Economy

UK: Oct consumer sentiment falls to six-month low, GfK says. UK consumer confidence fell to a six-month low in Oct as Britons become more pessimistic about their finances and spending, GfK NOP Ltd said. An index of sentiment declined to -30 from -28 in Sep. (Bloomberg)

EU: Jobs machine falters for first time since 2009 in Germany. German unemployment rose twice as much as consensus forecast in Oct and the jobless rate increased for the first time in three years as the sovereign debt crisis damped economic growth and investment. The number of people out of work climbed a seasonally adjusted 20,000 from Sep to 2.9m. The adjusted jobless rate rose from a two-decade low of 6.8% in Aug to a revised 6.9% in Sep and held there in Oct. (Bloomberg)

EU: Spain’s economy contracted for fifth quarter as austerity spurs inflation. Spain’s economy contracted for a fifth quarter, undermining efforts to plug the budget deficit that’s pushing the nation closer to a bailout, while austerity measures kept inflation at a 17-month high. GDP declined 0.3% in the three months through Sep and 1.6% from a year earlier compared with an estimated of a 0.4% contraction. Consumer prices rose 3.5% from a year earlier. (Bloomberg)

Japan: BoJ boosts stimulus for sagging economy, markets unimpressed. The Bank of Japan (BoJ) boosted its monetary stimulus for the second month in a row in response to intense political pressure for action and mounting evidence that the world's third-largest economy was on the cusp of recession. In a well-flagged move, the central bank topped up its asset buying and lending program, its main monetary easing tool, by JPY11trn (USD138bn) to JPY91trn broadly in line with what markets had factored in. (Reuters)

Taiwan: Growth may recover as exports improve on China demand. Taiwan’s economy probably resumed growth in the third quarter as measures by Chinese policy makers to stabilize expansion on the mainland take effect, boosting the island’s exports and reducing pressure to ease monetary policy. GDP in the three months through Sep probably grew 1.5%, according to consensus. The economy contracted 0.1% in the previous three months. Data signaling China’s economy is recovering has brightened the outlook for the region’s exports and boosted currencies including the Taiwanese dollar. (Bloomberg)

South Korea: Output rises for first time in four months on carmakers. South Korea’s industrial production rose for the first time in four months as stronger sales of cars and electronics helped offset the effects of a cooling global economy. Output rose 0.8% last month from Aug when it dropped a revised 0.9%. (Bloomberg)

Malaysia: BNM may review interest rates. Bank Negara Malaysia (BNM) is assessing on whether there is a need to review the country’s interest rates and the assessment will be made at the next monetary policy committee meeting scheduled on 8 Nov. Malaysia currently has an interest rate or overnight policy rate of 3%. (Business Times)

Markets

Globetronics: Q3 net profit hits RM14.2m. Globetronics Technology’s net profit rose 84% to RM14.2m for the 3Q12 ended Sep 30 from RM7.7m y-o-y. Revenue also increased to RM78.3m from RM70.7m. Globetronics attributed the better performance to higher volume loadings from most of its customers, better product mix and economy of scale, coupled with gain on disposal of land and factory building in Jitra, Kedah. (Business Times)

IGB: Consortium to build RM8.4bn Taipei Twin Towers. A consortium led by IGB Corp together with Japanese and Taiwanese partners have won the bid to build the Taipei Twin Towers at a cost of between TWD70bn and TWD80bn (RM7.3bn and RM8.4bn), various Taiwan media reported. The two buildings are scheduled for completion in 2017 and 2018 respectively. When completed, the towers will serve as the main hub for the Taoyuan airport mass rapid transit line to Taipei and five other railway and mass rapid transit lines in the capital. (StarBiz)

Samudra: Corporate exercise gets Bursa nod. Kejuruteraan Samudra Timur (Samudra) has received Bursa Malaysia Securities' approval for its corporate exercise involving the issuance of 71.5m warrants and the listing of 71.5m new shares. The company also received the approval to list 71.5m new shares of 30 sen each to be issued when the warrants are exercised. (StarBiz)

Aeon: Denies talks to buy Carrefour Malaysia. Aeon Co (M) has denied that it is involved in any discussion with any party with regard to the proposed acquisition of Carrefour's Malaysian operations. The company was referring to a report by a local daily yesterday, which had stated that Aeon Co may announce the proposed acquisition this week. Speculation has been rife that Japan's Aeon Group is set to take over Carrefour's Malaysian operations and that Aeon Co may be a conduit for it. The company will make the appropriate announcement to Bursa Securities in a timely manner should there be any further development on this matter. (SunBiz)

TH Plantations: Q3 net profit dips 42%. TH Plantations’ (THP) 3Q12 net profit fell 42% to RM19.2m from RM33.1m y-o-y, due to lower revenue. Revenue dropped 29% to RM82.3m from RM116.0m y-o-y mainly due to lower sales volume of crude palm oil (CPO) and palm kernel as well as lower average commodity selling prices realised. The group's performance in Q3 dragged net profit for the nine months period, which fell 40% to RM52.2m from RM87.1m a year ago, due to higher production costs. There were no dividends paid or proposed during the period. (SunBiz)

REITs: Malaysia ranked fourth in Asia Pacific. Asia Pacific Real Estate Association (Aprea) CEO Peter Mitchell said the industry in Malaysia has grown substantially in recent years, thanks in part to the rolling back of restrictive legislation and introduction of favourable tax laws, and also the adoption of best practice principles by many of the REITs. Malaysia now ranks fourth with 16 REITs and a market capitalisation of USD8bn (RM25bn). On the challenges and how a country like Malaysia can further promote the industry, Mitchell said, “One challenge for Malaysia is liquidity and the size of some of the REITs." (Bernama)

MARKET UPDATE

The US stock markets remain closed as Hurricane Sandy battered and ravaged the East Coast on Tuesday. It has been estimated that Sandy would cause about USD20bn in property damage and another USD10bn to USD30bn in lost business as one of the nation’s most populated and productive regions grinds to a halt. Its full impact on the budding recovery of the US economy remains to be seen, but the staggering scale of destruction is a poignant reminder of global weather uncertainties and their increasing influence on the world economy.

European markets were undeterred by the storm, however, as major markets rebounded on the back of positive news from oil major BP and several major banks, which reported better than expected earnings, while banking giant UBS announced plans to axe 10,000 jobs worldwide to save costs. UK's FTSE 100 closed up 0.95% to 5,849.9, while in Germany’s DAX gained 1.13% to 7,284.4, and France's CAC 40 jumped 1.48% to 3,459.4. Spain's IBEX 35 climbed 1.36% to 7,833.9 despite data showing that the Spanish economy contracted by 0.3% in the third quarter. As US markets reopen today, it may influence the near-term direction of the European markets.

Key Asian markets showed mixed performances, with the Hang Seng Index down 0.38%, while the Shanghai Composite Index, Straits Times Index and FBM KLCI recorded gains of 0.17%, 0.3% and 0.13% respectively.

IGB Corp made the headlines today by winning a lucrative TWD80bn (RM8bn) project to build Taiwan’s Twin Towers in Taipei through an IGB-led consortium with Japanese and Taiwan’s companies. This comes at a welcoming time as its successful Mid Valley City development is coming to a close. It also marks IGB’s continued diversification beyond Malaysian shores after its acquisition of a 1.1ha site in Jakarta in June.

Source: PublicInvest Research - 31 Oct 2012