Economy

US: Consumer spending rebounds, but high inflation cooling demand. US consumer spending increased more than expected in Aug, but stubbornly high inflation is dampening demand, potentially limiting an anticipated rebound in economic growth this quarter. The report from the Commerce Department also showed underlying inflation pressures building up last month, providing cover for the Federal Reserve to remain on its aggressive monetary policy tightening path. (Reuters)

US: Fed united on inflation front as Brainard rejects early rate cuts. The Federal Reserve's No. 2 official added her full endorsement of the US central bank's higher-for-longer game plan for interest rates to curb inflation that new data shows is still running at more than three times policymakers' 2% target. In her first public remarks since the Fed's decision last week to raise its benchmark interest rate by three-quarters of a percentage point for a third straight time, Fed Vice Chair Lael Brainard said: "Monetary policy is focused on restoring price stability in a high-inflation environment." (Reuters)

EU: Eurozone inflation hits double-digit for first time on record. Eurozone inflation moved into double-digits for the first time on record in Sept as the single currency bloc struggles to meet energy needs amid an acute shortage, official data revealed. Inflation advanced to 10.0% in Sept from 9.1% in Aug, Eurostat reported. The rate exceeded economists' forecast of 9.7%. (RTT)

EU: Euro zone yields fall, German real rates in positive territory. Euro zone debt yields fell after a sharp bond selloff earlier this week but anxiety persisted about central banks' monetary tightening path and possible erratic moves in UK gilts. Yields fell even as euro zone inflation zoomed past forecasts to hit 10.0% in Sept, a new record high, as expected by analysts after German data showed consumer prices increased by 10.9% over the year. (Reuters)

UK: House price inflation softens unexpectedly in Sept. UK house price inflation eased unexpectedly in Sept, with a stronger slowdown expected in the coming months as high inflation squeezed consumer budgets, survey results from the Nationwide Building Society showed. The house price index climbed 9.5% YoY in Sept, slower than the 10.5% rise in Aug. (RTT)

UK: GDP expands in Q2. The UK economy expanded in the second quarter after a revision to the services output, but growth remained below the pre-pandemic level, data released by the Office for National Statistics showed. GDP grew 0.2% sequentially, which was revised up from a first estimate contraction of 0.1%. Nonetheless, the pace of growth was weaker than the 0.7% expansion posted in the first quarter. (RTT)

China: Other Manufacturing PMI Shows Contraction – Caixin. The manufacturing sector in China continued to contract in Sept, and at a faster pace, the latest survey from Caixin showed with a manufacturing PMI score of 48.1. That's down from 49.5 in Aug and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction. A key factor driving the headline index lower was a faster fall in new orders during Sept. (RTT)

China: Manufacturing PMI moves to expansion – NBS. The manufacturing sector in China swung to expansion in Sept, the latest survey from the National Bureau of Statistics showed with a manufacturing PMI score of 50.1. That exceeded the expectations for a score of 49.6 and is up from 49.4 in Aug. It also moves above the boom-or-bust line of 50 that separates expansion from contraction. (RTT)

Japan: Housing Starts Rise Unexpectedly; Consumer Confidence Weakens. Japan's housing starts increased unexpectedly in Aug after falling in the previous three months, while consumer confidence weakened in September, official data showed. Housing starts rose 4.6% YoY in Aug, reversing a 5.4% decrease in July, data from the Ministry of Land, Infrastructure, Transport and Tourism revealed. (RTT)

India: Central Bank Lifts Rates Again To Battle Inflation, Rupee Weakness. The Reserve Bank of India lifted its benchmark rate for the fourth straight session, in a bid to combat high inflation and the decline in the rupee to a record low as the emerging markets encounter spillover effects from the policy normalization in advanced economies. (RTT)

South Korea: Sept exports grow at slowest pace in almost two years. South Korea's exports grew at the slowest pace in nearly two years in Sept as softening global demand piles pressure on the trade-dependent economy. Overseas shipment grew 2.8% in Sept, missing the 2.9% tipped in a Reuters poll of analysts and the slowest expansion since Oct 2020. (Reuters)

Markets

TNB (Outperform, TP: RM12.42): Inks strategic collaboration with Prasarana for LRT Shah Alam Line's high-voltage electricity supply. TNB has entered into a strategic collaboration with Prasarana Malaysia to supply high-voltage electricity to three main switch stations along the LRT project of the LRT Shah Alam Line, formerly known as LRT3. The collaboration will start at the end of 2022 and the LRT Shah Alam Line is expected to be operational and open to the public by 2025. (The Edge)

Gamuda (Outperform, TP: RM4.30): Gamuda Land to launch five new overseas projects annually from 2023. Gamuda Land intends to add 5 new overseas projects per annum from its fiscal year 2023 in the UK, Australia, Singapore and Vietnam. Expanding internationally was consistent with the company's 5-year business plan to achieve RM8bn annual sales. (BTimes)

MISC: Wins more LNG carrier contracts from SeaRiver. MISC has secured long-term time charter contracts with SeaRiver Maritime LLC for 2 more liquefied natural gas (LNG) carriers. The agreement pushed the total number of contracts with SeaRiver to 4 LNG carriers. MISC had also signed an agreement with a reputable shipbuilder for the construction of the LNG carriers in South Korea. These 174,000cbm LNG carriers will be chartered by SeaRiver 10 years. (BTimes)

Duopharma: Execute agreement with Government for insulin worth RM375.17m via direct negotiation. Duopharma will supply and deliver the products to the Health Ministry while Biocon SB, the manufacturer, will pack and label the products under the agreement. Biocon's human insulin formulation will be supplied to all MOH hospitals, district health offices and health clinics. The 3- year agreement is from April 29, 2022 to April 28, 2025. (The Edge)

Sarawak Cable: Triggers PN17 criteria as auditor issues disclaimer of opinion on FY22 financials. Ernst and Young PLT had not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements. EY was awaiting the group's directors to finalise a proposed regulation plan after financial institutions had suspended the group’s credit facilities. (The Edge)

Barakah Offshore: Files fresh lawsuit against Petronas, former and current executives. Barakah Offshore Petroleum is suing Petroliam Nasional (Petronas) for suspending its wholly owned unit’s licence to bid for new projects from the national oil company in 2019. Barakah is seeking a mandatory injunction for the suspension of licence to be lifted, damages for misfeasance in public office, and damages for unlawful interference in trade or business. (The Edge)

Mudajaya: Bags RM57m job to construct vehicle yard in Sarawak. Mudajaya Group has secured a contract from JKR Sarawak to undertake the design and construction of a vehicle yard and associated facilities at Senari Port in Sarawak for RM56.93m. The project is targeted for completion by Oct 2024, with a construction period of 24 months. (The Edge)

Market Update

The FBM KLCI might open lower today after US stocks have notched their longest streak of quarterly losses since the market collapse of 2008, weighed down by central banks’ determination to tame inflation through higher interest rates. The blue-chip S&P 500 index dropped 1.5% on Friday, bringing the loss over the quarter between June to September to 5.3%. The S&P has now declined for three quarters in a row, the most since the prolonged bear market that accompanied the global financial crisis. The tech-heavy Nasdaq Composite also fell 1.5% on Friday, reaching the index’s worst closing level since July 2020 to end the quarter down 4.1%. The sell-off in US assets last week persisted after the Bank of England intervened to calm turbulence in the UK government debt market. The year has been rough for equities, as central banks including the US Federal Reserve have signalled they will stay the course on raising interest rates, reducing support for economic growth, in an effort to contain inflation. London’s FTSE 100 added 0.2% on Friday, while Europe’s regional Stoxx 600 rose 1.3%.

Back home, Bursa Malaysia ended the last trading day of the third quarter of the year on a slight dip, after roller-coaster trading all day long. At the closing bell the benchmark FBM KLCI slipped 2.87 points or 0.21% to settle at 1,394.63, from Thursday’s close of 1,397.50. In the regional equity markets, Japan’s Topix index dropped 1.8% on Friday. China’s CSI 300 index of Shanghai- and Shenzhen-listed shares shed 0.6%, while Hong Kong’s Hang Seng added 0.3%

Source: PublicInvest Research - 3 Oct 2022