HEADLINES

Economy

Global: Factory activity hit by economic uncertainty. Global factory activity weakened in Sept as soft demand and economic uncertainty pointed to a tough outlook, surveys showed, keeping policymakers under pressure to shore up fragile growth. HCOB's final euro zone manufacturing PMI, compiled by S&P Global, dropped to 45.0 in Sept. This was just ahead of a 44.8 preliminary estimate but further from the 50 mark separating growth from contraction. In Britain, factory managers turned sharply more pessimistic as worries about the new government's first budget combined with concerns about the Middle East and strong inflation pressures. Factory activity in Japan shrank in Sept and expanded at a slower pace in Taiwan, PMIs showed, highlighting the toll soft global demand was taking on Asian exporters. (Reuters)

US: No signs of labor market deterioration as job openings rebound. US job openings unexpectedly increased in Aug after two straight monthly decreases, but hiring was soft and consistent with a slowing labor market that keeps the Fed on track to cut interest rates again in November. The Labor Department's Job Openings and Labor Turnover Survey, or JOLTS report, also showed layoffs declining. There were 1.13 job openings for every unemployed person in Aug compared to 1.08 in July. Resignations were the lowest in four years, a sign that Americans are growing less confident in the jobs market. Job openings, a measure of labor demand, rebounded by 329,000 to 8.040m by the last day of Aug, the Labor Department's Bureau of Labor Statistics said. Data for July was revised higher to show 7.711m unfilled positions instead of the previously reported 7.673mn. (Reuters)

US: Manufacturing steady in Sept; prices paid measure lowest in nine months. US manufacturing held steady at weaker levels in Sept, but new orders improved and prices paid for inputs declined to a nine-month low, which together with falling interest rates bode well for a rebound in activity in the coming months. The Institute for Supply Management (ISM) said its manufacturing PMI was unchanged at 47.2 last month. The survey has, however, exaggerated the weakness in manufacturing, with the so-called hard data such as factory production and durable goods orders showing the sector largely moving sideways. (Reuters)

EU: Inflation dips below 2%, strengthening rate cut case. Euro zone inflation dipped below 2% for the first time since mid-2021 in Sept, reinforcing an already solid case for a ECB rate cut this month as a three-year battle to tame runaway price growth nears its end. Inflation in the 20 countries sharing the euro currency eased to 1.8% in Sept from 2.2% in Aug, Eurostat data showed, coming below expectations for 1.9% in a Reuters poll, primarily on falling energy costs and muted goods prices. A more closely watched figure on underlying prices referred to as core inflation, meanwhile, dipped to 2.7% from 2.8% on slower services price growth, coming below expectations for 2.8%. (Reuters)

Japan: BOJ signals rate-hike pause after big Fed cut, market rout. BOJ policymakers discussed the need to go slow in raising interest rates as jittery markets clouded the outlook, a summary of their Sept meeting showed, reducing the chance of a near-term rate hike. The summary also showed how the US Fed's decision to deliver an oversized reduction in borrowing costs, which came a day before the BOJ's 19-20 Sept meeting, led to increased worries about the US economic outlook. "Uncertainties have heightened about the U.S. economy and the pace of rate cuts by the Fed. Attention needs to be paid to the possibility that these factors will have a negative impact on the yen's exchange rates and corporate profits in Japan," one member was quoted as saying. (Reuters)

India: Factory growth cooled to eight-month low in Sept, PMI shows. Growth in India's manufacturing industry cooled to an eight-month low in Sept as solid demand and output eased slightly, according to a business survey that also showed weaker price increases despite rising input cost inflation. Factory production growth has been weakening since June and is likely to have further affected the expansion rate in Asia's third-largest economy last quarter, after the rise in GDP softened to 6.7% in April-June. The HSBC final India Manufacturing PMI, compiled by S&P Global, fell to 56.5 last month from 57.5 in Aug - the weakest since Jan - and slightly below a preliminary estimate of 56.7. (Reuters)

Indonesia: Inflation at 1.84% in Sept, lowest rate since 2021. Indonesian prices rose at their slowest rate in almost three years in Sept as the pace of food-price inflation eased, giving the central bank ample room to loosen monetary policy to stimulate economic growth. Annual inflation reached 1.84%, Statistics Indonesia said. That was the lowest since November 2021, LSEG data showed. The figure compared with 2.12% in Aug and the 2.00% median of analyst estimates in a Reuters poll. It also stayed within Bank Indonesia's inflation target range of 1.5% to 3.5%. Food prices are the biggest contributor to inflation figures but their rate of growth eased to 2.57% versus Aug's 3.39%. Core inflation, which excludes volatile food prices as well as government-controlled prices, was 2.09% versus 2.03% in the poll. (Reuters)

Markets

MHB: Bags RM43m subcontract from Uzma for mobile offshore drilling unit conversion. Malaysia Marine and Heavy Engineering Holdings has secured a RM43m subcontract from a subsidiary of Uzma for the conversion of a mobile offshore drilling unit (MODU) into a mobile water injection facility (WIF). Under the contract, the group will handle the demolition, refurbishment, life extension, and conversion of the MODU into a mobile WIF, with the work expected to be completed by the first quarter of 2025. (The Edge)

Central Global: In Sabah property buy. Central Global is acquiring a four-storey office and showroom from Sribina Resources SB in Kota Kinabalu, Sabah for RM19.5m. Central Global said the acquisition is part of the overall strategy of increasing the group’s profile as one of the leading construction groups in that region, specifically Sabah. Additionally, Central Global said the acquisition will allow the company to cross-sell and expand its presence of its products and to be the headquarters/ warehouse/storehouse for its vehicles/ machinery when projects are completed. (StarBiz)

Sunzen Biotech: Expands into ophthalmic industry with Eye Nation Medical stake acquisition. Sunzen Biotech is venturing into the ophthalmic industry through the acquisition of a 70% stake in Eye Nation Medical SB for RM6.4m. Sunzen has entered into a share purchase agreement with Eye Nation Medical’s directors Lee Peng Hwa and Lay Lee Chin for the acquisition. (The Edge)

PA Resources: Gets 0% dumping rate from US. PA Resources has secured a 0% dumping rate for its aluminium extrusion exports to the US. The aluminium extruder firm said it was notified on Sept 28 of the 0% dumping rate from the United States Department of Commerce, International Trade Administration. “This determination follows anti-dumping proceedings and marks a significant milestone for our group. (StarBiz)

MISC: Inks shipbuilding contract for two LNG carriers, secures long-term charter with Petronas. MISC has signed a shipbuilding contract with Samsung Heavy Industries Co Ltd for the construction of two new LNG carriers, scheduled for delivery in 2027. It also signed a letter of intent with Petronas LNG SB for long-term shipping services involving the new carriers, while will terminate the charters of three existing LNG carriers with the company — Seri Ayu, Seri Angkasa, and Seri Begawan — and enter into new agreements for two others, Seri Alam and Seri Amanah, upon expiry. (The Edge)

Tanco: Gets unconditional nod from Marine Dept to develop container port in Port Dickson. Tanco Holdings’ 79%-owned subsidiary, Midports Holdings SB (MHSB), had received the nod from the Malaysian Marine Department (MMD) to develop a container port in Port Dickson, Negeri Sembilan. (The Edge)

Aemulus: To seek new investors for loss-making Chinese subsidiary. Aemulus Holdings is taking full control of its lossmaking Chinese associate company Tangming Shengshi Technology (Jiashan) Co Ltd before looking for new investors to turn around the firm. Its wholly owned subsidiary Aemulus Corp Sdn Bhd has entered into an agreement with Tangren Microtelligence Technology (Jiashan) Co Ltd to acquire the remaining 60% stake in TMSS for CNY25m (RM15.1m) cash. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today as US stocks retreated from their records Tuesday after Iran fired missiles into Israel, a sharp escalation of tensions in the Middle East that investors fear could lead to disruptions in the flow of oil. The S&P 500 pulled 0.9% lower, and the Dow Jones Industrial Average lost 173 points, or 0.4%, after both had set all-time highs the day before. The Nasdaq composite dropped 1.5% after paring a bigger loss from earlier in the day, like other indices. Oil prices jumped amid speculation about how Israel and the United States may respond to Iran’s move. White House National Security Adviser Jake Sullivan called Iran’s missile attack a “significant escalation,” although he said it was ultimately “defeated and ineffective.” European stocks indices initially swung higher following the inflation update, only to fall to losses. Indices dropped 0.8% in France and 0.6% in Germany. Farther east, a quarterly “tankan” survey by the Bank of Japan showed large manufacturers are still feeling optimistic about business conditions than pessimistic. Japan also reported that its unemployment rate for Aug fell to 2.5% from 2.7% in July, in line with market expectations. Japan’s benchmark Nikkei 225 rallied 1.9% to claw back some of its steep 4.8% loss from the day before. Markets in China and South Korea were shut for holidays. Mainland Chinese markets, which had their best day since 2008 on Monday, will remain closed until Oct. 7 for the National Day break. Back home, the FBM KLCI added 7.48 points or 0.45% to 1656.39.

Source: PublicInvest Research - 2 Oct 2024