Our analysis of the data that has been reported in recent weeks leads us to conclude that key parts of U.S. GDP are still expanding, despite the impact of inflation, high interest rates, and geopolitical developments. But growth is not consistent across all segments of the economy and, in some cases, growth rates are slowing. While the Fed is on track to engineer a soft landing for the economy, the risk of a recession in 2023-2034 remains a possibility, though we think the odds are diminishing. After reviewing the latest economic data points, metrics, and trends, we are maintaining our 3Q23 GDP estimate of 4.0%. We now anticipate that the current (third) quarter could be the strongest quarter of the year, before higher interest rates dampen consumer spending into 2024. Our estimate for the full year 2023 is now 2.3%. Our preliminary forecast for GDP growth in 2024 is 2.2%, as the Federal Reserve, with its tool chest again full after hiking rates during 1H23, can contemplate lowering interest rates to recharge economic growth. The Wall Street Journal Economic Survey calls for GDP growth of 1.0% in 2023 and 1.3% in 2024. The Federal Reserve is now anticipating GDP growth of 1.0% for 2023 and 1.1% in 2024. Meanwhile, the IMF is calling for 2023 growth of 1.8%, and the Philadelphia Federal Reserve's Survey of Professional Forecasters is calling for growth of 1.3% in 2023 and 1.4% in 2024. A recent GDPNow Forecast from the Federal Reserve Bank of Atlanta was 4% for 3Q23.

Market Wrap

Oil surged after Hamas’s surprise attack on Israel raised fears of a wider conflict. Investors avoided traditionally risky assets such as stocks and instead bought gold, bonds and the dollar.

West Texas Intermediate jumped more than 4% to $86 a barrel, spurring a rally among energy producers. Gold climbed almost 1% and index of dollar strength added 0.3%. US equity futures retreated with Tesla Inc., Amazon.com Inc. and Nvidia Corp. among the worst performers in premarket trading, along with airlines. Defense and energy companies were headed for gains, led higher by Lockheed Martin Corp. and Exxon Mobil Corp. Europe’s Stoxx 600 slipped 0.2%.

Today's Big News

Oil Surges as Israel Conflict Reignites Middle East Volatility
Israel Latest: Army Reserves Called Up, Chevron Shuts Gas Field
Israel Shekel Slumps Despite $45 Billion Central Bank Pledge
Goldin Awarded Economics Nobel Prize for Gender-Gap Work
Bristol Myers to Buy Mirati Therapeutics for $4.8 Billion
BlackRock’s Hildebrand Wants IMF to Address New Economic Reality

OCBC

DBS

Oil price rebounded 3% while Dow futures down 200 points as surprise attack of Hamas on Israel increases geopolitical uncertainty
China Evergrande US$500m deal of US-listed Dubai mobility company halts on share price uncertainty
Philips share price down 7% after US FDA request for additional tests on recalled respiratory products

Market View Update

Latest Middle East conflict – Short-lived or long drawn?

Risk-off Monday as markets react to the military conflict that erupted in Israel-Gaza
US equity futures are down, brent is on the rebound after last week’s decline, gold is up on safe haven trade, the USD is firmer against major currencies.
Middle East conflicts potentially affects stock markets through concerns about oil price that lifts inflation and affects corporate earnings
Why do we believe that the impact on markets are likely short-lived?
Click here to read our views

China/HK equity strategy

A lukewarm Golden Week

Travel data suggested ongoing recovery but the momentum was slower than expected
Box office revenue missed estimate, while the mild recovery in property sales remained uneven
Market impact will be limited as HK investors didn’t put too much hope on holiday data
Do we think that the lukewarm holiday data will have a sizable impact on HK stocks?
Click here to read our views

Link REIT (823 HK)

Revisiting unit buyback

Expect Hong Kong retail reversionary growth to stay solid at mid-to-high single digit for FY24
Revised down FY24-25 DPU forecast by 5-6% to reflect slower-than-expected recovery in China retail portfolio, higher interest rate and exchange rate fluctuations.
Potential unit buyback to serve as a near-term catalyst
Are forward dividends of 6.9% attractive in our view?
Click here to read our views

DBS Group Research | Equity Picks

Singapore Equity Picks: Read more

Hong Kong Equity Picks: Read more

UOB

UOBKH: Country Dailies: Monday, October 09, 2023

Greater China: Closed due to Weather Advisory

Click on the link for Indonesia Daily.

https://research.uobkayhian.com/content_download.jsp?id=75478&h=ab897398ce31791fffec3877ed647387

Click on the link for Malaysia Daily.

https://research.uobkayhian.com/content_download.jsp?id=75492&h=eb926f4de043c626b935656be04d59f4

Click on the link for Singapore Daily.

https://research.uobkayhian.com/content_download.jsp?id=75463&h=8cf4452f74d51b9d3e90088577ccf727

Click on the link for Thailand Daily.

https://research.uobkayhian.com/content_download.jsp?id=75497&h=e179c3c40c3f791be8cd96acd15648ea

UOBKH: Regional Morning Meeting Notes: Monday, October 09, 2023 [ASEAN Banks, LPPF IJ, TOPG MK, KREIT SP, MINT SP, IVL TB]

Click on the link for details.

https://research.uobkayhian.com/content_download.jsp?id=75461&h=dc9ff8b8d2712352c76fd4e56030bac

KGI

Technical Analysis: 9 October 2023

🇸🇬 SG

Food Empire Holdings Ltd. (FEH SP)

Best World International Ltd. (BEST SP)

🇭🇰 HK

Cathay Pacific Airways (293 HK)

China Merchants Port Holdings Ltd. (144 HK)

TRADING IDEAS: 🇸🇬 SINGAPORE

9 October 2023

🏙 ST Engineering Ltd. (STE SP): Expanding services

BUY Entry 3.86 – Target – 4.06 Stop Loss – 3.76

🏢 Singapore Airlines Ltd. (SIA SP): Expecting a seasonal rebound

BUY Entry 6.50 – Target – 6.90 Stop Loss – 6.30

CIMB

CHN: Strategy Note - Holiday consumption indicates solid start to 4Q recovery

https://rfs.cgs-cimb.com/api/download?file=c646d4c8-923b-4cd7-ae0e-d3d773f5c78d

MAL: CGS-CIMB Daybreak - 09 October 2023

https://rfs.cgs-cimb.com/api/download?file=98a4db5e-9618-4847-90ba-af4c269bc649

ASEAN: CGS-CIMB ASEAN Daily - 09 October 2023

Equity Research Reports....

▌ TARGET PRICE CHANGES

THB: Siam Cement (HOLD, tp:THB318.00▼) - Difficult outlook likely to continue in 2H23F (6/10)

▌ SECTOR & COMPANY NOTES

THB: Petrochemical (NEUTRAL) - Better days for olefins still further away (6/10)

▌ RECENT 'IDEAs OF THE DAY'...

MAL: Strategy Note - One step at a time (4/10)

MAL: Economic Focus - Budget 2024 Preview: Tightening purses (2/10)

SIN: Singapore Post Ltd (ADD▲, tp:SGD0.60▲) - What’s next? (18/9)

THB: Retail (OVERWEIGHT) (ESG) - Stronger after the storm (15/9)

MAL: Malaysia Airports Holdings (ADD▲, tp:MYR7.76▲) - Exciting times to return (13/9)

CGS-CIMB SG/MY Preview - PET, MAHB, TOPG

SINGAPORE DOW +288pts (+0.9%) NDQ +212pts (+1.6%) SPX +50pts (+1.2%) WTI (+0.6%) GOLD (+0.8%) US stks surged on Friday with traders remain undeterred in accumulating positions, despite payrolls figure coming in hot. Nonfarm payrolls for Sep was ahead of estimates (+336K vs +160K est) while unemployment rate was slightly higher. (+3.8% vs 3.7% est). Oil gapped up with Israel declaring war for the first time since 1973. US 10Y rose 8bps to 4.80%. OTHER NEWS * Cromwell Reit (CERT SP) divests Viale Europa in Italy for €94 million (c.S$135M). * Yoma Strategic (YOMA SP) 70% owned subsidiary enters into joint venture agreement with Pun Hlaing Link Services to develop first mass market landed terraced housing known as Project Estella. MALAYSIA Bursa Malaysia market showed signs of modest strength as Asian stock markets rallied in anticipation of the US payroll data release. KLCI experienced a slight gain of 1.28 points or 0.09%, closing at 1,416.88. However, on a weekly basis, the index dipped by 1.88 points or 0.13%. The sectors that performed well for the day were construction (+0.92%), property (+0.79%), and telecommunications (+0.71%), while healthcare (-0.74%), consumer products (-0.25%), and plantation (-0.01%) were the only sectors that declined. Trading volume decreased compared to the previous day, and trading value decreased too. Overall, market breadth remained positive, with 449 gainers outnumbering 407 decliners. The benchmark index rebounded from a 2-month low, settling slightly above the 1,412-1,416 support range. OIL Oil remained flattish on Friday but surged more than 3% over the weekend after Hamas’ surprise attack on Israel threatens to destabilize the Middle East. WTI: 82.79 (0.58%) Brent: 84.58 (0.61%) PLANTATIONS Palm oil prices continued its decline on concerns that production and stockpiles are expanding in MY. 3rd MONTH FCPO: 3,600.00 (-0.19%) CGS-CIMB HIGHLIGHTS *UMW Holdings Bhd (UMWH MK) disposing 26% stake in an industrial equipment arm to Toyota Industries Corp for RM260mil. *Petroliam Nasional Bhd (PET MK) signed a memorandum of cooperation with Japan’s Ministry of Economy, Trade and Industry (Meti) and the Japan Organisation for Metals and Energy Security (Jogmec), to strengthen collaboration on cross-border carbon dioxide transportation from business to business for carbon capture and storage (CCS) projects. *Petronas adopted a 5G private network at its Regasification Terminal Sungai Udang in Melaka, making it the first in Malaysia to adopt the 5G technology for enterprise use. *Malaysia Airports Holdings Bhd (MAHB MK) announced that its MD and group CEO Datuk Seri Iskandar Mizal Mahmood will be stepping down from his role upon the expiration of his two-year contract on 24 Oct. *Top Glove Corp Bhd (TOPG MK) which undertook a RM389mil impairment in the June-to-Aug 2023 period, says there should be no more impairment to be made in the near future as it expects the recovery for glove demand to pick up. *Dutch Lady Milk Industries Bhd (DLM MK) plans to double production next year after shifting to its new RM540m facility in Bandar Enstek, deploying eight production lanes. *Tropicana Corp Bhd (TRCB MK) has redeemed the second tranche of its sukuk wakalah programme worth RM179mil due on Friday. *KNM Group Bhd (KNMG MK) who are looking to take over the board of the financially-distressed oil and gas engineering group say they plan to repay the group’s RM1.2bn debt owed to creditors in the next three to six months.