Economy

US: Dollar stumbles as signs point to Fed skipping June rate hike. The dollar was on track for its worst daily loss in nearly a month as US manufacturing data and comments by Federal Reserve officials reinforced expectations the Federal Reserve will likely skip an interest rate hike at its upcoming meeting. The euro recovered from a two-month low after ECB President Christine Lagarde said further policy tightening was necessary. The dollar index, which measures the currency against a basket of six peers, fell 0.547% at 103.580, off a two-month high of 104.7 touched as investors trimmed bets the Fed will raise interest rates this month. (Reuters)

US: Weekly jobless claims rise slightly, labour market defies recession fears. The number of Americans filing new claims for unemployment benefits increased modestly last week and private employers hired more workers than expected in May, pointing to continued labour market tightness that could push the Fed to keep interest rates elevated. The labour market is slowing only marginally, keeping a much feared recession at bay for now, despite 500 basis points worth of interest rate hikes from the US central bank since March 2022. (Reuters)

EU: Eurozone inflation slows to 15-month low, Lagarde signals more hikes. Confirming the downward trend, Eurozone inflation eased sharply to a 15-month low in May and core inflation slowed for the second month, but the ECB President Christine Lagarde said more monetary policy tightening is needed. Inflation eased to 6.1% in May from 7.0% in April. The rate was forecast to slow to 6.3%. This was the lowest rate since Feb 2022. (RTT)

UK: Manufacturing downturn deepens in May. The British manufacturing downturn worsened in May, as output, new orders and employment all fell at faster rates amid headwinds of weak domestic and foreign market conditions and client de-stocking. The PMI dropped to a four-month low of 47.1 in May from 47.8 in March. The flash estimate was 46.9. All of the PMI components namely output, new orders, employment, stocks of purchases and supplier lead times signalled a deterioration in operating performance. (RTT)

South Korea: Consumer prices rise 0.3% in May. Consumer prices in South Korea were up 03 percent on month in May, Statistics Korea said on Friday. That was shy of expectations for an increase of 0.5 percent following the 0.2 percent increase in April. On a yearly basis, inflation rose 3.3 percent - in line with forecasts and down from 3.7 percent in the previous month. Core CPI, which excludes volatile food costs, gained 0.4 percent on month and 4.3 percent on year after adding 0.4 percent on month and 4.6 percent on year in April. (RTT)

New Zealand: Terms of trade slips 1.5% in Q1. The terms of trade in New Zealand dropped a seasonally adjusted 1.5% on quarter in the first three months of 2023, Statistics New Zealand said. The missed expectations for a decline of 1.3% following the 1.8% increase in the previous three months. Export prices fell 6.9% in Q1, missing forecasts for a drop of 2.2% after easing 0.6% in the three months prior. Export volume rose 1.0%, beating forecasts for a flat reading after slumping 6.3% in the previous quarter. (RTT)

Markets

Kelington: Acquires 17% stake of Ace Gases Marketing for RM4.4m in share swap deal . Kelington Group (KGB) said that its 97.19%-owned subsidiary Ace Gases SB (AGSB) has acquired 85,000 shares or a 17% stake in Ace Gases Marketing SB (AGMSB) from Chong Ann Tsun for RM4.4m. KGB said that the exercise will be wholly satisfied via allotment of 1.55m new shares in AGMSB at an issued price of RM1 per share. The acquisition is considered a related party transaction given Chong’s interest in AGMSB. AGMSB is an 80%-owned subsidiary of AGSB where Chong is a director and a major shareholder in the former. This makes AGMSB an indirect subsidiary of KGB. (The Edge)

Kimlun: Unit bags construction contract worth RM237.6m . Kimlun Corporation has bagged a contract worth RM237.6m for the main building works for two blocks of serviced apartments in Selangor. Kimlun Corp said the contract was awarded to its wholly owned subsidiary, Kimlun SB, by Bayu Melati SB. The construction work is expected to be completed by end of January 2027, it said. (Bernama)

Panasonic: Says shutting down only two manufacturing units in Shah Alam . Panasonic Manufacturing Malaysia has clarified a report that it will shut down several of its operations in Malaysia this year, which will leave hundreds of its workers unemployed. The company stressed that it has only closed two product manufacturing departments at its Shah Alam plant, while it has no plans to close other operations in Malaysia. (The Edge)

Velesto: Secures USD10.9m contract for Naga 2 rig . Velesto Energy has secured a contract worth an estimated USD10.9m (RM50.3m) from Vestigo Petroleum SB for its Naga 2 jack-up rig to drill five wells. The contract, awarded to Velesto’s wholly-owned unit Velesto Malaysian Ventures SB, is expected to commence in 4QFY2023, Velesto said. Vestigo, which develops small and stranded oil and gas (O&G) reserves, is a wholly-owned unit of Petronas Carigali Sdn Bhd. (The Edge)

Meta Bright: Eyes industrial equipment leasing diversification for earnings boost . Towards widening its earnings base, Meta Bright Group (formerly known as Eastland Equity Bhd) plans to expand the group’s leasing and financing business segment to include the provision of industrial machinery and equipment leasing. Its current leasing and financing segment comprises provision of short- to medium-term personal and business loans, but added that the diversification into industrial equipment leasing is expected to contribute at least 25% of its net profit and result in diversion of at least 25% of net assets in the long term. (The Edge)

Citaglobal: Wins RM13m contract to dismantle rest of Port Dickson Power Plant . Citaglobal has secured a RM13.3m contract to dismantle the balance of the power plant owned by Malakoff Corp Bhd's unit Port Dickson Power Bhd. The job involves the decommissioning, dismantling, demolition and disposal of the balance of the 440MW Port Dickson Power Plant (PDPP). The PDPP, which was commissioned in 1995, ceased operations on Feb 28, 2019 due to the expiry of an extended power purchase agreement. (The Edge)

Market Update

The FBM KLCI might nudge higher today after US stocks reached a nine-month high on Thursday as lawmakers in Washington boosted traders’ hopes that the debt ceiling will pass through the Senate by the end of the week, and fresh economic data curbed concerns about a recession. Wall Street’s benchmark S&P 500 added 1%. The tech-heavy Nasdaq Composite gained 1.3%, recouping losses from the previous session. Both indices closed at their highest levels since August 2022. The House of Representatives late on Wednesday passed a bill to raise the debt ceiling — a crucial step to avert a historic default. It will be sent to the Senate, which is the final stage before it can be signed into law. Chuck Schumer, the Democratic leader of the Senate, said the upper chamber of Congress would stay in session until the debt ceiling bill was approved, which would raise the US borrowing limit and set caps on spending for the next two years. In Europe, the region-wide Stoxx 600 closed 0.8% higher, while Germany’s Dax gained 1.2% and France’s CAC 40 rose 0.6%.

Back home, Bursa Malaysia continued to be sluggish on Thursday amid a lack of impetus despite the optimism surrounding the US debt ceiling development. At the closing, the FBM KLCI fell by 4.11 points to 1,383.01 from 1,387.12 at Wednesday’s close. In the region, China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks advanced 0.2% on the back of an unexpected rebound in a critical gauge of Chinese factory activity. The Caixin/S&P Global manufacturing purchasing managers’ index rose to 50.9 in May, in contrast with the official manufacturing PMI released earlier this week, which declined to 48.8. A reading above 50 indicates expansion compared with the previous month. However, gains evaporated in Hong Kong and the benchmark Hang Seng stock index finished 0.1% lower, having fallen nearly 20% since its January peak, near lowest levels since November 2022

Source: PublicInvest Research - 2 Jun 2023