HEADLINES

Economy

US: Existing home sales drop in Aug; supply improves. US existing home sales fell more than expected in Aug as house prices remained elevated despite a continued improvement in supply. Home sales fell 2.5% last month to a seasonally adjusted annual rate of 3.86m units, the National Association of Realtors said. Economists polled by Reuters had forecast home resales falling to a rate of 3.90m units. Home resales, which account for a large portion of US housing sales, dropped 4.2% on a YoY basis in Aug.. (Reuters)

US: Jobless claims pick up for the first time in three weeks. Applications for US unemployment benefits ticked up for the first time in three weeks, consistent with a gradual slowdown in hiring. Initial claims increased by 2,000 to 230,000 in the week ended Sept 7, according to Labor Department data released. Continuing claims, a proxy for the number of people receiving benefits, also rose, to 1.85m in the week ended Aug 31. The claims data are prone to fluctuations around holidays, and the latest period included Labor Day. The four-week moving average, a metric that helps smooth out volatility in the data, edged up to 230,750, the first increase in five weeks. (Bloomberg)

EU: Italy current account surplus shrinks in July. Italy's current account surplus decreased in July from the previous year, the Bank of Italy reported. The current account surplus dropped to EUR5.37bn from EUR6.41bn last year. The goods surplus decreased to EUR6.23bn from EUR6.43bn. Similarly, the surplus in services trade shrank to EUR1.88bn from EUR2.11m. The primary income balance showed a deficit of EUR1.41bn, up from EUR0.44bn. The shortfall on secondary income narrowed to EUR1.33bn from EUR1.69bn. (RTT)

UK: BOE to reduce bond portfolio by GBP100bn over next year. The Bank of England will maintain the pace it is reducing its balance sheet of bonds, a decision that may have implications for how much fiscal firepower Chancellor Rachel Reeves has at the upcoming budget. The Monetary Policy Committee voted to keep the overall run-off of its stock of gilts at GBP100bn (USD133bn) during the next year of so-called quantitative tightening. (Bloomberg)

Australia: Unemployment rate remains stable. Australia's unemployment rate held steady in Aug and employment increased strongly, suggesting that the labor market remained tight. Data from the Australian Bureau of Statistics showed that the jobless rate remained unchanged at 4.2% in Aug, in line with expectations. The net employment increased by 47,500 on month in Aug, which was much higher than the expected increase of 26,400. The participation rate held steady at a record high of 67.1%. (RTT)

Hong Kong: Jobless rate stays at 3%. Hong Kong's unemployment rate remained unchanged at 3% in the three-month period ending in Aug. According to official data released, the underemployment rate also remained unchanged from the May to July period, at 1.2%. The government said that while unemployment had risen in the food and beverage and accommodation sectors, this was offset by new hiring in the insurance, trading, wholesale and transportation industries. (RTHK)

Markets

Pharmaniaga: New insulin, vaccine plant to raise FY2026 gross margin to 30%-35%. Pharmaniaga newly launched biopharmaceutical plant is expected to lift its gross profit margin to about 30% to 35% for FY2026. The plant, located in Puchong and operated by Pharmaniaga Life Sciences, has an annual production capacity of up to 30m doses of human insulin. It will also produce other essential biopharmaceuticals, including vaccines and biosimilars. “For (human) insulin alone, we are looking for RM100m per annum and we are also looking over about RM300m per annum for vaccines. This is in terms of revenue. (The Edge)

Country Heights: To ask contractor to withdraw legal action over alleged unpaid sums. Country Heights Holdings said it will request a contractor for the group's residential project in Kedah to withdraw its legal action against the group's subsidiary, Country Heights Smart Living SB, over alleged unpaid payments. If the contractor, Lean Xing Construction SB, refuses to withdraw the petition that has been filed against the subsidiary, CHHB will proceed to inform Bursa Malaysia of the potential reputational harm caused by the legal action. (The Edge)

Ancom Nylex: Buys 70% stake in Colorex. Ancom Nylex is acquiring 1.4m shares or a 70% stake in Colorex SB for RM14m. Ancom said its wholly-owned subsidiary, Nylex Holdings SB, had entered into a share sale agreement with Loke Yeak Thong and Lim Tiak Cheong (vendors), who each have a 50% stake in Colorex. “The proposed acquisition comes with a profit guarantee by the vendors that Colorex shall achieve a net profit of no less than RM2.5m for two consecutive years. This translates to an implied price-to-earnings multiple of eight times based on the annual profit guarantee of RM2.5m and 100% valuation (RM20m) of Colorex.” (StarBiz)

Bina Darulaman: Addresses change of auditors. Bina Darulaman Bhd has clarified that Messrs KPMG PLT's resignation as its external auditor was part of a routine governance practice. In a statement, the group said the auditor's resignation, effective on Sept 9, 2024, followed the extension of its tenure, which spanned 10 years from 2014 to 2023. "It is important to emphasise that KPMG has not audited this year's financial reports yet, so this transition will not affect Bina Darulaman's financial integrity," it said. (StarBiz)

SSF: 1QFY2025 net profit more than halved amid softer consumer demand. Softer consumer demand in the first quarter ended July 31, 2024 (1QFY2025) sent SSF Home Group net profit down by more than half compared to a year ago. In 1QFY2025, it recorded a net profit of RM1.3m, compared to RM2.7m in the previous year’s corresponding quarter. Its revenue dropped by 18.5% to RM32.0m from RM39.3m in the same period last year. (The Edge)

IPO: KHPT targets RM22m. Automotive parts and components manufacturer KHPT Holdings aims to raise RM21.73m from its IPO as the group targets to list on the ACE Market of Bursa Malaysia on Oct 8, 2024. The IPO involved the issuance of 108.6m new shares at a price of 20 sen per share. Upon listing, KHPT is expected to have a market capitalisation of RM80.5m. (StarBiz)

MARKET UPDATE

The FBM KLCI might open higher today after Wall Street romped to records Thursday as a delayed jubilation swept markets worldwide following the Federal Reserve’s big cut to interest rates. The S&P 500 jumped 1.7% for one of its best days of the year and topped its last all-time high set in July. The Dow Jones Industrial Average leaped 522 points, or 1.3%, to beat its own record set on Monday, and the Nasdaq composite led the market with a 2.5% spurt. Wall Street’s gains followed rallies for markets across Europe and Asia after the Federal Reserve delivered the first cut to interest rates in more than four years late on Wednesday. It was a momentous move, closing the door on a run where the Fed kept its main interest rate at a two-decade high in hopes of slowing the US economy enough to stamp out high inflation. Now that inflation has come down from its peak two summers ago, Chair Jerome Powell said the Fed can focus more on keeping the job market solid and the economy out of a recession. The upcoming US presidential election could also keep uncertainty reigning in the market. A fear is that both the Democrats and Republicans could push for policies that add to the US government’s debt, which could keep upward pressure on interest rates regardless of the Fed’s moves. In stock markets elsewhere, indices climbed even more across the Atlantic and Pacific oceans. They rose 2.3% in France, 2.1% in Japan and 2% in Hong Kong. The FTSE 100 added 0.9% in London after the Bank of England kept interest rates there on hold. The next big move for a central bank arrives Friday, when the Bank of Japan will announce its latest decision on interest rates. Back home, the FBM KLCI closed higher by 5.06 points or 0.3% to 1665.65.

Source: PublicInvest Research - 20 Sept 2024