Market Review

On Tuesday, the FBMKLCI saw a slight uptick of 0.2%, driven by increased activity in utility stocks, particularly YTL Power (+2.4%) and YTL (+3.8%). The utilities sector led the gains with a 1.3% increase, followed by the energy sector at 0.8%, and construction at 0.6%. Overall market sentiment was positive, with 600 stocks advancing compared to 516 declining.

Economics

US: Producer prices increase more than expected in April

In April, U.S. producer prices increased by 0.5%, exceeding expectations, indicating persistent inflation due to rising service and goods costs. The producer price index (PPI) for final demand rose 2.2% year- over-year, up from 1.8% in March. Despite strong domestic demand driving inflation in the first quarter, economists are hopeful for a price decline as the labour market cools. Financial markets anticipate the Federal Reserve may start easing rates by September, with some expecting a potential rate cut in July, following the Fed's decision to keep rates steady at 5.25%-5.50% earlier this month. (Reuters)

US: Biden imposes tariffs on Chinese chips, critical minerals, EVs

President Biden is increasing tariffs on various Chinese imports, including semiconductors, batteries, and solar cells, aiming to boost domestic manufacturing and address unfair trade practices. The changes, projected to impact around US$18bn in imports annually, represent a comprehensive update to tariffs imposed by the previous administration. Biden's approach seeks to strike a balance between protecting domestic industries and avoiding significant consumer price increases or provoking retaliatory actions from China. (Bloomberg)

UK: Unemployment rises to 4.3%, signalling potential BOE rate cuts

UK unemployment rose to 4.3% in the three months to March, the highest since last summer, while private- sector wage growth eased to 5.9%, slightly below the Bank of England's (BOE) forecast. These indicators suggest a cooling labour market, potentially supporting the BOE's consideration of interest rate cuts from a 16-year high as early as June, contingent on inflationary pressures continuing to subside. (Bloomberg)

Companies

Uzma (7250): Bags non-rig assisted services contract from ExxonMobil

Uzma Bhd has secured a contract from ExxonMobil Exploration and Production Malaysia Inc (EMEPMI) for providing non-rig assisted, electric wireline logging equipment and services in West Malaysian waters. The contract, which spans three years from May 3, 2024, to May 2, 2027, includes technical consultancy, electric-line unit provision, logging services, tractoring, and perforation. Although there are no guaranteed call-offs, the contract is based on agreed rates and work orders issued by EMEPMI during the contract period. (The Star)

BCB (6602): Buys land in Batu Pahat, Johor for RM84m

BCB Bhd is purchasing 59 parcels of freehold land in Batu Pahat, Johor from Lian Hup Seng Sdn Bhd for RM83.7m. The acquisition, which includes several buildings, will add about 286 acres to BCB's land bank. This strategic expansion is expected to enhance BCB's sustainable earnings and support a mixed-use development project with an estimated gross development value (GDV) of RM1.1bn. The development will feature both residential units and retail shops, benefiting from the favourable property market outlook in Johor. (The Star)

Tuju Setia (5297): Receives new substantial shareholder

Yeong Sin Khong has become a substantial shareholder in Tuju Setia Bhd by acquiring 18.2m shares, representing a 5.74% stake, for approximately RM4.9m. This acquisition, made in the open market, includes a direct stake of 4.576% and an indirect stake of 1.168%. With this purchase, Yeong becomes the third-largest shareholder, following co-founder and managing director Wee Eng Kong and non- independent non-executive director Datuk Wee Beng Aun. (The Edge)

Fibromat (03026): Proposes listing transfer to ACE market

Fibromat (M) Bhd plans to transfer its listing from the LEAP Market to the ACE Market of Bursa Malaysia to facilitate larger fundraising exercises and comply with public shareholding requirements by issuing new shares to the public and selected investors. The proposed transfer, aimed at increasing share liquidity and marketability, will support Fibromat's expansion plans and long-term growth. Subject to necessary approvals, the transfer is expected to be completed by Q2 2025. (The Edge)

Source: Mercury Securities Research - 15 May 2024