Economy

EU: German economy shrinks 0.1% as estimated. Germany's economy contracted slightly, as initially estimated, in the third quarter with the household consumption that used to be the pillar of growth, acting as a drag. Confirming the initial figures, detailed data from the statistical office Destatis showed that GDP shrank 0.1% quarterly. Economic performance was virtually stagnant in the first two quarters of the year with flat growth in the first quarter and a 0.1% rise in the second quarter. Household spending dropped 0.3% after a 0.2% rebound in the preceding period. Meanwhile, government spending grew for the first time in more than a year, up 0.2%. Positive contributions came from gross fixed capital formation. Investment in machinery and equipment rose 1.1% and that in construction gained 0.4%. (RTT)

EU: German business sentiment improves in Nov. Business confidence in Germany improved for the third month in a row in Nov signaling that the largest euro area economy is stabilizing at a low level, survey results from the Munich-based ifo Institute showed. The business climate index rose to 87.3 in Nov from 86.9 in Oct. The reading was seen at 87.5. Companies assessed their current business situation as somewhat better and their expectations for the coming months turned less pessimistic. The current situation indicator rose to 89.4 from 89.2 in the previous month. This was slightly below economists' forecast of 89.5. At the same time, the expectations indicator improved to 85.2 from 84.8 a month ago. The score was expected to rise more markedly to 85.7. (RTT)

China: Seen holding key rate until 2024, economists say. China will likely wait until early next year to cut policy rates to support the economy, though other forms of easing before the end of 2023 via trims to shorter-term rates or reserve ratios are still in the cards. That’s according to the latest Bloomberg survey of economists, in which respondents said they see the rate on China’s one-year medium-term lending facility staying put at 2.5% by the end of the year, compared with the previous median estimate of a five basis point trim. Any reductions are instead likely to happen in the first quarter: 12 of 20 economists surveyed see the People’s Bank of China cutting the rate on its one-year policy loans then by five bps or more. “Monetary policy is playing second fiddle to fiscal policy in supporting the recovery,” wrote Duncan Wrigley and Kelvin Lam, China economists at Pantheon Macroeconomics Ltd, in a research note this week. (Bloomberg)

Japan: Inflation picks up as BOJ pivot bets grow. Japan's core consumer price growth picked up slightly in Oct, after easing the previous month, reinforcing investors' views that stubborn inflation may push the Bank of Japan (BOJ) to roll back monetary stimulus before long. The nationwide core consumer price index (CPI), which excludes volatile fresh food costs, rose 2.9% YoY in Oct, government data showed, against 3.0% expected by economists in a Reuters poll. Core inflation had slowed to 2.8% in Sept from 3.1% in Aug, the first time it was below 3% since Aug 2022. The rate of inflation has hovered above the central bank's 2% inflation target for 19 consecutive months, but the BOJ has insisted the cost pressures are largely driven by higher global commodity prices and the weaker yen, not a sign of sustainable price gains led by stronger domestic demand and wage growth. (Reuters)

Japan: Leading index falls less than estimated. Japan's leading index declined less than initially estimated in Sept, the latest data from the Cabinet Office showed. The leading index, which measures future economic activity, fell to 108.9 in Sept from 109.2 in the previous month. In the initial estimate, the score was 108.7. On the other hand, the coincident index that measures the current economic situation edged up to 114.7 from 114.6 a month ago. That was in line with the flash data. Data showed that the lagging index improved to a 3-month high of 106.2 from 105.8 in Aug. (RTT)

Singapore: Industrial output recovers strongly by 7.4%. Singapore's industrial production expanded for the first time in just over a year in Oct, data from the Economic Development Board revealed. Industrial production advanced 7.4% YoY in Oct, reversing a 1.1% fall in the prior month. Meanwhile, economists had expected a 2.1% decrease for the month. Further, this was the quickest expansion since May 2022, when production had risen 11.1%. Excluding bio-medical manufacturing, industrial production expanded 7.3% annually in Oct after a 1.3% gain in the previous month. On a monthly basis, industrial production grew 9.8% in Oct, slower than the 13.1% surge in Sept. (RTT)

Indonesia: Budget tips into deficit in Oct, on track for full year target. Indonesia's state budget tipped into IDR0.7trn (USD45.2m) deficit for the Jan-Oct period, having shown IDR67.7trn surplus in the first nine months, and was on course to meet its full year deficit target, the finance minister said. While the budget deficit for the first 10 months was equivalent to just 0.003% of GDP, the government expects the 2023 deficit to be below 2.3% of GDP, reducing it from 2.35% in 2022. Total revenues for the 10 months were IDR2,240.1trn (USD144.6bn), up 2.8% on annual basis, while total spending was IDR2,240.8trn rupiah, down 4.7%, Sri Mulyani Indrawati told. "So far, our state-budget performance is still on track; if there's deviation, it will be a positive one. This is a momentum that we will continue to maintain," she said. The government typically spends a lot more in the fourth quarter because authorities wait until auditors check bills for subsidies and projects. (Reuters)

Markets

Leform: Bags USD1.95m contract in Cambodia. Leform’s 85%- owned subsidiary, Leform Metal SB (LMSB) has secured a contract worth USD1.95m in Cambodia. LMSB accepted and executed a contract with Nim Meng Group Co Ltd for the supply of highway guardrail products for the national road No. 5 improvement project, Package 4 in Cambodia. The contract is expected to contribute positively to the revenue, earnings and net assets of Leform and its subsidiaries for the FYE Dec 31, 2024. (StarBiz)

Pharmaniaga: Denies ignoring letter of demand from MOH on faulty ventilators. Pharmaniaga has denied that the group ignored a letter of demand (LOD) issued by the Ministry of Health (MOH) regarding shortcomings in the procurement of faulty ventilators during the height of the Covid-19 pandemic in 2020. (The Edge)

Iris: Takes dispute with Home Ministry over terminated immigration system contract to arbitration. Iris Corp said it is taking its dispute with the Home Ministry over the cancellation of its contract for the National Integrated Immigration System (NIISe) to arbitration. The group wholly owned subsidiary Iris Information Technology Systems SB (IITS) filed a notice to refer the dispute to the Asian International Arbitration Centre (AIAC). (The Edge)

ECM Libra: Buys Tune Hotel in Liverpool to add to its hospitality assets. ECM Libra Group is adding to its hospitality assets by acquiring two leasehold properties in the city centre of Liverpool, UK, the Tune Hotel and a ground floor shop with basement for GBP4.5m or about RM26.48m. ECM Libra has inked a business purchase agreement with the vendors Castle Street Liverpool LLP and CSL Opco Ltd to acquire the two leasehold assets that are located on the popular Castle Street. (The Edge)

Pestech: Says subsidiary restrained from calling on RM14.25m bonds. Pestech International said an injunction has been issued against its indirect wholly-owned subsidiary CRSE SB to restrain the company from calling on two bonds worth RM14.25m. The bonds were issued in favour of CRSE pursuant to a sub-supply contract entered into in 2018 between Pembinaan Tajri SB and Universal Cable (M), a wholly-owned unit of Sarawak Cable. (The Edge)

Sersol: Announces auditor's resignation while its net loss swells as it writes off non-recoverable deposits, payments. Sersol which has just removed its chief executive officer earlier this month citing his prolonged absence from office without proper notice, announced that its external auditor has resigned and the group is now looking for its replacement. (The Edge)

Jentayu: Sells land for RM25m. Jentayu Sustainables (JSB) is disposing of a piece of land measuring 1,197 sq m in Kuala Lumpur to Armani Development SB for RM25m. JSB said the proposed disposal is in line with its focus on its core business. (StarBiz)

Samaiden: Initiates solar project at Tsun Jin High School. Samaiden Group has launched a solar project at Tsun Jin High School, which includes installing a solar photovoltaic (PV) system with a capacity of 637.65kWp. (StarBiz)

MARKET UPDATE

The FBM KLCI might open higher today after major Wall Street indices notched weekly gains on Friday, as global equities drifted toward their biggest one-month rally since November 2020 during a shortened, muted trading session following the U.S. Thanksgiving holiday. Data showed US business activity held steady in November, but employment in the private sector declined. The Dow Jones Industrial Average rose 117.12 points, or 0.33%, to 35,390.15, the S&P 500 gained 2.72 points, or 0.06%, at 4,559.34 and the Nasdaq Composite dropped 15.00 points, or 0.11%, to 14,250.86. Europe's benchmark STOXX 600 gained 0.4% on Friday to close higher for a second straight week, while investors assessed data from Germany for clues about the country's economic outlook. Germany's DAX closed up 0.2%.

Back home, the FBM KLCI closed slightly higher on Friday despite subdued trading, in line with the performance of regional markets. At the closing, the barometer index rose 0.63 of-a-point to 1,453.92 from Thursday’s closing of 1,453.29. In the region, Japan's Nikkei share index climbed, charging back toward a 33-year high hit on Monday. Data on Friday showed that Japan's core consumer inflation picked up slightly in October, although by less than expected. Mainland China's CSI 300 index dropped 0.7% to its lowest close in more than a month, reflecting investor concern about a property slump and sluggish economy.

Source: PublicInvest Research - 27 Nov 2023