HEADLINES

Economy

US: Inflation cools in May, boosting hopes of Fed rate cut. US monthly inflation was unchanged in May as a modest increase in the cost of services was offset by the largest drop in goods prices in six months, drawing the Fed closer to start cutting interest rates later this year. The report from the Commerce Department also showed consumer spending rose marginally last month. Underlying prices advanced at the slowest pace in six months, raising optimism that the US central bank could engineer a much-desired "soft landing" for the economy in which inflation cools without triggering a recession and a sharp rise in unemployment. Traders raised their bets for a Fed rate cut in Sept. (Reuters)

US: Consumer sentiment deteriorates much less than previously estimated in Jun. Revised data released by the University of Michigan showed consumer sentiment in the US deteriorated by much less than previously estimated in the month of June. The University of Michigan said the consumer sentiment index for June was upwardly revised to 68.2 from the preliminary reading of 65.6. The revised reading is still down from 69.1 in May but came in well above economist estimates for an upward revision to 65.8. The report said the current economic conditions index slumped to 65.9 in June from 69.6 in May, while the index of consumer expectations rose to 69.6 in June from 68.8 in May. (RTT)

EU: German unemployment rises more than forecast. Joblessness in German grew more than expected in June and the unemployment rate edged up, preliminary figures from the Federal Labour Agency. The seasonally adjusted unemployment grew by 19,000 persons in June following a 25,000 increase in May. Economists had forecast a rise of 15,000. The jobless rate rose to 6.0% after holding steady at 5.9% in the past few months. The rate was expected to remain unchanged. The number of unemployed totalled 2.781m versus 2.762m in May. "The weakness in the labour market continues, with unemployment and underemployment rising noticeably in June on a seasonally adjusted basis," Federal Labour Agency Chief Andrea Nahles said. (RTT)

EU: French inflation eases to 34-month low, producer prices fall further. France's CPI eased in June to the lowest level in nearly three years amid a slowdown in costs for food and energy, a provisional estimate from the statistical office INSEE showed. A separate official report showed that producer prices declined for the sixth straight month in May. The CPI climbed 2.1% YoY in June, following a 2.3% rise in the previous month. Further, this was the weakest inflation since Aug 2021, when prices had risen 1.9%. This slight fall in inflation was largely due to the slowdown in food and energy prices, the agency said. (RTT)

UK: Economy picks up in early 2024, too late for election boost. Britain's economy pulled out of recession at a faster pace than previously thought in the first three months of this year, revised official data showed, but the broader economic backdrop remains fragile ahead of next week's election. British GDP expanded by 0.7% from the previous quarter, above an initial estimate of 0.6% growth, the Office for National Statistics said. GDP fell for two quarters in a row in the 2H of 2023. (Reuters)

China: June factory activity contracts again, services slows. China's manufacturing activity fell for a second month in June while services activity slipped to a five-month low, keeping alive calls for further stimulus as the economy struggles to get back on its feet. The National Bureau of Statistics (NBS) PMI, at 49.5 in June, was unchanged from May, below the 50-mark separating growth from contraction and in line with a median forecast of 49.5 in a Reuters poll. While a sub-index of production was above 50 in June, other indexes of new orders, raw material stocks, employment, supplier delivery times and new export orders were all in contractionary territory, the NBS survey showed. (Reuters)

Japan: Names new FX diplomat as yen hits 38-year low. Japan appointed a new top foreign exchange diplomat as the yen plumbed a 38-year low against the dollar, heightening expectations of imminent market intervention by Tokyo to shore up the battered currency. Atsushi Mimura, a financial regulation veteran, replaces Masato Kanda, who launched the biggest yen-buying intervention on record this year and aggressively jawboned speculators against pushing down the Japanese currency too much. While the change is part of a regular personnel reshuffle conducted every year, it comes as markets test Japan's resolve to arrest a renewed fall in the yen that adds pain to households and companies by pushing up import costs. (Reuters)

Japan: Housing starts decline 5.3% in May. Japan's housing starts decreased less-than-expected in May after recovering sharply in the prior month, data from the Ministry of Land, Infrastructure, Transport, and Tourism showed. Housing starts dropped 5.3% YoY in May, reversing a 13.9% surge in April. Economists had expected a decrease of 6.1%. Data showed that new construction was contracted in all categories, namely owned, rented, issued, and built for sale. The seasonally adjusted annualized number of housing starts declined to 813,000 in May from 880,000 in the previous month. (RTT)

India: GDP growth to slow modestly this fiscal year and next, Reuters Poll. Forecasts for a mild slowdown in India's fast-growing economy held steady in the first Reuters poll of economists since the ruling Bharatiya Janata Party (BJP) lost its parliamentary majority in phased national elections that ended in early June. Asia's third-largest economy grew 8.2% in the last fiscal year, the fastest among major economies. But growth is set to slow to 7.0% and then 6.7% in the current and next fiscal years, according to a June 19-27 Reuters poll of over 50 economists. (Reuters)

Vietnam: Q2 GDP growth accelerates, inflation pressure rises. Vietnam's economic growth accelerated in the 2Q on robust exports, government data showed, but rising inflation remained a challenge for the Southeast Asian country. GDP is estimated to have expanded to 6.93% in the 3Q from a year earlier, faster than a growth of 5.87% in the 1Q, the government's General Statistics Office (GSO) said. The economy expanded 6.42% in the first half of this year, the GSO added. Vietnam, an important exporter of smartphones, electronics and garments, is seeking to shore up business activity after missing last year's growth target because of weak global demand and power shortages. (Reuters)

Markets

UEM Sunrise (Underperform, RM0.70): Appoints Emily Teh as new chief marketing officer. UEM Sunrise has appointed Emily Teh as its new CMO, effective April 15, 2024. The developer said Teh has over 25 years of experience in various sectors including retail, real estate, and commercial asset management. Her diverse background, ranging from frontline sales to property development, positions her uniquely to lead UEM Sunrise’s marketing strategies and execution of the company’s strategic turnaround plan. (SunBiz)

Haily: Bags RM54m residential construction job in Johor. Builder Haily Group has secured a RM53.72m contract from Venice View Development SB to build 221 units of two-storey houses, three units of Tenaga Nasional (TNB) sub-stations and a TNB main switch station in Pulai, Johor. Its wholly-owned subsidiary Haily Construction SB has accepted a letter of award for the proposed job, which encompasses two parcels of land. (The Edge)

Sentoria: CEO Loh Yuen Tuck resumes duties after one-month suspension. Sentoria Group announced that its chief executive officer (CEO) Datuk Loh Yuen Tuck will resume his duties immediately after a one-month suspension, due to alleged misconduct. As such, the appointment of an external inquiry team (EIT) will be unnecessary. The inquiry covers Loh's alleged absence from office without notice since May 17, abuse of authority, and other misrepresentation and irregularities. (The Edge)

Coastal Contracts: Secures RM64.1m liftboat contract extension. Coastal Contracts' subsidiary, Elite Point Pte Ltd, has secured a contract extension for its liftboat valued at approximately RM64.1m. Coastal Contracts said the extended charter contract tenure is for one year. The extended charter contract is expected to contribute positively to the earnings and net assets of the company for the FYE 2024 and the financial period thereafter during its extended contract tenure. (StarBiz)

MAHB: Units seek summary judgement against MYAirline. Malaysia Airports Holdings’ two subsidiaries are seeking a summary judgement from the High Court against MYAirline SB in their claim for RM17.74m owed by the troubled carrier. MYAirline had sought to strike out the bid for summary judgement by Malaysia Airports SB (MASB) and Malaysia Airports Sepang SB (MASSB), for which oral submissions were heard before Judicial Commissioner Gan Techiong. (The Edge)

Kawan Renergy: Unit bags RM11.8m fabrication contract. Kawan Renergy's wholly-owned subsidiary Kawan Engineering SB (KESB) has secured a RM11.8m contract for fabrication works at the Malaysia site of Chemical Industries (Malaysia) SB. KESB will be providing fabrication and installation works for the conversion of molasses to corn as raw material for a bio ethanol production plant. (StarBiz)

Betamek: Completes acquisition of Sanshin for RM13.4mil. Betamek has completed the acquisition of a 100% equity interest in Sanshin (M) SB, an established player in the automotive electronics manufacturing sector for RM13.4m cash. The EMS provider, in a statement, said the acquisition is valued at a PE of 10x, based on the audited PAT of RM1.3m for Sanshin, reflecting both the strategic value and the financial health of the acquired entity. (StarBiz)

MARKET UPDATE

The FBM KLCI might open with a whimper after stocks on Wall Street gave up early gains and finished lower Friday, ending a three-week winning streak for the S&P 500. A flurry of selling late in the day left the benchmark index 0.4% lower and in the red for the week. The Nasdaq composite fell 0.7%, while the Dow Jones Industrial Average ended 0.1% lower. Despite the downbeat finish, the S&P 500 and the Nasdaq remain near their all-time highs. The market headed higher in the early going following a closely watched report that showed inflation continues easing. Investors are hoping that cooling inflation will prompt the Federal Reserve to start cutting interest rates, which remain at their highest level in more than 20 years. Consumer prices in the US rose 2.6% in May compared with a year ago, according to the latest personal consumption expenditures index, or PCE. That signaled continued easing from a 2.7% reading in April and is sharply lower than the peak reading of 7.1% two years ago. European shares gave up early gains to close lower on Friday as a drop in shares of beauty giant L'Oreal weighed, while the benchmark index clocked weekly, monthly and quarterly declines on French political uncertainties. The panEuropean STOXX 600 closed 0.2% lower, extending losses to the fourth straight session. Back home, Bursa Malaysia ended the week on a positive tone in tandem with the upbeat performance across the region with buying mainly in telecommunications stocks. At the closing bell, the FBM KLCI rose 0.33% or 5.15 points to an intraday high of 1,590.09 from Thursday’s close of 1,584.94. Meanwhile, MSCI's gauge of stocks across the globe fell 1.74 points, or 0.22%.

Source: PublicInvest Research - 1 Jul 2024