Economy

US: Pending home sales slump to lowest level in over twenty years. Pending home sales in the US slumped to their lowest level in over twenty years in the month of Oct, the National Association of Realtors revealed in a report. NAR said its pending home sales index tumbled by 1.5% to 71.4 in Oct after jumping by 1.0% to a revised 72.5 in Sept. Economists had expected pending home sales to plunge by 2.0% compared to the 1.1% surge originally reported for the previous month. With the decrease, the pending home sales index fell to its lowest level since the index was originated in 2001. (RTT)

EU: Inflation tumble pits ECB against markets. Eurozone inflation tumbled more than expected for a third straight month in Nov, challenging the ECB’s narrative that price growth is stubborn and fuelling bets on early spring rate cuts in defiance of the bank's explicit guidance. Inflation has dropped quickly towards the ECB's 2% target from levels above 10% just a year ago but policymakers have cautioned against excessive optimism. They warn that the "last mile" of disinflation could be more difficult and take twice as long as getting back under 3%. (RTT)

EU: German jobless rises unexpectedly amid economic downturn. Germany's unemployment rate rose unexpectedly in Nov as the economic downturn damped job creation, official data revealed. The jobless rate rose to 5.9% in Nov, while it was forecast to remain unchanged at 5.8%. The rate was the highest in two and a half years. The number of people out of work increased by 22,000 after rising 31,000 in the previous month. Unemployment was forecast to climb 23,000. The economic downturn continues to leave its mark on the German labor market, the Federal Employment Agency Chief Andrea Nahles said. Employment is only growing slightly and the demand for labor is still declining, Nahles added. (RTT)

EU: French economy unexpectedly shrinks while inflation eases. France’s economy unexpectedly shrank in the third quarter, while Nov inflation sank more than anticipated — prompting investors to step up bets that the ECB will cut interest rates in the spring. While output had remained relatively strong as Germany suffered the brunt of a manufacturing slowdown, French statistics agency Insee revised the 0.1% expansion it initially reported for the three months through September to a 0.1% fall. (Bloomberg)

UK: BOE staff argue global interest rates will sink to lows again. Global interest rates will likely sink back to the lows seen before the pandemic in the long run, according to a new BOE study that wades into the fierce debate among economists about the future of borrowing costs. Staff analysts at the UK central bank argued that sluggish productivity gains and longer life spans will drive the long-run neutral interest rate — known as R* by economists — back down to the historically low levels that prevailed in the years leading up to the pandemic. The conclusions feed a growing debate over whether the ultra-low rates environment that emerged after the financial crisis will return. (Bloomberg)

China: Home sales spiral despite backstop plan for developers. The decline in China’s home sales accelerated in Nov, as buyers remained wary of the turmoil in the country’s real estate sector. The value of new home sales among the 100 biggest real estate companies fell 29.6% from a year earlier to CNY390.2bn (RM254.4bn), according to preliminary data from China Real Estate Information Corp. That follows a 27.5% decline in Oct. Sales were down 4.1% from a month earlier. (Bloomberg)

Singapore: Real income falls 2.3% this year as inflation lingers. Singaporean paychecks failed to keep pace with inflation that stayed elevated this year, with a Ministry of Manpower report showing real incomes in 2023 fell from a year ago. Real median wage, which takes inflation into account, fell 2.3% this year while real income for lower earners fell 3%, according to the ministry’s Labor Force in Singapore advance release. The data comes a week after the city-state reported that core inflation — which hit a 14-year high at the start of the year, quickened for the first time in nine months in Oct. (Bloomberg)

Markets

Gamuda (Outperform, TP: RM5.00): Gamuda Land to develop RM150m hotel in Gamuda Cove, to be managed by Dusit International. Gamuda’s property division Gamuda Land had allocated an investment of up to RM150m to develop a mid-scale lifestyle hotel at Gamuda Cove slated to be opened in the first quarter of 2026 (1Q 2026). (StarBiz)

Sime Darby (Neutral: TP: RM2.41): Seeks to expand car retail business. Sime Darby, Malaysia’s industrial and automotive conglomerate, is looking to set up a luxury car retail business in India and expand in Indonesia to tap into the growth potential of both economies, its top executive told Reuters. Group CEO Datuk Jeffri said Sime Darby also plans to expand in Indonesia, SouthEast Asia’s largest economy, following a joint venture with a local firm to sell BMW cars in Jakarta and Medan. (StarBiz)

Serba Dinamik: Misses deadline to submit quarterly report for the fourth time. Serba Dinamik Holdings was unable to release its financial report for its 1QFY24 by Nov 30 as required under listing requirements. The troubled oil and gas company did not clarify why it was unable to meet the deadline, but said in a filing with Bursa Malaysia that it expects to submit the quarterly report by Dec 7. (The Edge)

Maxim: Declines to reveal value of sewerage plant job in Cheras, citing confidentiality clause. Maxim Global was queried by Bursa Malaysia on the scant details regarding its “privatisation agreement” to decommission and upgrade several sewerage treatment plants in Cheras. One of Bursa's six queries revolved around the value of the land that would be transferred to the developer upon completion of the decommissioning and upgrading works, including provision of amenities and utilities done by Maxim's subsidiary. (The Edge)

Capital A: Anticipates further revenue upswing after 3Q losses narrow sharply. Capital A reported a significantly smaller net loss of RM178.82m for its 3QFY23, down from RM901.31m in the corresponding quarter last year, as revenue more than doubled on continued improvement in its aviation business. The group is now expecting a further revenue upswing that exceeds the prepandemic levels as it approaches the final quarter of the year. (The Edge)

Pharmaniaga: Slips on 3Q net loss, opaque outlook. The group reported a net loss of RM49.3m for the 3QFY23, more than double the RM13.9m quarterly net loss it logged a year earlier. The wider net loss was due to a one-off provision of RM65.2m stock obsolescence from its expiring pandemic-related consumables inventory, such as personal protective equipment and needles. (The Edge)

Senheng: Warns of weaker annual earnings as 3Q profit tumbles to lowest since listing. Senheng New Retail’s net profit tumbled 64.56% to RM5.2m in the 3QFY23 from RM14.6m in the corresponding quarter a year ago, as revenue dropped while it recorded higher operating and administrative expenses amid its expansion plan. (The Edge)

Padini: 1Q net profit falls 45% to RM26.7m, declares dividend of 2.5 sen. Padini Holdings' net profit for the first 1QFY24 fell 45.4% to RM26.7m, from RM48.9m a year earlier, due to a drop in its gross profit margin from 39% to 36%. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after the Dow Jones Industrial Average closed at its highest level since Jan 2022 as investors crossed the finish line of a banner month for stocks and viewed cooling inflation data as a harbinger of easing Federal Reserve monetary policy. Among data released Thursday, the Commerce Department's closely watched Personal Consumption Expenditures (PCE) report showed inflation is cooling as expected, along with consumer spending. The data reinforced expectations that the Fed has completed its rate hiking cycle. While New York Fed President John Williams reiterated the central bank's determination to remain data dependent, he would not rule out the possibility of further rate hikes if inflation fails to continue to moderate. The Dow Jones Industrial Average rose 520.47 points, or 1.47%, to 35,950.89, the S&P 500 gained 17.22 points, or 0.38%, at 4,567.8 and Nasdaq Composite dropped 32.27 points, or 0.23%, to 14,226.22. In Europe, the pan-European STOXX 600 index closed up 0.55%, confirming its biggest monthly percentage gain since January as weak economic data from Europe bolstered bets for rate cuts.

Back home, the FBM KLCI recouped after a weak opening and finished in positive territory on Thursday thanks to late buying on Dialog Group Bhd, CelcomDigi Bhd and Nestle (M) Bhd stocks. At the closing, the FBM KLCI gained 0.46% or 6.67 points to an intraday high of 1,452.74 from Wednesday’s close of 1,446.07. In the region, shares in Hong Kong rose as the Hang Seng gained 0.3%. The Nikkei 225 and Shanghai Composite in China also gained 0.5% and 0.3% respectively.

Source: PublicInvest Research - 1 Dec 2023