Economy

US: Manufacturing activity increases at slightly faster rate in May . Manufacturing activity in the US expanded at a slightly faster pace in the month of May, according to a report released by the Institute for Supply Management. The ISM said its manufacturing PMI inched up to 61.2 in May from 60.7 in April, with a reading above 50 indicating growth in the manufacturing sector. The uptick surprised economists, who had expected the index to come in unchanged. The modest increase by the headline index reflected an acceleration in the pace of new orders growth, as the new orders index climbed to 67.0 in May from 64.3 in April. On the other hand, the report showed the production index slid to 58.5 in May from 62.5 in April, indicating a slowdown in the pace of growth. (RTT)

US: Construction spending inches up to new record high in April . A report released by the Commerce Department showed US construction spending increased by less than expected in the month of April. The Commerce Department said construction spending edged up by 0.2% to an annual rate of USD1.52trn in April after jumping by 1.0% to an upwardly revised rate of USD1.52trn in March. Economists had expected construction spending to climb by 0.6% compared to the 0.2% uptick originally reported for the previous month. With the modest increase from March's upwardly revised level, the annual rate of construction spending hit a new record high in April. (RTT)

EU: Eurozone factory growth, input costs hit record highs in May — PMI . Eurozone manufacturing activity expanded at a record pace in May, according to a survey which suggested growth would have been even faster without supply bottlenecks that have led to an unprecedented rise in input costs. The bloc's economy has been ravaged by the coronavirus pandemic over the past year, with governments forcing much of the region's dominant service industry to close. But factories largely remained open, and restrictions in various countries have gradually been eased. IHS Markit's final Manufacturing Purchasing Managers' Index (PMI) rose to 63.1 in May from April's 62.9. (Reuters)

EU: German unemployment falls more than expected . Germany's unemployment dropped more than expected in May, providing more evidence of a rebound in the biggest euro area economy. The number of unemployed dropped by 15,000 persons in May after growing a revised 8,000 in the previous month, data from the Federal Labor Office showed. Economists had expected joblessness to decline by 9,000 persons. The first signs of an improvement in the labor market has appeared in May, Chairman of the Federal Employment Agency Detlef Scheele said. (RTT)

China: Factory growth up in May but inflation pressures built — Caixin PMI . China's factory activity expanded at the fastest pace this year in May as domestic and export demand picked up, though sharp rises in raw material prices and strains in supply chains crimped some companies' production, a business survey showed. The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 52.0 last month, the highest level since Dec and inching up from April's 51.9. New orders rose at the strongest pace so far this year and a gauge for export orders was the highest since Nov, but the output reading, while still solid, was slightly lower than the previous month. (Reuters)

Australia: Central bank holds rates as economy charges ahead. Australia's central bank left its cash rate at record lows and reiterated its lower-for-longer policy stance even as data showed the country's economic output was above its pre-pandemic level and house prices were shooting through the roof. The Reserve Bank of Australia (RBA) left its policy settings at 0.1% for a sixth straight meeting, awaiting inflation and wage pressures. (Reuters)

South Korea: Exports post biggest gain since 1988 as world reopens . South Korea’s exports surged the most since 1988 in May as a reopening of overseas economies boosted demand for products manufactured by the Asian nation. Overseas shipments increased 45.6% from the pandemic-driven plunge a year earlier, the trade ministry said, compared with economists’ forecasts for a 48.9% increase. Exports to China rose 22.7% while total semiconductor shipments increased 24.5%. A separate report from IHS Markit showed the country’s manufacturing sector expanded at a slower pace, with the purchasing managers’ index for May at 53.7, down slightly from the previous month. (Bloomberg)

Taiwan: Manufacturing growth slows in May . Taiwan's manufacturing sector expanded at a softer pace in May, figures by IHS Markit revealed. The manufacturing Purchasing Managers' Index rose to 62.0 in May from 62.4 in April. A score above 50 signals expansion. New orders and output increased at the fastest rate for over a decade in May. Purchasing activity expanded to the quickest since March 2020. Delivery times lengthened in May. Staffing levels increased for the seventh straight month and backlogs of work expanded with the rate of accumulation sharpest over eleven years. (RTT)

Markets

Duopharma: Seals agreements to supply 6.4m doses of Sputnik V's Covid-19 vaccines. Duopharma Biotech has concluded the execution of separate definitive supply agreements with the Health Ministry and a subsidiary of the Russian Direct Investment Fund (RDIF) for the supply of 6.4m doses of the Sputnik V vaccine. This followed by the announcement made on Jan 26 this year. (BTimes)

MSM: Completes boiler rectification work. MSM Malaysia Holdings (MSM) has completed its boiler rectification work with all the necessary approvals from relevant authorities and regulatory bodies had been obtained as the work and procedure were certified to be in full compliance with standard industry requirements and policies particularly in the aspects of safety and quality. (BTimes)

Pharmaniaga: To supply seven million doses of Sinovac vaccine to GLCs and state govts. Pharmaniaga has received a request to supply 7m doses of Sinovac Covid-19 vaccine to government-linked companies (GLCs) and state governments. The pharmaceutical company has received a request to supply 4m vaccine doses to GLCs and 3m doses to state governments. However, the delivery timeline is not specify. (The Edge)

Advancecon: Wins RM20m earthworks contract from Sime Darby Property. Advancecon Holdings has bagged a contract worth RM20.21m contract from Sime Darby Property to undertake earthworks and other ancillary works for a construction project in Dengkil. The contract is valid from June 14, 2021 until Sept 13, 2022. (The Edge)

MBSB: Seal chilled water supply agreement. Malaysia Building Society (MBSB) has entered into a chilled water supply agreement with PJ Sentral DCS SB for the supply of chilled water to an office building located at Petaling Jaya for a period of 20 years from Dec 1, 2020, at an estimated total consideration of up to RM73.41m. (Bernama)

Pertama Digital: Ropes in INFOPRO to apply for digital bank licence from BNM. Pertama Digital has roped in banking-as-a service provider INFOPRO SB in its consortium to apply for a digital bank licence from Bank Negara Malaysia (BNM). INFOPRO has served more than 100 banks across 32 countries, mostly located in Southeast Asia and Africa. (The Edge)

TCS Group: Ongoing projects to sustain earnings for 2021. TCS Group expect the progress of its ongoing construction projects to pick up pace for the rest of this year. The company have secured six projects worth a total of RM823.78m. Outstanding order book stands at RM1.07bn. (BTimes)

Microlink Solutions: Inks deal with Chinasoft International to develop joint ICT initiatives. Microlink Solutions has signed an agreement with Chinasoft International Technology Service (HK) Ltd to develop joint information and communications technology (ICT) initiatives and expand their footprint in ASEAN. (The Edge)

Rubber Gloves (Overweight): MARGMA supports 60% workforce ruling under MCO 3.0. The Malaysian Rubber Glove Manufacturers Association (MARGMA) has declared its support for the 60% workforce ruling under MCO 3.0. MARGMA ensuring enough gloves are being produced to meet demand. (The Edge)

Market Update

The FBM KLCI might open flat today after Wall Street stocks trailed behind European bourses, which hit fresh records as commodity prices rallied on hopes that the global economic recovery would continue gathering pace. The blue-chip S&P 500 and the tech-heavy Nasdaq Composite indices were essentially flat by the time the closing bell rang in New York, following a US long weekend for Memorial Day. A handful of “meme stocks” favoured by amateur investors, meanwhile, continued their rally from last week, with the video game retailer GameStop up 12.2% and the cinema operator AMC jumping 22.6%. Across the Atlantic, the Stoxx Europe 600 climbed 0.8% to close at a fresh peak, boosted by mining and energy groups that tracked the oil price higher. Germany’s Xetra Dax and the UK’s mid-cap FTSE 250 indices also closed at all-time highs, driven by investor confidence about accelerating vaccine rollouts and reopenings, while London’s FTSE 100, which is heavily weighted to commodities groups, rose 0.8%.

Back home, the FBM KLCI closed 0.15% or 2.35 points higher at 1,585.90. Regional markets were largely in positive territory. Across the causeway, the Singapore Straits Times Index was 0.56% or 17.66 points higher at 3,181.94. Chinese markets too closed higher. Hong Kong's Hang Seng Index finished 1.08% or 316.20 points higher at 29,468, while the Shanghai Composite was 0.26% or 9.24 points better at 3,624.71. As for the Nikkei 225, it finished 0.16% or 45.74 points lower at 28.814.34.

Source: PublicInvest Research - 2 Jun 2021