showed US manufacturing activity unexpectedly contracted at a modestly faster rate in the month of Oct. The ISM said its manufacturing PMI fell to 46.5 in Oct from 47.2 in Sept, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 47.6. (RTT)

EU: Turkish manufacturing activity remains in contraction. The manufacturing activity in Turkey continued to deteriorate in Oct, although rates of moderation in output and new orders, survey results from S&P Global showed. The headline Istanbul Chamber of Industry Turkey Manufacturing Purchasing Managers' Index rose to 45.8 in Oct from 44.3 in Sept. However, any reading below 50.0 indicates contraction in the sector. (RTT)

EU: Czech manufacturing downturn softens in Oct. The Czech Republic's manufacturing downturn eased in Oct due to softer falls in both output and new orders, survey data from S&P Global showed. The PMI for the manufacturing sector rose to 47.2 in Oct from 46.0 in Sept. However, any reading below 50 indicates contraction in the sector. Both output and new orders contracted at some of the softest rates for nearly two-and-a-half years amid tentative signs of reduced client hesitancy in some industries despite further subdued demand conditions. (RTT)

UK: Manufacturing contracts for first time since April. The UK factory activity contracted for the first time since April as manufacturers adopted a wait-and-see approach on investment and spending ahead of the budget announcement, final data from S&P Global showed. The final manufacturing PMI posted 49.9 in Oct, down from 51.5 in Sept. The flash reading was 50.3. The index fell below the neutral 50.0 mark for the first time since April. (RTT)

China's Oct factory activity returns to expansion, Caixin PMI shows. China's manufacturing activity swung back to growth in Oct as an expansion in new orders led to a pick-up in production growth, signaling an improvement in the sector at the start of the final quarter, a private-sector survey showed. The Caixin or S&P Global manufacturing PMI rose to 50.3 in Oct from 49.3 the previous month, beating analysts' forecasts in a Reuters poll of 49.7. (Reuters)

Hong Kong: Retail sales fall for seventh straight month on YoY basis but decline narrows. Retail sales dropped for a seventh straight month on a YoY basis in Sept, falling by 6.9% as a growing trend of Hongkongers heading to mainland China for shopping and entertainment continued to affect business although new stimulus measures may help to boost sentiment. Provisional figures released by the Census and Statistics Department showed sales of HKD29.6bn in Sept. In Aug, a 10% YoY fall was recorded. (South China Morning Post)

Markets

Bumi Armada (Outperform, TP:RM0.80): Enters EPCIM contract for flare gas recovery system in UK's Magnus platform. Bumi Armada Bhd's wholly-owned subsidiary Bumi Armada UK Limited has inked an engineering, procurement, construction, installation and modification agreement with EnQuest Heather Limited for the provision of a flare gas recovery system on the Magnus platform located in blocks 211/12a and 211/7a of the UK North Sea. It said the agreement is expected to be carried out over about four years with an estimated contract value of GBP50mil (RM282.68mil). (The Star)

Comment: The contract secured is not a surprise given Bumi Armada close relationship with EnQuest as asset operator of Armada Kraken FPSO. Assuming at 10% margin of the contract, Bumi Armada would be able to record average net profit of RM7m per annum or approximately at 1% of our forecast. We make no changes on our forecast as the potential positive impact is minimal. Maintain Outperform call and TP RM0.80.

MMAG Holdings: Aviation arm gets nod for aircraft leasing business in Labuan. MMAG Holdings announced that its aviation arm MMAG Aviation Consortium SB (MAC) has received regulatory approval to operate a leasing business in Labuan. MMAG said MAC has obtained a letter of approval from the Labuan Financial Services Authority to establish MMAG Skyfleet Ltd, a wholly owned entity based in Labuan dedicated to the leasing business. This approval will enable MMAG Skyfleet to engage in the leasing of aircraft and to manage the leasing of these assets within the aviation arm of the group. (The Edge)

Gas Malaysia: To supply biomethane to Japan's ISF. Gas Malaysia's subsidiary Gas Malaysia Energy and Services (GMES) and Intercontinental Specialty Fats (ISF) have signed an agreement for the supply of certified biomethane through the natural gas distribution system (NGDS). The biomethane supplied to ISF will be certified under the International Sustainability and Carbon Certification (ISCC) Plus standard. This globally recognised certification ensures that the biomethane supplied by GMES adheres to renewable and sustainability criteria. (New Straits Times)

RGT: Purchases Penang land for RM16.8m. RGT's wholly-owned subsidiary Rapid Growth Technology SB has agreed to acquire two parcels of land with a building in Bukit Minyak Industrial Park in Simpang Ampat, Seberang Perai, Penang, from Permai Gas Sdn Bhd for RM16.8m. The group said the first parcel of leasehold industrial land measures about 65,520 sqft and comes with a three-storey office building with a single-storey open-sided factory. (The Star)

Parkwood: Buys Rawang land for RM30.9m. Parkwood Holdings has bought five parcels of freehold land in Rawang, Selangor for RM30.9m. The company said that it plans to develop the land into a contemporary residential enclave featuring modern living with sustainability and community connection. "The acquisition is aligned with Parkwood's business growth strategy, which aims to develop modern master planned community that harmonises sustainable living with community-focused lifestyle, nature, and accessibility. "This strategic move will contribute positively to the growth of the group's property development business," the company said. (New Straits Times)

MARKET UPDATE

Stocks rallied to kick off November as Amazon led big technology stocks into the green and traders looked past a disappointing jobs report. The Dow Jones gained 0.7% while the S&P 500 advanced 0.4%. The Nasdaq Composite rose 0.8%. Amazon rallied 6.2% as strength in the cloud and advertising businesses propelled the e-commerce giant above Wall Street's earnings expectations. Intel jumped 7.8% after exceeding analysts' expectations. The two stocks lifted investor sentiment following some notable earnings disappointments this week. European markets closed higher, led by rebound in banks. German DAX rose 0.9% while the French CAC and UK FTSE gained 0.8%. Asia market were mostly lower, led by Japan's Nikkei following a sharp decline on Wall Street on Thursday. The Nikkei fell 2.6% while the Shanghai Composite retreated 0.2%.

Back home, the FBM KLCI gained 2.1 points to close at 1,603.98. The MCMC announced the appointment of U Mobile as the country's second 5G network operator, beating contenders like Maxis and CelcomDigi. As part of its commitment to the national agenda, U Mobile will reduce its foreign majority shareholding to 20% to ensure greater Malaysian control.

Source: PublicInvest Research - 4 Nov 2024