HEADLINES

Economy

US: New York manufacturing index indicates return to contraction in Oct. Following a significant turnaround in the previous month, the Fed Bank of New York released a report on Tuesday showing regional manufacturing activity has returned to contraction in the month of Oct. The New York Fed said its general business conditions index tumbled to a negative 11.9 in Oct from a positive 11.5 in Sept, with a negative reading indicating contraction. Economists had expected the index to decrease to a positive 2.3. (RTT)

US: Consumers see higher long-run inflation, rising delinquency risk. Americans said they expected higher inflation over the longer run last month, as their expectations of credit turbulence rose to the highest level since Apr 2020, the Fed Bank of New York said. While inflation a year from now is seen holding steady at 3%, three years from now it is seen at 2.7% from Aug’s 2.5% estimate, and at 2.9% in five years, from 2.8% in the Aug survey, the bank said in its latest Survey of Consumer Expectations. (Reuters)

EU: Eurozone economy shows some signs of growth. The eurozone economy showed some signs of life with a raft of indicators pointing to lukewarm but still positive growth for a bloc that has been skirting a recession for over a year. Industrial output expanded and lending demand rose, while expectations in a key German sentiment survey also increased more than predicted, offering some reassurance after key indicators tended to underperform expectations over the past month. (Reuters)

EU: Spain 12-month EU-harmonised inflation falls to 1.7% in Sept. Spain's EU-harmonised 12-month inflation fell to 1.7% in Sept, down from 2.4% in the period through Aug, final data released by the National Statistics Institute (INE) showed. The 12-month inflation rate was the same as the flash estimate reported by INE and the average expectation by analysts polled by Reuters. Core inflation, which strips out volatile fresh food and energy prices, was 2.4% in the 12 months through Sept, down from 2.7% a month earlier, INE said. Spanish national consumer prices fell to 1.5% in the 12 months through Sept, from 2.3% in the period through Aug. The final reading was in line with the flash estimate released by INE two weeks ago. Analysts polled by Reuters also expected a 1.5% rate. (Reuters)

EU: French inflation eases more than estimated. France's CPI slowed slightly more than initially estimated in Sept to the lowest level in three-and-a-half years amid cheaper energy costs, the latest data from the statistical office INSF. The CPI climbed 1 year- over-year in Sept, slower than the 1.8% previous month. In the flash report, the rate of inflation was further, this was the weakest inflation rate since March 2021, when prices had risen the same 1.1%. Energy prices fell 3.3% annually in Sept, versus a 0.4% rise in Aug. This deflation was led by a 14.2% plunge in prices of petroleum products. Inflation based on services moderated to 2.4% from 3.0%. Meanwhile, food inflation held steady at 0.5%, and prices for manufactured products dropped by 0.3%. (RTT)

China: Economy set to grow 4.8% in 2024, missing target: Reuters poll. China's economy is likely to expand 4.8% in 2024, undershooting the government's target, and growth could cool further to 4.5% in 2025, a Reuters poll showed, maintaining the pressure on policymakers as they consider more stimulus measures. GDP is forecast to have risen 4.5% in the 3Q from a year earlier, slowing from 4.7% in the 2Q and hitting the weakest since the first quarter of 2023, according to the poll. Authorities have sharply ramped up policy stimulus since late Sept in a bid to revive the flagging economy and ensure growth will reach the government's target of around 5% this year. (Reuters)

Japan: Industrial output shrinks as estimated. Japan's industrial production decreased as initially estimated in Aug, final data from the Ministry of Economy, Trade, and Industry showed. Industrial production contracted 3.3 % on a monthly basis, reversing a 3.1% rebound in July. That was in line with the flash data published earlier. Data showed that shipments fell 4.1% from the previous month, and inventories dropped 0.8%. On the other hand, the inventory ratio showed a strong increase of 5.3%. YoY, industrial production declined 4.9% in Aug versus a 2.9% rise in the prior month. The capacity utilization decreased 5.3% monthly in Aug, in contrast to a 2.5% gain in July. (RTT)

India: Rate-cut calls at risk after inflation picks up sharply. Economists are reviewing their forecasts for interest rate cuts in India after inflation accelerated faster than expected last month, fueled by surging food prices. Several economists, including Upasna Bhardwaj of Kotak Mahindra Bank Ltd. and Gaura Sen Gupta of IDFC First Bank Ltd., say the RBI is unlikely to cut interest rates in Dec as previously predicted. The RBI last week shifted its policy stance to neutral to indicate a pivot soon. Governor Shaktikanta Das has kept the benchmark rate unchanged for more than 20 months, and has repeatedly said he wants to bring inflation down to the 4% target level on a durable basis before he considers easing. (Bloomberg)

Markets

Cypark (Neutral, TP: RM0.70): Forms consortium with Jakel Capital, Melaka Corp to power up German Technology Park in Melaka. Renewable energy producer Cypark Resources has formed a consortium to jointly explore and develop energy solutions for the 186-hectare German Technology Park in Ayer Keroh, Melaka. It has signed a memorandum of agreement with its largest shareholder, Jakel Capital SB, and Melaka Corporation to manage the planning, generation and distribution of energy for the park, a project that could cost an estimated RM4bn. (The Edge)

Maxis (Neutral, TP: RM3.90): Teams up with MRCA to boost 5G in retail sector. Maxis has signed a MOU with the Malaysia Retail Chain Association (MRCA), which represents 562 Malaysian retailers, to encourage the adoption of 5G solutions to strengthen the domestic retail sector. The partnership aims to enhance the retail customer experience and increase operational efficiency through advanced connectivity and digital solutions. These solutions include retail analytics, artificial intelligence-powered computer vision, managed network services, extended reality experiences, and supply chain enhancements, all supported by secure connectivity and cloud infrastructure. (StarBiz)

PLB Engineering: Sells 60% stake in solar venture for RM33m. PLB Engineering (PLB), through its subsidiary PLB Terang SB (PLBTSB), has signed a share sale agreement to sell its 60% stake in PLB Green Solar SB (PLBGS). The agreement, made with Koperasi Sahabat Amanah Ikhtiar Malaysia and Greenviro Solutions SB who currently own the remaining 40% of PLBGS, is valued at RM33m and will be paid entirely in cash. PLB’s 60% equity in PLBGS is held via its 85.7%-owned subsidiary, PLBTSB. PLB noted that the sale price was negotiated based on the audited net assets of PLBGS, which were valued at RM2.2m as of Aug 2023. (The Malaysian Reserve)

Perdana Petroleum: Bags RM7.3m vessel charter. Perdana Petroleum (PPB), through its wholly owned subsidiary Perdana Nautika SB (PNSB), has entered into a RM7.3m charter party agreement with RUHM Marine SB for the provision of one anchor handling tug & supply (AHTS) vessel. The initial contract, starting on 30 Aug 2024, was for 45 days with a 15-day extension option. RUHM Marine has since extended the contract for an additional 18 days, from 29 Oct to 15 Nov 2024, with daily extensions of up to 15 days. (The Malaysian Resere)

MFM: No second earnout payment from Tyson. Malayan Flour Mills said that there will be no second earnout payment from Tyson Foods Inc in relation to the consideration for its 49% equity disposal in Dindings Tyson Group (DTSB) to Tyson Foods. As a result, the total consideration for the disposal of its 49% equity stake in DTSB amounts to RM289.9m, from its initial payment and the adjusted first earnout consideration, instead of RM420m if all disposal consideration were met. (The Edge)

Yinson Holdings: Appoints Lim Poh Seong as independent non-executive director. Yinson Holdings has appointed Lim Poh Seong as an independent non-executive director, effective 15 Oct 2024. Lim, 57, is a Fellow of the Association of Chartered Certified Accountants (ACCA) and a member of Malaysian Institute of Accountants (MIA). He has more than 25 years of experience in auditing, accounting, corporate finance, and the overall administration of business operations. (StarBiz)

MARKET UPDATE

The FBM KLCI might open lower today as Wall Street pulled back from its records on Tuesday after the price of crude oil tumbled and technology stocks faltered. The S&P 500 fell 0.8%, a day after setting an all-time high for the 46th time this year. The Dow Jones Industrial Average dropped 324 points, or 0.8%, and the Nasdaq composite sank 1%. Crude prices have been weakening as China’s flagging economic growth raises concerns about demand for oil. At the same time, worries have receded about Israel possibly attacking Iranian oil facilities as part of its retaliation against Iran’s missile attack early this month. Iran is a major producer of crude, and a strike could upend its exports to China and elsewhere. The yield on the 10-year Treasury fell to 4.03% from 4.10% late Friday. Manufacturing has been one of the areas of the US economy hurt most by high interest rates caused by the Federal Reserve in its efforts to slow the economy enough to stamp out high inflation. In China, Chinese stocks fell sharply as doubts continue about whether the government will offer enough fiscal stimulus to prop up the world’s second-largest economy. Stocks in Shanghai fell 2.5%, and Hong Kong’s Hang Seng index dropped 3.7%. Indices were mixed elsewhere in Asia and in Europe. Back home, the FBM KLCI added 5.43 points or 0.33% to 1641.97. d at 1641.97 yesterday. Nonetheless, market breadth remained negative as , the FBM KLCI is anticipated to trend sideways around the 1636 horizon in e index are at 1636, 1622 and 1600, while resistance levels stand at 1652,

Source: PublicInvest Research - 16 Oct 2024