Economy

• Global: IMF chief says 'much more decisive' action needed to deal with debt problems. The head of the IMF on Sunday called for significant steps to address the increasingly unsustainable debt burdens of some countries, urging creditors and debtors to start restructuring processes sooner rather than later. IMF MD Kristalina Georgieva said a six-month extension of the Group of 20 major economies’ freeze in official bilateral payments would help lowincome countries hammered by the Covid-19 pandemic, but more urgent action was needed. She urged icreditors and countries facing debt distress to start restructuring debts without delay. (Reuters)
• US: Industrial production unexpectedly drops 0.6% in Sept. Industrial production in the US unexpectedly decreased in the month of Sept, according to a report released by the Federal Reserve on Friday. The Fed said industrial production fell by 0.6 in Sept after rising by 0.4% in Aug. The drop surprised economists, who had expected production to increase by 0.5%. Production declined for the first time in five months but has still recovered more than half of its Feb to April decline, although it remains 7.1% below its pre-pandemic Feb level. (RTT)
• US: Consumer sentiment rises amid improvement in expectations. With an improvement in consumer expectations more than offsetting concerns about current conditions, the University of Michigan released a report on Friday showing a much bigger than expected increase in US consumer sentiment in the month of Oct. The preliminary report said the consumer sentiment index rose to 81.2 in Oct from the final Sept reading of 80.4. Economists had expected the index to inch up to 80.5. The bigger than expected increase by the headline index came as the index of consumer expectations climbed to 78.8 in Oct from 75.6 in Sept, reaching its highest level since March. (RTT)
• US: Business inventories rise slightly less than expected in Aug. Business inventories in the US increased by slightly less than expected in the month of Aug, according to a report released by the Commerce Department of Friday. The Commerce Department said business inventories rose by 0.3% in Aug after inching up by 0.1% in July. Economists had expected inventories to climb by 0.4%. The increase in business inventories came as wholesale and retail inventories both grew by 0.4%, while manufacturing inventories came in unchanged line. The report also said business sales climbed by 0.6% in Aug following a 3.4% spike in the previous month. (RTT)
• US: Retail sales blow expectations in Sept, dark clouds gathering. US retail sales accelerated in Sept, rounding out a strong quarter of economic activity, but the recovery from the Covid19 recession is at a crossroads as government money runs out and companies continue to layoff workers. Retail sales jumped 1.9% last month as consumers bought motor vehicles and clothing, dined out and splashed out on hobbies. That followed an unrevised 0.6% increase in Aug. Economists polled by Reuters had forecast retail sales would rise 0.7% in Sept. Some said Sept’s surge was likely exaggerated by difficulties stripping seasonal fluctuations from the data after the shock caused by Covid-19. Unadjusted retail sales fell 2.8% after dropping 1.0% in Aug. (Reuters)

• EU: Eurozone trade surplus increases on exports. The euro area trade surplus increased in Aug as the growth in exports exceeded the rise in imports, data from Eurostat revealed Friday. Exports grew 2% on a monthly basis and imports advanced 0.5%. However, exports and imports continued to stay below the pre-crisis level, Eurostat reported. Compared to Feb, the month before restrictions were imposed, both exports and imports were down by 11% and 10.7%, respectively. (RTT)
• EU: German econ forecasts solid as long as coronavirus contained - Altmaier. The German government is unlikely to make significant changes to its autumn economic forecasts, Economy Minister Peter Altmaier said on Sunday, while cautioning that a failure to contain the coronavirus pandemic could spell trouble. Berlin currently expects gross domestic product to shrink in 2020 by 5.8% before rebounding by 4.4% next year. But, Altmaier said, “that of course assumes we will bring the pandemic under control, that we break the rapid increase in infections, and we succeed in returning to the situation we had from May to August.” (Reuters)
• China: Passes export-control law following US moves. China passed a law restricting exports of controlled items, allowing the government to act against countries that abuse export controls in a way that harm’s China’s interests, state media said. The new Chinese law, passed on Saturday by the National People’s Congress Standing Committee, the country’s top legislative body, will take effect on Dec 1, Xinhua said. Controlled items include military and nuclear products, as well as other goods, technologies and services and relevant data, according to National People’s Congress. (Reuters) § China: Cental bank head says economy to expand about 2% this year. China will see its economy expand by about 2% this year as it has put the coronavirus pandemic under control, the country’s central bank governor Yi Gang said on Sunday. “The Chinese economy remains resilient with great potential. Continued recovery is anticipated, which will benefit the global recovery,” he said. (Reuters)
• Japan: BOJ has no plan to change inflation target, forward guidance - Kuroda. BOJ Governor Haruhiko Kuroda said on Sunday there was no need to change the central bank’s inflation target or forward guidance. By committing to increase the monetary base until inflation stably overshoots its 2% target, the BOJ already has a framework “quite similar” to the US Federal Reserve’s average inflation target, Kuroda said. “We have no intention to change our inflation targeting policy and forward guidance,” Kuroda said. Kuroda maintained his fairly upbeat view on Japan’s economy, saying it was likely to follow an improving trend though risks were skewed to the downside due to uncertainty regarding the fallout from Covid-19. (Reuters)

Markets

• Top Glove (Trading Buy, TP: RM9.70): Says labour issues in US DOL report resolved, seeks quick lifting of import ban. Top Glove said it has resolved issues highlighted by the US Department of Labour (DOL) in a report that listed rubber gloves among products manufactured through child or forced labour. It had taken to improve work conditions, which it has submitted to the US Customs and Border Protection to secure an “expeditious resolution and revocation” of the ban on importing its products into the country. (The Edge)
• AWC: Bags facility management contract in Putrajaya. AWC has bagged a contract to provide management maintenance and operational services at a commercial office building in Putrajaya. The contract is valid for three years, starting on Nov 1 with an option to extend for another two years. The value of the threeyear contract is RM6.51m while the extended contract is worth RM4.31m, it added. (The Edge)
• Brem Holdings: Buys land in Serendah for RM68m. Brem Holdings is buying six parcels of leasehold industrial land in Serendah, Selangor for RM68.26m to replenish its land bank. The vacant plots measure 528,439 sqm in total and are located near the Sungai Buaya interchange and toll plaza on the NorthSouth Expressway. The purchase price translates to RM129.17 per sqm. The lands have a remaining lease term of 75 years. The acquisition will be financed through internally-generated funds or bank borrowing, and is expected to be completed by end-2021. (The Edge)
• Mah Sing: To spend up to RM150m in capex for Phase 1 of rubber glove business. Mah Sing Group will be spending up to RM150m in capex for the first phase of its proposed rubber glove venture, which will be funded via internal funds, bank borrowings and sukuk issuance. The capex entails the purchase of 12 new glove production lines and other plant and machinery such as boilers, chillers, compressors and wastewater treatment plant as well as the refurbishment work of a warehouse in Klang. (The Edge)
• Destini: Calls off acquisition of Indonesian port services provider. Destini has terminated the share sale agreement it entered into with PT Berkah Sadaya Adikarya to acquire 99.9% of its holdings in port services provider PT Muara Badak Perkasa. It said after taking into consideration the current market conditions and the situation of the Covid-19 pandemic in both Malaysia and Indonesia, it has mutually agreed with Berkah Sadaya to terminate the agreement. (The Sun Daily)
• IPO: Mr DIY 3.91 times oversubscribed. Mr DIY Group’s IPO has been oversubscribed by 3.91x, based on the total demand under the institutional offering and the applications received under the retail offering. For the institutional offering, the oversubscription rate was 4.71x, while the retail offering, applications for a total of 169.94m shares with a value of RM271.9m were received from the public and eligible persons. (The Sun Daily)

MARKET UPDATE

• The FBM KLCI might open lower today after US stocks gave up early gains to close in mixed territory Friday, even after upbeat news on retail sales and a positive development on a potential vaccine for the coronavirus. The Dow Jones Industrial Average gained 112.11 points, or 0.4%, to 28,606.31. The S&P 500 crept up 0.47 point, remaining nearly flat, to 3,483.81, closing with its third-straight week of gains. The Nasdaq Composite declined 42.32 points, or 0.4%, to 11,671.56, but still managed to close the week 0.8% higher. The U.S. trading session got off to a strong start after drugmaker Pfizer (PFE) said it could file for emergency use authorization from the Food and Drug Administration by late November for the Covid-19 vaccine it is making with BioNTech. Meanwhile, the Stoxx Europe 600 rose 1.3%, thanks to strong results from the auto and luxury goods sectors. The French CAC 40 surged 2% as LVMH Moët Hennessy reported strong growth at its Louis Vuitton and Dior brands, partly offsetting steep declines elsewhere. Shares of LVMH climbed 7.3% in Paris.
  
  Back home, the FBM KLCI dropped 0.67% or 10.11 points at 1,503.84 points, reflecting the lacklustre trading on blue chips. The benchmark index was dragged by Petronas Dagangan Bhd, Axiata Group Bhd and IOI Corp Bhd. On the regional front, the Hong Kong Hang Seng finished 0.94% or 228.25 points higher at 24,386.79 points. Meanwhile, the Shanghai Composite was up 0.13% or 4.18 points at 3,336.36 points. Across the causeway, Singapore’s Straits Times Index was up by 0.32% or 8.03 points at 2,351.65 points while the Nikkei 225 dropped 0.41% or 96.90 points at 24,410.63 points.

Source: PublicInvest Research - 19 Oct 2020