Economy

US: Wall Street divided over just how aggressive Fed cutting will be. There’s a stark divide among Wall Street banks over how aggressive they think the Fed will be in cutting interest rates next year. On one side are UBS Group AG and Morgan Stanley, each of which anticipate deep interest-rate cuts in 2024 as inflation cools and the economy stalls. On the other is Goldman Sachs Group Inc., where analysts expect fewer reductions and a later start. The diverging opinions come after Treasuries were whipsawed in recent weeks, with traders seeking to make sense of the latest economic data even as looming debt sales fuelled supply concerns. (Bloomberg)

US: NY Fed finds softer inflation expectations in Oct. The expected path for inflation softened on balance in Oct amid rising expectations for future gasoline price increases and a largely stable outlook for employment and personal finances, the Federal Reserve Bank of New York reported. Respondents to the bank’s latest Survey of Consumer Expectations project inflation a year from now will stand at 3.6% from Sept’s 3.7%, with inflation three years from now seen at 3%, the same level as the prior month. (Reuters)

US: Consumer sentiment drops to six-month low in Nov. Preliminary data released by the University of Michigan on Friday

EU: Ireland construction downturn deepens in Oct. Ireland's construction activity deteriorated for the fourth straight month in Oct, and at a faster pace amid a general slowdown in market conditions, survey results from S&P Global showed. The headline BNP Paribas Real Estate Ireland Construction Purchasing Managers' Index dropped to 47.3 in Oct from 48.6 in Sept. Any score below 50 indicates contraction, while a reading above 50 suggests expansion in the sector. (RTT)

EU: Portugal inflation unrevised at 2-year low. Portugal's consumer price inflation eased as initially estimated in Oct, the latest data from Statistics Portugal showed. CPI moderated to 2.1% in Oct from 3.6% in the previous month. That was in line with the flash data published on Oct 31. Further, this was the weakest inflation rate since Oct 2021, when prices had risen only 1.83%. The core inflation rate, which excludes energy and unprocessed food products, also moderated to 3.5% in Oct from 4.1% in Sept. (RTT)

UK: Asking prices of UK homes fall by most in five years. Asking prices for homes in Britain have fallen at their fastest pace in five years for the time of year, property website Rightmove said, underscoring how rising borrowing costs have caused a housing market slowdown. Average asking prices for homes fell by 1.7% between Oct. 8 and Nov. 4, a bigger fall than is typical for the preChristmas period. (Reuters)

China: Slips into deflation, producer prices continue to fall. China returned to deflation in Oct on falling food prices and producer prices continued to decline amid the renewed economic weakness, official data showed Thursday. Consumer prices dropped 0.2% in Oct from a year ago after staying flat in Sept, figures from the National Bureau of Statistics revealed. The rate matched expectations. Inflation had turned negative in July and stayed near zero in subsequent months, while Beijing aims to keep inflation around 3% in the whole year of 2023. (RTT)

China: Credit growth still weak in Oct with low loan demand. China’s credit growth remained steady in Oct, with a big jump in government bond sales to finance stimulus compensating for weak business and household borrowing as well as a large contraction in shadow financing. The flow of aggregate financing, a broad measure of credit, was CNY1.85trn (USD254bn), the People’s Bank of China said. That missed economists’ expectations of a CNY1.95trn increase. (Bloomberg)

Japan: Machine tool orders plunge 20.6%. Japan's machine tool orders declined for the tenth straight month in Oct and at a faster pace due to weak domestic and foreign demand, preliminary data from the Japan Machine Tool Builders Association. Machine tool orders fell 20.6% YoY in Oct, which was worse than the 11.2% decrease in the previous month. (RTT)

Markets

Genting (Outperform, TP:RM5.40): Genting Singapore reported a 59% YoY increase in 3QFY23 net profit to SGD216.3m (SGX).

Comment: Genting Bhd’s (GENT) subsidiary, Genting Singapore (GENS), posted a 59% YoY increase in 3QFY23 net profit, driven by stronger gross gaming revenue as well as higher contribution from non-gaming segment. The results beat both market and our expectations with adjusted EBITDA exceeded the pre-Covid levels in 2019. This was mainly due to increased foreign visitor arrivals and higher customer spend during the summer holiday season. For now, we maintain our earnings forecasts for GENT pending 3QFY23 results release on 23rd November. In FY19, GENS contributed 47% of the group’s adjusted EBITDA. For FY23F, we are forecasting GENT to derive c.40% of its adjusted EBITDA from GENS (while another 50% from GENM). We reiterate our Outperform rating on GENT.

LBS Bina (Outperform, TP: RM0.67): Secures 28.67MW solar power capacity from Energy Commission under CGPP. The consortium is one of the successful solar power producers that was selected out of a total of 46 applications in the second batch of applications. The total quota of 800MW under CGPP has now been fully subscribed. (The Edge)

Gas Malaysia: To pioneer green gas efforts in the state. The companies had a formal document exchange ceremony during the Asia Pacific Climate Week 2023. Prior to the document exchange ceremony, both GMVP and Johor Plantations formalised their commitment by signing a gas purchase agreement. Under the agreement, GMVP will procure biomethane from Johor Plantations with an annual contract quantity of 250,000 MMBtu, to be injected into Gas Malaysia's natural gas distribution system (NGDS). (BTimes)

Boustead Plantation: LTAT launches unconditional takeover offer. The Armed Forces Fund Board (LTAT) has launched an unconditional takeover offer for all the remaining shares not held by it in Boustead Plantations (BPlant) for RM1.55 each. This is after LTAT signed the unconditional share sale agreement with Boustead Holdings to acquire 739.2m BPlant shares representing a 33 per cent stake. LTAT does not intend to maintain the listing status of BPlant.. (BTimes)

Advancecon: Wins RM22.8m job from Sime Darby Property. Advancecon Holdings has secured a RM22.8m contract from Sime Darby Property (Pagoh) SB. The contract is for earthworks and auxiliary works at the latter's industrial park project in Bandar Universiti Pagoh, Johor. The contract is for 18 months, commencing from the site possession in November. (BTimes)

GUH Holdings: Partners with Shenzhen Xixin to establish lithium battery assembly plant in Malaysia. GUH Capital will hold a 75% stake in the JV firm, while the remaining 25% will be held by Shenzhen Xixin. GUH Holdings stated that the plant will be fully funded by GUH Capital, with Shenzhen Xixin providing technology and assistance in planning the entire plant layout, production line, and detailed specifications. Shenzhen Xixin will also help set up a power battery pack production line. (The Edge)

MARKET UPDATE

US markets brushed off the downgrade of the country’s outlook by Moody’s from stable to negative, preferring instead to focus on key inflation data due out later today as the next catalyst for the market. The ratings agency reaffirmed the country’s AAA credit rating nonetheless. This comes 3 months after Fitch Ratings cut its US long-term foreign currency issuer default rating to AA+ from AAA, also citing expected fiscal deterioration, an increasing debt burden and political standoffs on fiscal issues. On an unrelated note, Swiss banking giant UBS expects the US Federal Reserve to cut its benchmark rate by 275bps next year. On the day, the S&P 500 slipped 0.1% as the Nasdaq Composite fell 0.2%. The Dow Jones Industrial Average inched 0.2% higher however. European markets started off the we,mek on stronger footing, with investors looking ahead to high-level talks between US and China in the next few days. Travel and leisure stocks added 1.7% to lead gains on the continent, with media stocks rare losers on the day with a 0.2% drop. Italy’s FTSE MIB ended 1.5% higher to lead gains amongst major markets. UK’s FTSE 100 was 0.9% higher while Germany’s DAX and France’s CAC 40 rose 0.7% and 0.6%. Asian markets were mixed as investors looked to more economic data ahead of talks between Joe Biden and Xi Jinping, their first in-person meeting in about a year. Major North Asian benchmarks were higher on the day, with the Hang Seng Index and Shanghai Composite Index up by 1.35 and 0.3% as the Nikkei 225 inched 0.1% higher. Korea’s KOSPI Index slipped 0.2%. Malaysia and Singapore’s markets were closed for a holiday.

Source: PublicInvest Research - 14 Nov 2023