Economy

EU: At turning point needs consumers to get out and spend. The eurozone’s economy is waiting for a resounding vote of confidence from its own consumers for its long-awaited rebound to finally take shape. With employment at a record, wages rising steeply and inflation not far from 2%, the conditions are there for people to get out and spend. Business surveys have started to offer some hope, and on the ground, Kaweh Nemati, a retail entrepreneur in Frankfurt, reckons it’s just a matter of time before shoppers return in numbers. “You have to remain positive and optimistic — everything else means giving up,” said Nemati, who owns a small boutique in the city’s Nordend district and heads the local neighbourhood’s trade association. “At some point, consumers will have to say ‘we’ve saved long enough’. And when the first domino falls, then hopefully it’ll take others along.” (Bloomberg)

EU: ECB rate cut case getting stronger, says chief economist. The case for a ECB interest rate cut in June is getting stronger as services inflation is finally starting to ease, ECB chief economist Philip Lane told Spanish newspaper El Confidencial. The ECB has all but promised a rate cut on June 6, provided incoming data strengthen policymakers' belief that inflation will head back to its 2% target by the middle of next year. "Both the April flash estimate for euro area inflation and the first quarter GDP number that came out improve my confidence that inflation should return to target in a timely manner," Lane told the newspaper in an interview. "So, as of today, my personal confidence level has improved compared with our April meeting," Lane said, adding that more crucial data is still to be published in the weeks ahead. (Reuters)

EU: Spain unemployment lowest since 2008. Spain's unemployment declined sharply in April to the lowest level since Sept 2008, data from the labor ministry revealed. The number of people out of work totalled 2.67m in April. The decrease in unemployment was 60,503 compared to the previous month. Compared with the same month of last year, unemployment decreased by 121,870 or 4.4%. By economic sectors, registered unemployment in services fell 42,067 and by 4,902 in construction. The decrease in industry came in at 4,433 and the fall in farm sector was 3,451. The ministry said unemployment among young people decreased 16,925 people or 8.26%, a rate that was more than triple that of the general fall. (RTT)

China: May Day holiday spending shows mixed picture on post-Covid recovery. Domestic travellers spent CNY166.9bn (RM109.7bn) during one of China's longest breaks, the May Day holiday, a rise of 13.5% from pre-pandemic levels, government data showed, but expenditure per head lagged 2019 rates. Boosting consumer confidence has presented a key challenge for Chinese authorities this year amid a declining property market, high youth unemployment and deflation pressures. The total spent over the May 1 to 5 holiday was 12.7% higher than last year, shortly after China lifted Covid-19 curbs, and the tourism ministry recorded 295m domestic trips during the holiday. (Reuters)

China: Service sector growth moderates in April. China's service sector continued to expand in April but the pace of growth moderated slightly, survey results from S&P Global showed. The Caixin services Purchasing Managers' Index fell to 52.5 in April from 52.7 in the previous month. A reading above 50.0 indicates expansion in the sector. The official PMI survey results also showed that the private sector growth moderated in April. The manufacturing PMI declined to 50.4 in April from 50.8 in March. The non-manufacturing PMI slid to 51.2 from 53.0 in March. Despite the slowdown, the service sector expanded for 16 consecutive months, S&P Global said. The latest growth was driven by another strong growth in new business. (RTT)

Hong Kong: Private sector PMI slips in April - S&P Global. The private sector in Hong Kong continued to expand in April, although at a slower pace, the latest survey from S&P Global revealed with a services PMI score of 50.6. That's down from 50.9 in March, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. Business activity rose fractionally for the first time in three months, expanding mainly in the service sector according to sub-sector data. The growth in output was supported by businesses working through their existing orders, which led to a seventh successive monthly reduction in the level of outstanding work. (RTT)

Indonesia: 1Q GDP growth beats forecasts, but outlook's uncertain. Indonesia's economic growth in the first quarter beat expectations, buoyed by high public spending for the country's elections, but maintaining the strong pace will be challenging due to global developments and tight local monetary conditions. Southeast Asia's largest economy grew by 5.11% on a yearly basis in the Jan-March period, the highest growth rate in three quarters. Growth exceeded the 5% rate expected by economists polled by Reuters and the 5.04% achieved in the fourth quarter. In the first three months of 2024, campaign expenditure for the Feb 14 election and higher household spending during the Muslim holy month of Ramadan, which started in March, bolstered economic activity. (Reuters)

Markets

Star Media: The Edge and its owner cease to be substantial shareholders of Star Media. The Edge Communications SB and its owner Tan Sri Tong Kooi Ong have ceased to be substantial shareholders in Star Media Group following the latest share sale last week. Tong sold out his direct stake of 0.2%, or 1.45m shares on May 2 and 3. Meanwhile, The Edge sold 1.5m shares on May 3, according to Star Media’s exchange filing. The transaction price was not disclosed. After the latest transactions, The Edge is left with 36m shares or 4.87% in Star Media, based on its issued share capital of 738.56 shares. (The Edge)

Ho Hup: Disposes of Bukit Jalil land for RM110m. Ho Hup Construction Co is disposing of a parcel of freehold commercial development land measuring 12,492 sq metres in Kuala Lumpur to EXSIM Persiaran Jalil SB for RM110m. In a filing with Bursa Malaysia, Ho Hup said it had, in the preceding financial year, initiated and executed a series of restructuring and rationalisation exercises aimed at enhancing business operations, optimising asset allocation, as well as de-gearing its balance sheet. (StarBiz)

Ireka: EPF initiates legal action against Ireka unit over unpaid contributions. Practice Note 17 (PN17) company Ireka Corp said its wholly-owned Ireka Development (Terengganu) SB (IDTSB) and the unit's directors are being sued by the EPF over unpaid contributions to the fund. The construction outfit said EPF is claiming a principal sum of RM50,196, representing total outstanding contribution from Aug 2023 to Dec 2023, along with dividends and late payment charges to be determined upon full settlement of the amount claimed. (The Edge)

Sunzen: To buy 70% stake in Eye Nation Medical. Sunzen Biotech has proposed to acquire 70% stake in Eye Nation Medical SB for RM6.37m. Sunzen entered into a non-binding term sheet with Lee Peng Hwa and Lay Lee Chin to acquire 70,000 ordinary shares, representing 70% in Eye Nation. The proposed acquisition is in the process of negotiation and subjected to the terms to be finalised and/or further terms and conditions, where applicable, to be incorporated in the share sale agreement and upon completion of the due diligence to be conducted on the target company (SunBiz)

Niche Capital: Aims to raise RM18.7m via private placement to fund mining business. Loss-making Niche Capital Emas Holdings has proposed to undertake a private placement of up to 135.74m shares, or 10% of its issued share capital, to fund its mining business as well as working capital. The private placement is expected to raise RM18.7m based on an indicative price of 13.78 sen per placement share. (The Edge)

Favelle Favco: Wins four contracts worth RM39.2m. Construction crane manufacturer Favelle Favco has secured four contracts for the supply of offshore and tower cranes totaling RM39.2m. Two contracts for offshore cranes were awarded by Hilong Petroleum Offshore Engineering Ltd and CUEL Ltd. The Hilong job is to be delivered in the third quarter of this year, while CUEL's is to be completed by the first quarter of 2025. The other two contracts, which are for the supply of tower cranes, were awarded by Favco Heavy Industry (Changshu) Co Ltd and GA Caelli Holdings Trust. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks rose Monday and added to their gains from last week, as technology companies once again led the way. The S&P 500 rose 52.95, or 1%, to 5,180.74. The Dow Jones Industrial Average added 176.59, or 0.5%, to 38,852.27, and the Nasdaq composite jumped 192.92, or 1.2%, to 16,349.25. The US stock market has been swinging sharply since setting a record at the end of March. It sunk for weeks on fears that stubbornly high inflation would prevent or at least delay the Federal Reserve from delivering the cuts to interest rates that Wall Street craves. In stock markets abroad, several exchanges were closed for holidays. Indices rose relatively modestly in France and Hong Kong. They jumped 1% in Germany and 1.2% in Shanghai. Back home, the FBM KLCI rose 0.49%, or 7.80 points, to 1,597.39, up from Friday’s close of 1,589.59.

Source: PublicInvest Research - 7 May 2024