Economy

US: Consumer comfort eases after seven straight weekly gains. Americans’ confidence eased from a 16-year high last week, though relatively high optimism should continue to support spending, according to Bloomberg Consumer Comfort Index figures released Thursday. Consumer comfort measure fell to 52.6 from 53.3, first decline in eight weeks. Gauge of views on the economy declined to 53.9 from 54.4. Index of personal finances improved to 59.9, highest since early June, from 59.3. Index of buying climate declined to 44.1, a five-week low, from 46.1. (Bloomberg)

US: Hurricane Harvey boosts jobless claims to more than two-year high. The number of Americans filing for unemployment benefits jumped to a more than two-year high last week amid a surge in applications in hurricane-ravaged Texas, but the underlying trend remained consistent with a strong labor market. The surge in claims reported by the Labor Department on Thursday offered an early glimpse of Hurricane Harvey’s impact on the economy. Initial claims for state unemployment benefits surged 62,000 to a seasonally adjusted 298,000 for the week ended Sept 2, the highest level since April 2015, the Labor Department said. The weekly increase was the largest since Nov 2012. (Bloomberg)

EU: ECB keeps stimulus unchanged as investors await Draghi insight. The European Central Bank opted to keep its stimulus settings unchanged for now as officials started cautiously sketching out the future of their quantitative-easing program. Policy makers maintained asset purchases at EUR60bn (USD72bn) a month until Dec, and reiterated their pledge to increase the size or duration if the economy worsens. They left interest rates unchanged and repeated that they expect borrowing costs to stay at present levels until well past the end of net asset buying. (Bloomberg)

UK: Growth forecasts lowered as business sees no pound boost. The weaker pound is failing to boost UK growth, according to the British Chambers of Commerce. The business group downgraded its medium term outlook for the economy in a report on Friday, citing a weaker than-expected contribution from trade and subdued consumer spending. Inflation will outpace wage growth until 2019, the BCC forecast, continuing the squeeze on shoppers’ pockets that weighed on performance in the 1H2017. (Bloomberg)

China: Foreign reserves rise a seventh month amid yuan strength. China’s foreign-exchange reserves posted a seventh straight gain in August as the yuan rose in its best monthly performance in at least a decade. Stockpile climbed USD11bn to USD3.09trn, the People’s Bank of China said Thursday. The figure compares with a USD3.1trn estimate in a Bloomberg survey. Steady economic fundamentals have helped restore confidence in the yuan, and capital controls remain tight as new rules on overseas investments were introduced last month to categorize the nation’s plan to crack down on "irrational" outbound acquisitions. (Bloomberg)

Markets

I-Bhd (Outperform, RM0.91): Central i-City Shopping Centre to open end-2018. Central i-City Shopping Centre, a JV development by I-Berhad (I-Bhd) and Bangkok-based property developer and investor Central Pattana Public Co Ltd (CPN), is scheduled to open at the end of next year. The construction of the six-storey shopping mall at i-City in Shah Alam, which has a lettable area of 940,000 sq ft with approximately 350 shops, started early last year and has now reached the fourth floor of the first section, or approximately 30% of the overall construction plan. The project has a GDV of RM850m. (The Edge)

TM (Neutral, TP: RM6.00): To implement Iskandar Malaysia smart city services. Telekom Malaysia (TM) and Iskandar Regional Development Authority (IRDA) had recently signed a MoU under which TM will implement smart city services across Johor's Iskandar Malaysia. TM and IRDA said in a joint statement that the MoU represents a strategic collaboration to ensure effective delivery of sustainable smart city services. "The agreement will enable TM to implement suitable smart services such as safety and security, smart mobility, city-wide services, energy and facilities management, as well as citizen portal in line with the Iskandar Malaysia Smart City Blueprint," TM and IRDA said. (The Edge)

Mitrajaya: Bags two construction jobs worth RM377.45m. Mitrajaya Holdings’ wholly-owned unit has won two construction projects in KL and Selangor for a combined contract sum of RM377.45m. Under the first contract, Mitrajaya said Pembinaan Mitrajaya SB will undertake the construction of a building and a car park for a higher learning institution in KL for RM333.55m. The two year contract will commence on Sept 15. In a separate filing, Mitrajaya said Pembinaan Mitrajaya has been awarded a contract by Gema Padu SB to develop affordable housing under the Rumah Selangorku scheme for RM43.91m. This contract is for a duration of 36 months ending Aug 2020. (The Edge)

Amanahraya REIT: Buys Intermark’s Vista Tower for RM455m. Amanahraya REIT (ARREIT) is acquiring Vista Tower, a 63-storey office building, from The Intermark SB for RM455m in cash. The office tower with 2 concourse levels and 3 basement levels has a land area of 228,948 sq ft, according the REIT’s management company, AmanahRaya-Kenedix REIT Manager SB. The building’s net lettable area is 551,875 sq ft, and the occupancy rate was 74.4% as of July 31 and could fall to 66.3% due to the non-renewal of one of the tenancy agreements upon expiry on Nov 30, it said. (The Edge)

Gabungan AQRS: Gets demand letter from Lien Hoe over RM50.46m payment. Gabungan AQRS’ wholly-owned property development unit, AQRS The Building Co SB (AQRS-TBC), has been served with a letter of demand for the full outstanding payment of RM50.46m to Lien Hoe Corp, after the company allegedly defaulted on its payment schedule. Lien Hoe said the letter of demand, served by its wholly-owned unit Pro-Meridian SB, requires AQRS-TBC to pay RM50m and accrued interest of RM456,954. (The Edge)

Bintai Kinden: Eyes data centre M&E projects. Bintai Kinden Corp is looking at participating in data centres, amid the flourishing e commerce trend in South East Asia. Group MD cum CEO Ong Choon Lui said the group is “embracing digitalisation” in efforts to stay competitive, and aims to tender for M&E service provision projects for data centres in the region, especially in Singapore. (The Edge)

Market Update

The FBM KLCI might open flat today after a listless trading day on Wall Street overnight. The euro grabbed the headlines as it climbed back towards a recent 33-month high against the dollar above USD1.20 following a meeting of the European Central Bank’s governing council. While Mario Draghi, ECB President, made several references to the single currency’s strength he also indicated that plans to begin scaling back its quantitative easing programme would be unveiled next month. The single currency touched USD1.2059 against the dollar, just a whisker away from last week’s intraday peak of USD1.2069. It subsequently edged back to USD1.2018, but was still up 0.9% on the day. The euro was also up 0.4% against sterling at GBP0.9171. The dollar fell 0.7% against the yen to JPY108.51 and 0.5% versus the Swiss franc at CHF0.9511, in part reflecting persistent concerns over geopolitical tensions in the Korean peninsular. Gold jumped USD15 to a one-year high of USD1,348 an ounce. Those moves came as US Treasuries returned to favour following a sell-off on Wednesday. As well as geopolitical worries, there were also concerns in the market about the potential economic effects of Hurricane Irma, due to reach Florida over the weekend. Data released on Thursday showed that initial jobless claims rose to 298,000, far more than expected, reflecting the impact of Tropical Storm Harvey. On Wall Street, the S&P 500 finished the session down 0.44 point, or less than 0.1%, at 2,465.10, the Dow Jones Industrial Average lost 22.86 points, or 0.1%, to close at 21,784.78 and the tech-heavy Nasdaq Composite Index eked out a slight gain, up 4.55 points, or 0.1%, at 6,397.37. Across the Atlantic, Germany’s DAX 30 index climbed 0.7% to 12,296.63, France’s CAC 40 index gained 0.3% to 5,114.62 and the UK’s FTSE 100 rose 0.6% to 7,396.98.

Back home, the FBM KLCI index gained 10.50 points or 0.59% to 1,782.98 points. Trading volume increased to 2.63bn worth RM2.41bn. Market breadth was positive with 533 gainers as compared to 317 losers. The regional markets ended mixed with the Nikkei 225 gained 0.20%, while the Shanghai Composite led the Hang Seng lower. They fell 0.59% and 0.33% respectively.

Source: PublicInvest Research - 8 Sept 2017