HEADLINES

Economy

US: Business inventories rise 0.4% in July, slightly more than expected. Business inventories in the US increased by slightly more than expected in the month of July, according to a report released by the Commerce Department. The Commerce Department said business inventories climbed by 0.4% in July rising by 0.3% in June. Economists had expected business inventories to increase by another 0.3%. The slightly bigger than expected increase by business inventories came as retail inventories advanced by 0.8% in July after jumping by 0.9% in June. (RTT)

US: Economy on solid ground as retail sales surprise on the upside. US retail sales unexpectedly rose in Aug as a decline in receipts at auto dealerships was more than offset by strength in online purchases, suggesting that the economy remained on solid footing through much of the third quarter. The report from the Commerce Department also showed retail sales were a bit stronger than initially thought in July. (Reuters)

EU: German investor sentiment plunges further in Sept. German investor confidence declined sharply again in Sept as hopes of swift improvement in economic situation fade, survey results from the think tank ZEW showed. The ZEW Indicator of Economic Sentiment fell to 3.6 from 19.2 in Aug. The score was the lowest since Oct 2023 and also remained well below forecast of 17.2. The think tank said the optimism in economic expectations that has been evident since Nov 2023 has almost completely dwindled. (RTT)

UK: BOE needs to ease stigma of repo facility. The Bank of England needs to shift the perception that its liquidity facilities for banks are primarily crisis-management tools, according to Debbie Cunningham, chief investment officer for global liquidity markets at Federated Hermes. Cunningham, who says she meets BOE staff regularly, said UK policymakers should reframe their existing tools or introduce new facilities to ensure commercial lenders have easy access to liquidity whenever they want, without any stigma. (Bloomberg)

Japan: BOJ faces task of flagging rate hike path while standing pat. Bank of Japan Governor Kazuo Ueda faces the delicate task this week of making sure investors is firmly aware of interest rate hikes to come without ruffling markets even as he stands pat on policy. All 53 economists surveyed by Bloomberg said Ueda’s board will leave the benchmark rate at 0.25% when its two-day meeting concludes. Almost 70% of them forecast a rate hike by Dec, making the BOJ’s messaging crucial, particularly after it drew criticism for a lack of communication leading up to the July 31 rate increase and the market mayhem that followed. (Bloomberg)

India: Wholesale price inflation eases to 1.31%, lowest in 4 months. India's wholesale price inflation softened more-thanexpected in Aug to the lowest level in four months, provisional data from the Ministry of Commerce and Industry revealed. The wholesale price index, or WPI, rose 1.31% YoY in Aug, slower than the 2.04% increase in July. Economists had expected inflation to ease to 1.80%. Prices for primary articles grew at a slower pace of 2.42% in Aug versus a 3.08% gain in the prior month. Similarly, the yearly price growth in the food index moderated to 3.26% from 3.55%. Costs for manufactured products climbed 1.22% after a 1.58% increase in the preceding month. Meanwhile, costs for fuel and power were down 0.67%. On a monthly basis, wholesale prices dropped 0.45% from July, when they increased by 0.78%. Data released last week showed that India's consumer price inflation rose marginally to 3.65% in Aug from 3.60% in July. (RTT)

Indonesia: Trade surplus shrinks in Aug. Indonesia's foreign trade surplus decreased in Aug from a year ago as imports grew faster than exports, figures from Statistics Indonesia showed. The trade surplus dropped to USD2.90bn in Aug from USD3.12bn in the same month last year. In July, the surplus was USD0.5bn. Exports climbed 7.13% YoY in Aug versus an expected rise of 3.83%. Data showed that imports grew by 9.46% from last year, faster than the 8.15% expected by economists. On a monthly basis, exports showed growth of 5.97%, while imports fell by 4.93%. Of the ten commodities with the largest non-oil and gas export values in Aug 2024, most commodities experienced an increase, the agency said. (RTT)

Singapore: Q2 jobless rate confirmed at 2.0%. Singapore's unemployment rate decreased slightly as initially estimated in the second quarter, the latest data from the Ministry of Manpower showed. The seasonally adjusted jobless rate dropped to 2.0% in the second quarter from the stable rate of 2.1% in the March quarter. The labor market expanded faster in the second quarter than in the first quarter as the economy continued to expand. Employment grew by 11,300 compared with 4,700 in the March quarter. "Looking forward, we expect labor market momentum to be sustained, with wages and employment continuing to grow as the economy picks up," the ministry said. (RTT)

Markets

Genting Malaysia (Outperform, TP: RM3.00): Units issue additional USD100m senior notes. Two of Genting Malaysia’s subsidiaries, video lottery facility operator Genting New York LLC and its unit Genny Capital Inc, have priced an additional USD100m (RM427m) of 7.25% senior unsecured notes, due 2029. This came after the two indirect wholly-owned units priced an offering of US$525 million of 7.25% senior unsecured notes, also due 2029. "These additional notes form part of the same series as the initial USD525m aggregate principal amount of notes that were priced on Sept 10, 2024 (initial notes) and the additional notes will carry the same terms as the initial notes.” Net proceeds from the additional corporate notes will be used to repay existing debts. (The Edge)

Samaiden: In JV to expand RE presence in Indonesia. Samaiden Group is set to expand its presence in Indonesia’s renewable energy (RE) market through a joint venture (JV) with PT MCS Bina Energi (MCS). The partnership, via its wholly owned subsidiary Samaiden SG Pte Ltd, will form a JV company with an authorised capital of IDR10bn (RM2.8m). Samaiden will hold a 70% stake in the new entity, while MCS will own the remaining 30%. “The capital injection into the JV will be carried out progressively based on cash flow requirements,” Samaiden noted. (StarBiz)

Supermax: To begin glove production in US by Jan 2025. Supermax Corp’s first US manufacturing facility in Texas will begin commercial production by Jan 2025. Its US-based unit Maxter Healthcare Inc will commence testing and commissioning of its first batch of production lines in Dec 2024. Phase one operation has a total production capacity of 4.8bn pieces of gloves per annum, and it expects to achieve half capacity by next year. The remaining capacity expansion is expected to be completed in the fourth quarter of 2025. (The Edge)

Resintech: Forms JV for industrial plastics business in Sarawak. Resintech is forming a joint venture (JV) with a unit of a Sarawak state agency to jointly trade industrial plastic products in the state. The JV will boost Resintech’s trading capabilities and open doors to new opportunities in Sarawak’s rapidly growing industrial sector, providing a steady revenue stream from the Sarawak market. The JV will initially focus on trading industrial plastics products, with the possibility of expanding into manufacturing based on future market demands. SEDC Energy SB, a unit of Sarawak Economic Development Corp, has agreed to subscribe to 40,000 new shares or 40% in the JV, while Resintech will have the remaining 60%. (The Edge)

Perak Corp: Gets sixth extension, has until Feb 2025 to submit regularisation plan. Perak Corp has been given another sixmonth extension by Bursa Malaysia to submit its regularisation plan, with the deadline now being postponed to Feb 9, 2025. This was in response to the company’s application for an extension of time in Aug 9, which it submitted as its previous Aug 10 submission deadline approached. (The Edge)

MyEG: Partners with freight forwarders to promote its blockchain-based ZTrade as single window for cross-border trades. MyEG Services has teamed up with the Federation of Malaysian Freight Forwarders (FMFF) to promote ZTrade — a blockchain-based trade document system — as Malaysia's National Single Window (NSW) for cross-border trade facilitation. FMFF currently has 1,500 members nationwide. (The Edge)

MARKET UPDATE

US stocks closed mostly unchanged after hitting a record high as the market awaited the Federal Reserve’s key interest rate cut decision. The Dow inched down 15.9 points while the S&P 500 was up 0.03%. The Nasdaq Composite advanced 0.2%. The fresh records for the S&P 500 and the Dow come during a historically tough period for the market. September has been the worst month for the benchmark over the past 10 years, averaging a 1.3% monthly loss. European stocks closed higher, rebounding from a negative session at the start of the week as upcoming central bank meetings remained in focus. The German DAX and the French CAC rose 0.5% while the FTSE 100 gained 0.3%. Shares of Commerzbank hit a 12-year high on reports from Bloomberg that UniCredit is seeking approval from the European Central Bank to build up a 30% stake in the company. Asia stocks traded mixed with Japan’s Nikkei 225 fell 1% as investors awaited the US Fed to begin its monetary easing cycle. Meanwhile, Hang Seng Index rose 1.4%. The Chinese markets were closed for Mid-Autumn Festival.

Back home, the FBM KLCI gained 12.13 points to close at 1,664.28. Glove stocks surged following news of the latest US tariff hike against China’s glove products. We believe this will likely improve Malaysia’s competitive edge, leading to possible market share gain by our local glove manufacturers in the future.

Source: PublicInvest Research - 18 Sept 2024