Economy

US: Fed says economy expanded at somewhat faster rate. The Federal Reserve's Beige Book said US economy increased at a somewhat faster rate from early April to late May. The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, still described the pace of economic growth as moderate. (RTT)

US: Fed plans to wind down a pandemic corporate credit facility. The Federal Reserve Board plans to begin gradually selling a portfolio of corporate debt purchased through an emergency lending facility launched last year, as the Covid-19 pandemic was spreading panic through financial markets. (Bloomberg)

EU: Producer price inflation accelerates sharply in April. Eurozone producer price inflation accelerated sharply in April driven by higher energy prices, data from Eurostat showed. Producer price inflation rose to 7.6% in April from 4.3% in March. This was also bigger than economists' forecast of 7.3%. Excluding energy, producer prices rose 3.5% on year, following a 2.3% increase in March. (RTT)

EU: Germany retail sales fall more than expected in April. Germany's retail sales declined more than expected in April, data released by Destatis revealed. Retail sales declined 5.5% on a monthly basis, reversing March's 7.7% increase. Economists had forecast sales to drop 2% in April. On a yearly basis, growth in retail sales slowed to 4.4% from 11.6% in March. (RTT)

EU: IMF sees Greek economy growing 3.3% in 2021, boosted by EU funds, tourism. The Greek economy should grow by 3.3% this year and 5.4% in 2022, fuelled by European recovery fund investment, pent-up consumer demand and an expected return of tourism, International Monetary Fund officials said. (Reuters)

UK: Mortgage approvals rise more than expected in April. UK mortgage approvals increased more than expected in April, figures from Bank of England showed. The number of mortgages approved for house purchase rose moderately to 86,921 in April from 83,402 in March. The expected level was 84,980. Net mortgage borrowing fell to GBP3.3bn from a record GBP11.5bn in March. Economists had forecast borrowing to decline to GBP6.6bn. (RTT)

Indonesia: Consumer prices rise more than expected in May. Indonesia's consumer prices increased more than expected in May, data from the statistics bureau showed. Consumer prices rose 1.68% YoY in May. Core inflation was 1.37% in May, which was above the 1.28% economists had forecast. (RTT)

Markets

Axiata (Neutral, TP: RM4.00): RHB Bank, Axiata’s unit Boost to jointly apply for digital banking license . Axiata’s subsidiary Boost Holdings and RHB Banking have signed agreement to form a consortium to apply for a digital banking license from Bank Negara Malaysia (Bursa).

Comment: Boost would own a majority stake of 60% in the joint venture with the remaining 40% held by RHB. Both parties plan to leverage on Boost’s extensive fintech experience in digital micro-financing and micro-insurance as well as e-wallet business to develop digital products and services for micro entrepreneurs, SMEs and those in the gig economy. While we are positive on this as it could potentially enable Axiata to expand into a complementary business by weighing on the internet to deliver banking services, the award of the licences will only be made known by BNM towards end of next year. The deadline for the submission is June 30. At this juncture, no changes to our earnings forecasts and rating on Axiata.

Top Glove (Trading Buy, TP: RM7.60): Remains committed to Hong Kong listing plan. Top Glove remains committed to the proposed IPO in Hong Kong. it said where appropriate, material developments regarding this matter will be announced on the relevant stock exchanges. (The Edge)

Techfast: Signs another marine fuel oil deal with Wise Marine valued at RM1.46bn. Techfast has secured a RM1.46bn contract to supply a range of marine fuel oils over a three-year period to a Singapore-based integrated marine fuel oil logistics provider. Techfast will supply Wise Marine Pte Ltd up to 20k tonnes of low sulphur fuel oil, low sulphur marine gas oil and high sulphur fuel oil every month. (The Edge)

Iris: Bags RM1.09bn NIISe project. Iris Corp has secured a RM1.09bn contract for the National Integrated Immigration System (NIISe) project from the Home Affairs Ministry. It has accepted a supplemental letter of award (SLOA) from the ministry with a reduced applicable sales and service tax to RM33.06bn from RM65.6m. (NST)

Datasonic: Bags RM39.75m contract from Home Affairs Ministry. Datasonic Group has bagged a RM39.75m contract from Home Affairs Ministry for maintenance services at all National Registration Department's card personalisation centres. (NST)

Ta Win: Proposes two-for-five bonus warrants. Ta Win has proposed a bonus issue of up to 1.49bn warrants on the basis of two-for-one. The entitlement date of the bonus issue will be determined later. (The Edge)

Computer Forms: Proposes four-for-one bonus issue. Computer Forms has proposed a bonus issue of up to 164m new shares on the basis of four bonus shares for every one existing share. The group said the bonus issue will provide shareholders with greater participation in the equity of the company. The number of the group’s shares is expected to increase to 205m after the bonus issue, from 41m currently. (The Edge) 

Market Update

The FBM KLCI might open higher today after meme stocks favoured by retail investors soared on Wednesday in a session that saw a large uptick in derivatives trading. Companies targeted by retail investors rallied, including the cinema chain AMC, the software group BlackBerry and the retailer GameStop all gained more than 10%. AMC shares almost doubled in value by the end of the day. The broader market ended the session little changed. The blue-chip S&P 500 climbed 0.2% while the technology-heavy Nasdaq Composite edged 0.1% higher. Just over half of the 505 stocks within the S&P 500 advanced on Wednesday. The region wide Stoxx Europe 600, which reached an all-time high on Tuesday, gained 0.3%, boosted by energy stocks. Paris’s CAC 40 and the Xetra Dax in Frankfurt both advanced and closed up 0.5% and 0.2%, respectively. Across the Channel, London’s FTSE 100 ended the session 0.4% higher.

Back home, the FBM KLCI rose for the second consecutive day, closing 12.04 points or 0.76% higher at 1,597.94 as market sentiment was boosted by a further rise in crude oil prices. All but three of the 30 index-linked counters rose, led by RHB Bank Bhd, Hap Seng Consolidated Bhd and Axiata Group Bhd. The FBM KLCI's gain was in contrast to the losses recorded by most Asian bourses. Hong Kong's Hang Seng index fell 0.58% or 170.38 points to 29,297.62 points, Shanghai Composite closed 0.76% or 27.58 points lower at 3,597.14, and Singapore's Straits Times Index fell 0.8% or 26.19 points to 3,161.04.

Source: PublicInvest Research - 3 Jun 2021