Economy

US: New home sales creep up; supply, prices remain constrainted. Sales of new US single-family homes increased in July after three straight monthly declines, but housing market momentum is slowing as surging housing prices amid tight supply sideline some first-time buyers from the market. Though the report from the Commerce Department showed a big increase in new housing inventory, the jump was driven by a record rise in homes that are yet to be built. New home sales rose 1.0% to a seasonally adjusted annual rate of 708,000 units last month. June's sales pace was revised up to 701,000 units from the previously reported 676,000 units. (Reuters)

EU: German consumers, state spending drive Q2 economic recovery. The German economy grew more than expected in the 2Q as the easing of COVID-19 curbs spurred consumers to dip into record savings piled up during the winter lockdown and the state pressed on with a huge debt-financed stimulus push. GDP grew an adjusted 1.6% on the quarter, the Federal Statistic Office said, up from its previous estimate of 1.5% and following a revised first quarter contraction of 2%. On the year, Europe’s largest economy expanded by a calendar-adjusted 9.4% in the 2Q, leaving economic activity 3.3% below the pre-crisis levels of the 4Q of 2019. Private consumption grew by 3.2% between April and June. (Reuters)

UK: Retail sales surge in August, price pressures up too - CBI. British retailers reported the biggest surge in spending in almost seven years this month and orders hit a new high but stocks fell to the lowest levels on record, putting pressure on prices, industry data showed. The Confederation of British Industry’s measure of the volume of sales compared with a year earlier soared to +60, the highest since Dec 2014, from +23 in July. A poll of economists had pointed to a fall to +20. Consumer demand was spurring an economic recovery from the coronavirus crisis but spending was expected to settle down later in the year. (Reuters)

UK: Property sales halve after surging to beat tax break deadline. The number of homes sold in the UK fell by more than half last month after the scaling-back of a tax break designed to encourage home purchases during the coronavirus crisis, official data showed. Britain’s tax office said 73,740 homes were sold in July on a seasonally adjusted basis - 63% fewer than in June when buyers had rushed to complete sales before a COVID emergency tax break was reduced, although 4% more than in July 2020. Sales were down 24% compared with the same month in 2019, before the pandemic. British finance minister last year temporarily scrapped the stamp duty tax on the first GBP500k (USD685,550) of property purchases in England and Northern Ireland. (Reuters)

UK: Construction and manufacturing push up wage inflation. Britain’s construction, manufacturing and food preparation industries are pushing wages higher across the economy due to a shortage of workers to fill available jobs. Building companies increased pay by 6.7% from Feb to July 2021 to draw more workers into the industry, according to data from jobs site Indeed. That compares with wage growth of just 0.8% across all jobs. The Bank of England is keeping a close eye on whether salary increases will lead to more persistent increases in prices across the economy. (Bloomberg)

India: July oil imports hit 1-year low on refinery maintenance. India’s July crude oil imports slumped to their lowest in a year, tanker arrival data from industry sources showed, and are likely to rebound in August as refiners are expected to boost runs after maintenance of units. Crude imports in July fell 12.5% MoM to 3.4mbbls/day, but rose 12.8% YoY, as refiners shut units for maintenance and cut crude imports anticipating lower fuel demand during the monsoon season. Government data released showed India’s oil imports declined to about 15.02mt, about 3.5mbbls/day. (Reuters)

South Korea: Business confidence index slips in Aug - BoK. Business sentiment in South Korea ebbed in Aug, the latest survey from the Bank of Korea showed with a business confidence index score of 95.0 - down from 97.0 in July. The outlook for the following month rose by 4 points to 96. In the non-manufacturing sector, the BSI on business conditions for Aug was 81, up 2 points from the previous month. The outlook for the following month also rose by 3 points to 81. The Economic Sentiment Index (ESI)-a composite of the BSI and the CSI (Consumer Survey Index) for Aug was 105.3, up 1.4 points from July. (RTT)

South Korea: Consumer confidence ebbs in Aug - BoK. Consumer confidence in South Korea dipped slightly in Aug, according to the latest survey from the Bank of Korea's sentiment index, which came in with a score of 102.5 - down from 103.2 in July. Consumer sentiment regarding current living standards and their future outlook were unchanged at 91 and 96, respectively. (RTT)

Markets

AirAsia (Underperform, TP: RM0.19): Rolls out ride-hailing service. AirAsia Group has launched its very own ride-hailing services dubbed as Airasia ride as the airline industry continues to struggle with the Covid-19 pandemic and travel bans. (StarBiz)

Comment: There are likely synergies between Big Pay (higher business flow) and Teleport (supplementing its existing last-mile delivery capabilities with greater capacity and reach). This new venture is part of the Group’s multi-service offering strategy to build an ecosystem around itself and increase its super app “stickiness” in the mass market, though financial impact may not be as apparent yet. While we like this aspect of the Group’s business, the Covid-19 pandemic continues to weigh heavily on its overall operations. We maintain our Underperform call.

Tenaga (Outperform, TP: RM12.42): Divests Indian investment as utility shifts effort to pursue growth in focused markets. Tenaga Nasional Bhd (TNB) said that via its wholly-owned subsidiary TNB Topaz Energy SB it has divested its entire tranche one investment comprising 105.6m units in a compulsory convertible debenture issued by India-based GMR Bajoli Holi Hydropower Private Ltd for INR1.18bn (RM67.04m) to streamline TNB's international portfolio. The company said it is defocusing on India, and shifting its effort to pursue growth in TNB's focused markets such as the UK, Europe and Southeast Asia. (The Edge)

Salutica: Closes production areas after workers tested positive for Covid-19. Salutica has sealed its production areas after a member of its production workers tested positive for Covid-19. The company said the affected areas have been closed for deep cleaning purposes and sanitisation, adding that affected production workers have been quarantined accordingly. (Bernama)

Bina Puri: Plans private placement to raise RM7.7m for working capital. Bina Puri Holdings has proposed to undertake a private placement of up to 10% of its total number of issued shares or 143.11m shares, which based on an illustrative price of 5.41 sen per placement share is expected to raise RM7.74m, of which RM7.4m would be used for working capital. (The Edge)

Berjaya Corp: Is now the largest hotel operator in Iceland. Berjaya Corp (BCorp) CEO Abdul Jalil Abdul Rasheed said the diversified group via subsidiary Berjaya Land is now the largest hotel operator in Iceland with 1,471 keys across 14 hotels in that country under various brands. He said the group's Iceland hotels have bounced back very quickly due to Covid-19-led quarantine restrictions being removed. (The Edge)

Press Metal: 2Q net profit surges threefold on higher aluminium prices, declares one sen dividend. Press Metal Aluminium Holdings net profit surged nearly threefold in the 2Q to RM255.58m, from RM90.07m a year earlier, due to higher aluminium prices. Revenue rose 52.22% to RM2.64bn from RM1.73bn in the same quarter last year. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks closed at record levels on Tuesday, as investors shook off Delta variant fears and turned their attention to a speech from Fed chair Jay Powell at Jackson Hole on Friday. Despite fading in late afternoon trade, Wall Street’s S&P 500 finished 0.2% higher and the techheavy Nasdaq Composite closed up 0.5%. Stocks had been even higher earlier in the trading session following the Food and Drug Administration’s approval on Monday of the Pfizer-BioNTech vaccine. While many investors expect that the Fed will announce a tightening of monetary policy in the near future, few anticipate Powell to announce the withdrawal of the central bank’s $120bn-amonth asset purchase programme that has helped buoy asset prices, at the closely watched meeting of leading monetary policymakers in Jackson Hole on Thursday and Friday. Across the Atlantic, it was a mixed session; the region-wide Stoxx 600 closed flat while France’s Cac 40 lost 0.3%. Germany’s Dax rose 0.3%, while London’s FTSE 100 ended the day 0.2% higher.

Back home, the FBM KLCI marched higher for the third straight trading session to close at its two-month high, as investors collected oversold stocks following the recent selldown. At 5pm, the KLCI climbed 30.94 points or 2.03% to close at its intraday high of 1,553.37 — also its highest since June 25. The upbeat mood was also evident in key regional markets. Japan's Nikkei 225 rose 0.87%, South Korea's Kospi added 1.56%. In China, Hong Kong's Hang Seng Index jumped 2.46% and the Shanghai Stock Exchange Composite Index advanced 1.07%.

Source: PublicInvest Research - 25 Aug 2021