HEADLINES

Economy

US: Job growth misses estimates in Aug but unemployment rate dips. Employment in the US rose by less than expected in the month of Aug, according to a closely watched report released by the Labor Department. The Labor Department said non-farm payroll employment climbed by 142,000 jobs in Aug compared to economist estimates for an increase of 160,000 jobs. The report also said the increases in employment in June in July were downwardly revised to 118,000 jobs and 89,000 jobs, respectively, reflecting a net downward revision of 86,000 jobs. (RTT)

US: Fed must decide if quarter-point cut will be enough for workers. The Federal Reserve is set to begin unwinding its tightening campaign this month as inflation cools and the labor market slows. The big question policymakers now face is whether a small interest-rate cut will be enough to keep the economy in expansion mode. The monthly jobs report showed the pace of hiring in the US moderated over the last three months to the slowest since the onset of the pandemic in 2020. Even so, the numbers left investors skeptical as to whether Fed officials would opt for an outsize rate cut at their Sept 17-18 meeting. (Bloomberg)

EU: Swiss consumers more pessimistic in Aug. Confidence among Swiss consumers remained more negative in Aug, survey results from the State Secretariat for Economic Affairs, or SECO. The consumer confidence index dropped to -35.0 from -32.0 in July. The expected score was -33.0. Moreover, the consumer sentiment index remained well below the long-term average. Among components, the index measuring expected economic activity over the next year worsened to -22 from -16, and the past financial situation fell to -37.0 from -31.6. On a positive note, the index was 6.0 points higher than the reading of -40.6 in the same month last year. (RTT)

EU: Czech industrial output decline softens; trade deficit narrows. The Czech Republic's industrial production decreased for the fifth straight month, though at a slower pace than in the previous two months, data from the Czech Statistical Office revealed. Separate data showed that the foreign trade surplus decreased in July from a year ago as exports rose faster than imports. Industrial production declined a working-day-adjusted 1.9% year-on-year in July, slower than the 3.3% drop in June. Among sectors, mining and quarrying output contracted the most by 11.1% from last year, and manufacturing output dropped by 2.2%. Meanwhile, the positive contribution came from the utility sector, where production advanced by 2.7%. On a monthly basis, industrial output shrank by 0.8% in July. (RTT)

EU: Eurozone GDP growth slows in Q2. Euro area economic growth rate for the second quarter was revised down as the positive contributions from government consumption and net trade were partially offset by the slump in investment. Gross domestic product grew 0.2% from the first quarter, which was revised down from 0.3% estimated initially, data from Eurostat showed on Friday. The initial estimate suggested that the economic growth steadied at 0.3% in the second quarter. The annual GDP growth for the second quarter was confirmed at 0.6%. (RTT)

Japan: Q2 GDP growth revised down slightly on consumption, capex. Japan's economy expanded in April-June at a slightly slower pace than initially reported, largely due to downward revisions in corporate and personal spending, government data showed on Monday. Japan's GDP expanded by an annualised 2.9% in the second quarter from the previous three months, the Cabinet Office's revised data showed, versus economists' median forecast for a 3.2% growth and a 3.1% rise in the preliminary estimate. The revised figure translates into a quarter-on-quarter expansion of 0.7% in price-adjusted terms, compared with a 0.8% rise issued last month. Analysts expect the Japanese economy will continue to improve gradually supported by positive trends in wages and personal and corporate spending, while risks remain from external factors such as a potential slowdown in the US and Chinese economy. (Reuters)

Markets

Hartalega (Outperform, TP: RM3.16): Allocates RM300m capex for automation, capacity upgrades. Hartalega Holdings plans to spend RM300m on capital expenditure (capex) over the next 12 months to increase production capacity and automation, said CEO Kuan Mun Leong. Kuan said Hartalega is focusing on smart manufacturing. "Out of this RM300m, about RM170m will be invested in new capacity for production," he said at a press conference after the company’s AGM. He said the remainder will go towards upgrading the company’s automation for its production lines, with a focus on more advanced automation technology. (Bernama)

Gadang: Subsidiaries face RM9.77m claim for RTS Link work. Gadang Holdings said its subsidiaries have been hit with a civil suit by their subcontractor, claiming for an amount of RM9.77m in alleged outstanding payments for works done related to the Johor Bahru–Singapore Rapid Transit System (RTS) Link project. Gadang's wholly owned subsidiary Gadang Engineering (M) SB (GESB), together with Usaha Pesona SB, a wholly owned subsubsidiary of GESB, were served with the writ of summon and statement of claim by its subcontractor JF Foundation (M) SB over bored piling works carried out in relation to the RTS Link project. (The Edge)

MYEG: Exclusive tie-up with China agency to operate Asean national single window platform. MY E.G. Services (MYEG) has signed a supplementary heads of agreement with China's East Logistics Link Co Ltd to develop and operate a national single window platform for Asean countries. East Logistics is a whollyowned agency of China's General Administration of Customs. The exclusive collaboration would pave the way for both parties to cooperate in securing and implementing a national single window to facilitate cross-border trade in the region. (Bernama)

MISC: Acquires full ownership of FPSO Kikeh. MISC has announced the acquisition of SBM Holdings Inc SA's 49% interest in FPSO Kikeh, as well as the divestment of its 49% stake in FPSO Espirito Santo. The group said it has inked share sale and purchase agreements to purchase SBM's 49% equity interest in Malaysian Deepwater Floating Terminal (Kikeh) Ltd (MDFT) and Malaysian Deepwater Production Contractors SB each. (The Star)

OSK: Acquires manufacturing facilities in JB for RM85m. OSK Holdings’ indirect 97.47%-owned subsidiary, Olympic Cable Company SB, has proposed to acquire property and assets in Johor Bahru from Universal Cable (M) for RM85m. The group said it will be purchasing two manufacturing plants in Tebrau and Plentong, together with its land and machinery, from Universal Cable, which is currently undergoing liquidation. (The Star)

JHM: Acquires leasehold land with buildings in Sungai Petani for RM21m. JHM Consolidation is buying a leasehold land with two factories in Sungai Petani, Kedah for RM20.9m. It said it has signed an agreement with Megaready Industries SB (MISB) for the purchase of the property. JHM said the acquisition is a critical investment for the company’s expansion. JHM said the land, spanning over 12,140.6 sq m or three acres, has a lease duration of 60 years expiring in 2050. MISB is planning to apply to Perbadanan Kemajuan Negeri Kedah to extend the lease to 2089, it said. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower as another rout hit Wall Street last Friday, with formerly high-flying technology stocks again taking the brunt, after a highly anticipated update on the US job market came in weak enough to add to worries about the economy. The S&P 500 dropped 1.7% to close out its worst week since March 2023. Broadcom, Nvidia and other tech companies drove the market lower amid ongoing concerns that their prices soared too high in the boom around artificial intelligence, and they dragged the Nasdaq composite down by a market-leading 2.6%. The Dow Jones Industrial Average dropped 410 points, or 1%, after erasing a morning gain of 250 points. Sharp swings also hit the bond market, where Treasury yields tumbled, recovered and then fell again after the jobs report showed US employers hired fewer workers in August than economists expected. It was billed as the most important jobs report of the year, and it showed a second straight month where hiring came in below forecasts. It also followed recent reports showing weakness in manufacturing and some other areas in the economy. In stock markets elsewhere, indices fell across much of Europe and Asia. Trading was halted in Hong Kong because of a typhoon. Back home, shares on Bursa Malaysia retreated at the close last Friday, mirroring the cautious mood in global markets ahead of key US jobs data. At the closing bell, the FBM KLCI fell 11.70 points, or 0.7%, to 1,653.12 from Thursday’s close of 1,664.82.

Source: PublicInvest Research - 9 Sept 2024