Market Review

The FBMKLCI ended last Friday in loss, closing 0.3% lower mainly due to profit-taking activities in selected heavyweights. This can be observed on the underperformance of YTLPOWR (-3.9%), YTL (--2.1%) and PETDAG (-1.4%). Among the sectors, Technology (-1.0%), Utilities (- 0.8%) and Telecommunication & Media (-0.7%) are some of the sectors that registered losses. Likewise, the broader market sentiment turned negative, with 639 losers against 532 gainers.

Economics

US: Consumer sentiment falls to eight-month low on high prices

US consumer sentiment unexpectedly declined to 66 in July from 68.2, according to the preliminary reading from the University of Michigan, which is the lowest level in eight months in early July as high prices continued to weigh on Americans’ views of their finances and the economy. Data earlier this week showed inflation cooled broadly in June, with a measure of underlying price trends posting its smallest advance since 2021, while a separate report Friday showed a firmer-than-expected rise in wholesale inflation. (Bloomberg)

Argentina: Inflation snaps Milei’s five-month slowdown streak

Argentina recorded the first monthly pick-up in inflation of the year shown by the rose in consumer prices to 4.6% in June from May, marking a slight reversal of the downward streak President Javier Milei put in motion with his aggressive economic shock therapy. Utilities led all categories in price hikes as Argentines’ electricity and gas bills soared in June while Milei slashed generous subsidies that have allowed most households to pay less than 5% of the real cost of electricity for years. In doing so, the administration more than doubled energy bills for middle-class residences and set limits on how much poor households can consume while benefitting from the government assistance. (Bloomberg)

Brazil: Finance Chief says Lula moved past anger at Central Bank

Brazil President Luiz Inacio Lula da Silva ’s outrage toward the nation’s central bank who paused the monetary easing cycle last month has passed, his finance minister, Fernando Haddad said Friday following a fresh streak of blistering criticism from the leftist leader. Lula faces a challenge in working with a central bank governor who was nominated under the prior administration. However, Haddad mentioned on Friday that they turned the page, and they’re not going to dwell on a matter that has been overcome. (Bloomberg)

US: Producer Prices move higher as service provider margins climb

The producer price index for final demand rose 0.2% from a month earlier, according to Bureau of Labor Statistics data published Friday. Compared with a year ago, the PPI rose 2.6%. The PPI report showed services costs increased 0.6%, with nearly all the advance tied to a 1.9% jump in margins at wholesalers and retailers. Goods prices fell 0.5%. Among those categories, physician care costs edged up 0.2%, the cost of hospital outpatient care rose 0.1% and inpatient care climbed 0.5%, where all more modest advances than in May. At the same time, airfares increased 1.1% and prices for portfolio management services climbed 1%. (Bloomberg)

India: Inflation accelerates in June, justifying rate pause

India’s inflation accelerated to a four-month high in June, justifying the central bank’s decision to keep interest rates higher for longer. The consumer price index rose 5.08% from a year earlier, compared with 4.75% in May, the Statistics Ministry said Friday. Housing prices rose 2.69% from a year earlier, compared to 2.56% the previous month. Clothing and footwear costs remained steady at 2.73% in June from a year earlier, compared to 2.74% in May. Fuel and electricity costs fell 3.66% last month. Separately, factory output grew 5.9% in May, compared to 5% in the previous month. Governor Shaktikanta Das said on Thursday that inflation is moving very slowly towards the Reserve Bank of India’s (RBI) 4% target and that it’s premature to discuss interest rate cuts. (The Edge)

Companies

Kimlun Corp: Forms JV to build serviced apartments in JB

Kimlun Corp Bhd’s wholly-owned subsidiary, Kii Amber Sdn Bhd, is teaming up with Astaka Holdings Ltd’s indirect 51%-owned unit, Astaka Capital Sdn Bhd, to form a joint venture company (JVco). This JVco will develop a residential serviced apartment project in Johor Bahru, related to phase three of Arden @ One Bukit Senyum. The project is scheduled to launch in the fourth quarter of 2024, with construction expected to be completed within 48 months. The gross development value (GDV) of the project is estimated to be RM600m. The JVco has also proposed to acquire a parcel of land measuring 1.662 acres in Johor Bahru for RM61.5m or RM77 per sq ft to be developed for the residential serviced apartment project. (The Edge)

Nestcon: Aims to raise RM27m via private placement

Nestcon Bhd aims to raise RM27.3m through a private placement of 70.8m shares or 10% of its enlarged share base. A total of RM22m of the gross proceeds will be allocated to repaying its bank borrowings. Another RM4.6m will be used for working capital in construction projects, as well as for engineering, procurement, construction and commissioning (EPCC) of solar photovoltaic (PV) projects. The remaining RM685,000 will cover estimated expenses related to the proposed private placement. (The Edge)

Tafi Industries: Bags RM207m contract for mixed-used development in Setia Alam

Tafi Industries Bhd has bagged a construction contract as well as piling and project furniture works worth a combined total of RM207.5m for a mixed-use development project that comprises a serviced apartment and a small-office, home-office (SOHO) block in Setia Alam, Selangor. The latest contract won increased Tafi’s outstanding order book to RM507.7m. The tenure for constructing the main building and associate works is 42 months, with a contract value of RM186.6m. The piling and project furniture construction works have a tenure of six months, worth RM20.9m. (The Edge)

Theta Edge: RM673.8m 'investment' for new IoT project is actually opex

Theta Edge Bhd is now saying that the RM673.8m it planned to invest to develop Internet of Things (IoT) technology for a project for the Ampang Jaya Municipal Council (MPAJ) is actually the operating expenditure (opex), rather than the actual investment that is required for the project over a 20-year concession period. In short, Theta Edge had referred to the RM673.8m first as value of the project, then opex, then investment cost, and now opex again. (The Edge)

REDtone: Becomes fourth-largest shareholder in Theta Edge

REDtone Digital Bhd has acquired 8.4m shares, representing a 7.1% stake in Theta Edge Bhd, from the open market for about RM13.9m cash, funded using internal funds from the group and its subsidiaries. This makes REDtone the fourth-largest shareholder in Theta Edge. (The Edge)

Toyo Ventures: US$980m equipment financing facility voided

Toyo Ventures Holdings Bhd said that the US$980m (RM4.6bn) financing facility it secured from i-Power Solutions Pte Ltd for its wholly owned subsidiary, Song Hau 2 Power Company Limited’s (SH2P) thermal power plant project is no longer applicable due to project termination by the Vietnamese government. SH2P received a letter from Vietnam's Ministry of Industry and Trade (MOIT) on July 1, indicating that despite the 90-day termination notice, SH2P had not resolved the necessary financial arrangements for the project. Toyo Ventures said it is currently assessing the implications of the notice and will seek legal advice to explore suitable action and remedies under the terms of the BOT contract. SH2P is still in the process of finalising syndicated financing facilities for the power plant project. (The Edge)

Source: Mercury Securities Research - 15 Jul 2024