HEADLINES

Economy

US: Hiring slows to weakest pace since start of year in ADP data. Hiring at US companies grew in May at the slowest pace since the start of the year, restrained by a steep decline in factory payrolls and adding to evidence of a cooling in the labour market. Private payrolls increased 152,000 last month, according to the ADP Research Institute. The median estimate in a Bloomberg survey of economists called for a 175,000 increase. (Bloomberg)

EU: Eurozone private sector logs fastest growth in a year. Eurozone private sector posted the fastest growth in a year in May as strong demand boosted production and hiring amid cooling inflation, the final Purchasing Managers' survey data compiled by S&P Global showed. The HCOB composite output index posted 52.2 in May, up from 51.7 in the previous month. The flash reading was 52.3. The reading indicated that the private sector showed the strongest increase in economic activity since May 2023. (RTT)

UK: Service sector growth moderates in May. The UK service sector growth moderated in May as growth momentum in business activity and new orders softened from their 11-month highs reported in April, final survey data from S&P Global showed. The S&P Global services Purchasing Managers' Index dropped to 52.9 in May, in line with the flash estimate, from April's 11-month high of 55.0. The reading remained above the threshold 50.0 mark for a seventh straight month. (RTT)

China: Services expansion picks up to strongest in 10 months. China’s services sector expanded at its fastest pace since July last year, a private survey showed, pointing to resilience that may alleviate concerns over the economy’s outlook after weak official figures. The Caixin China services purchasing managers index (PMI) rose to 54 in May, according to a statement released jointly by Caixin and S&P Global. (Bloomberg)

Australia: RBA won’t hesitate to act if inflation sticky, says Bullock. Australia’s central bank is conscious of the high economic cost of above-target inflation and won’t hesitate to raise interest rates again if needed — though its assessment remains that this may not be required. “Even though the risks are balanced, the cost of higher inflation is something that we’ve got in mind,” Reserve Bank of Australia (RBA) governor Michele Bullock told a senate panel. (Bloomberg)

Australia: Economy remains weak on household spending squeeze. Australia’s economy extended a streak of subdued growth in the first three months of the year as elevated interest rates and cost of living pressures weighed on households. Gross domestic product (GDP) advanced 0.1% from an upwardly revised 0.3% in the prior quarter and compared with economists’ forecasts of 0.2%, Australian Bureau of Statistics (ABS) data showed. From a year earlier, the economy grew 1.1%, below estimates of 1.2%. (Bloomberg)

Singapore: Retail sales fall 1.2%. Singapore's retail sales decreased for the first time in four months in April, preliminary data from the Department of Statistics showed. Retail sales dropped 1.2% YoY in April, reversing a 2.8% increase in March. Sales excluding motor vehicles also fell 4.5% from last year versus a 2.1% gain in the prior month. (RTT)

Markets

Leong Hup: CEO mops up shares. Leong Hup International’s group CEO Tan Sri Lau Tuang Nguang has acquired a total of 8.88m shares in the poultry, egg and livestock feed producer over the past week, for about RM5.02m. According to a Bursa Malaysia filing, Lau bought two blocks of shares, 2m shares and 1m shares, for 56 sen apiece last Friday (May 31). The purchase continued on Tuesday (June 4). Lau bought 4.04m shares for 57 sen apiece and two blocks of shares, 965,000 shares and 875,000 shares, for 57 sen apiece on Wed. These transactions raised his direct stake in Leong Hup to 0.24%. He also holds a 1.74% indirect stake in the group. (The Edge)

Sarawak Cable: Serendib Capital sues Sarawak Cable over agreement termination. Sarawak Cable faces legal action from Serendib Capital Ltd over the termination of their memorandum of agreement aimed at reviving the company. According to its filing today, Serendib Capital seeks declaratory reliefs, specific performance, a permanent injunction, and damages in the lawsuit. The legal papers were served by Rosli Dahlan Saravana Partnership, representing Serendib Capital. Defendants include chairman Datuk Seri Mahmud Abu Bekir Taib, directors Yek Siew Liong, Datuk Kevin How Kow, and Redzuan Rauf, among others. Sarawak Cable has engaged Dinesh Ratnarajah Partnership to vigorously defend the group and its affiliates. (The Malaysian Reserve)

Suria Capital: Inks JV agreement for mixed commercial project in Kota Kinabalu. Suria Capital Holdings, which operates eight major ports in Sabah, said it has entered into a deal to develop a mixed commercial project in the Kota Kinabalu Port area. It will be jointly developing the project, known as the Jesselton Docklands 1 project, with Jesselton Docklands 1 SB (JD 1). Suria Capital said the two parties will set up a project team that will be responsible for managing all aspects of the project’s execution and implementation. Suria Capital will be entitled to at least RM180m, representing 18% of the estimated net development value (NDV) of RM1bn. (The Edge)

Nestcon: Unit secures RM3.6m contract to install solar PV system. An indirect unit of construction group Nestcon, whose share price shot up over 20% just two weeks ago, has secured a RM3.6m contract to develop and install a solar photovoltaic (PV) system. Nestcon Solar SB (NSSB), a wholly-owned subsidiary of Nestcon Sustainable Solutions SB, which is in turn a 51%-owned subsidiary of the company, had entered into an agreement with Subang Safety Glass SB to develop, design, install, construct and commission a solar PV system on the rooftop of Subang Safety Glass' premises. (The Edge)

XOX: Plans for 30-to-one share consolidation after proposing capital reduction. XOX said it plans to consolidate every 30 of its shares into one share a month after its proposed share capital reduction to set off its accumulated losses. The share consolidation is part of its plan to improve its capital structure. The reduction in the number of shares available in the market may reduce the volatility of the trading price of the shares. The proposal is not expected to alter the total value of the shares held by shareholders, according to XOX, with the theoretical share price set to increase by 30 times and the total number of issued shares to be reduced by the corresponding ratio. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after Wall Street barreled to records Wednesday as its frenzy around artificial-intelligence technology keeps sending stocks higher. The rally sent the total market value of Nvidia, which has become the poster child of the AI boom, above US$3 trillion for the first time. The S&P 500 climbed 1.2% to top its all-time high set two weeks ago. The Nasdaq composite jumped even more, 2%, and likewise set a record. The Dow Jones Industrial Average, which has less of an emphasis on tech, lagged the market with a gain of 96 points, or 0.2%. Some fatter-than-expected profit reports from tech companies helped drive the market. Hewlett Packard Enterprise jumped 10.7% after saying strong sales related to artificial-intelligence systems helped it deliver better results than expected. It also raised its financial forecasts for the year. Companies have so far been meeting Wall Street’s sky-high hopes for how much money AI technology will generate. That’s helped to catapult stocks almost regardless of what the broader economy and interest rates are doing. Nvidia is leading the way because its chips are powering much of the rush into AI, and it rose another 5.2% to bring its gain for the year to more than 147%. As has become almost routine, Nvidia was again the day’s strongest force lifting the S&P 500. In stock markets elsewhere, indices rose across much of Europe ahead of a decision on interest rates Thursday by the European Central Bank. Investors expect it to cut rates amid worries about the continent’s economy. Stocks fell across much of Asia, with indices dropping 0.9% in Tokyo and 0.8% in Shanghai, but they rose 1% in Seoul. Back home, Bursa Malaysia closed lower, but the key index remained above the 1,600 psychological level. The decline was primarily due to profit-taking activities. At the closing bell, the FBM KLCI was lower by 6.87 points, or 0.43 per cent, to 1,608.53 from yesterday’s close of 1,615.40.

Source: PublicInvest Research - 6 Jun 2024