Economy

US: Jobless claims dip below 400,000 for first time in pandemic. Applications for US state unemployment insurance dipped below 400,000 for the first time during the pandemic as hiring accelerates and the economy strengthens heading into the summer months. Initial claims in regular state programs decreased by 20,000 to 385,000 in the week ended May 29, Labor Department data showed. The median estimate in a Bloomberg survey of economists called for 387,000 applications. The prior week’s reading was revised down to 405,000. The labour market continues to gain steam as remaining pandemic restrictions are eased and more fully-vaccinated Americans look to resume travel and socializing. (Bloomberg)

US: Private sector job growth far exceeds estimates in May. A report released by payroll processor ADP showed private sector employment in the US spiked by much more than expected in the month of May. ADP said private sector employment soared by 978,000 jobs in May after surging by a downwardly revised 654,000 jobs in April. Economists had expected private sector employment to increase by 650,000 jobs compared to the addition of 742,000 jobs originally reported for the previous month. The jump in May reflected the strongest job growth since private sector employment skyrocketed by 4.350m jobs in June of 2020. "Private payrolls showed a marked improvement from recent months and the strongest gain since the early days of the recovery," said Nela Richardson, chief economist at ADP. (RTT)

EU: Euro zone business growth soared in May as restrictions eased — PMI. Euro zone business activity surged in May as the easing of some coronavirus related restrictions injected life into the bloc's dominant services industry, a survey showed, echoing data which showed factories had their best month on record. An acceleration of vaccine programmes across the region and a fall in reported daily cases has allowed governments to remove some measures imposed to try and stop the spread of the virus. That meant IHS Markit's final composite Purchasing Managers' Index (PMI), seen as a good gauge of economic health, jumped to 57.1 last month from April's 53.8, its highest level since Feb 2018. May's final reading was ahead of a preliminary 56.9 indication and comfortably above the 50 mark separating growth from contraction. (Reuters)

UK: To see 'eye-popping' growth after services PMI hits 24-year high . Britain's services sector recorded the biggest jump in activity in 24 years last month, after pubs and restaurants were allowed to resume serving customers indoors following months of lockdown, according to a closely watched business survey. The IHS Markit/CIPS  Purchasing Managers' Index rose to 62.9 in May from 61.0 in April, taking it to its highest since May 1997 and above an initial estimate of 61.8. "The latest survey results set the scene for an eye-popping rate of UK GDP growth in the 2Q of 2021, led by the reopening of customer-facing parts of the economy after winter lockdowns," IHS Markit's economics director, Tim Moore, said. (Reuters)

China: Services activity growth slows in May - Caixin PMI . China's services sector expansion slowed in May, a private sector survey showed, with weaker overseas demand and increased costs putting pressure on businesses. The Caixin/Markit services Purchasing Managers' Index (PMI) fell to 55.1 in May, down from 56.3 in April but still well in expansionary territory. The 50-mark separates growth from contraction on a monthly basis. The survey attributed part of the slowing expansion to a fall in overseas demand as COVID cases abroad hurt business activity. A gauge of export orders slipped into contraction. The Caixin PMI contrasts with an official survey released earlier this week, which showed activity in China's services sector expanded at a faster pace in May. Though slower to recover from the epidemic than manufacturing, a gradual improvement in consumption has stimulated activity in China's services sector, which includes many smaller and private companies. (Reuters)

Taiwan: Central bank reiterates confidence in economy despite Covid-19 cases. Taiwan's central bank reiterated confidence in the island's economy, despite a spike in Covid-19 cases, although it said it would have to monitor consumption. The government has repeatedly sought to allay fears that the outbreak of coronavirus infections will affect Taiwan's export-dependent economy, a major global supplier of semiconductors. Central bank governor Yang Chin long told reporters it would have to watch how consumption did in the second and third quarters, but exports were holding up and foreign banks and economists all saw growth above 5% this year. "It seems that everyone is still quite optimistic about Taiwan's GDP this year," he said. (Reuters)

Australia: Trade surplus increases in April . Australia's trade surplus increased notably in April as exports increased amid falling imports, the Australian Bureau of Statistics reported. The trade surplus increased to AUD8.02bn from AUD5.79bn in March. This was above the economists' forecast of AUD7.9bn. Exports grew 3% to AUD39.77bn, while imports fell 3% to AUD31.74bn. As the increase in the trade surplus was largely driven by higher commodity prices, export volumes will need to recover further in the months ahead to prevent trade from being a drag on GDP growth yet again in the second quarter, Ben Udy, an economist at Capital Economics, said. (RTT)

Singapore: PMI picks up steam in May – Markit . The private sector in Singapore continued to expand in May, and at a faster pace, the latest survey from Markit Economics showed with a services PMI score of 54.4. That's up from 51.8 in April and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Both manufacturing and services registered stronger performances in May, but the construction sector saw a sharp downturn. The finance and insurance sub-sector registered another rapid rate of expansion in activity. (RTT)

Markets

Yong Tai (Neutral, TP: RM0.31): Gets nod to start Covid-19 vaccine clinical trial. Yong Tai is embarking on Phase III clinical trial for Covid-19 vaccine after receiving approval from the National Pharmaceutical Regulatory Agency (NPRA) for the Clinical Trial Import Licence (CTIL). Yong Tai would be the first private company to conduct Phase III clinical trial for Covid-19 vaccine in Malaysia. (BTimes)

MMC Corp: Syed Mokhtar offers to take private at RM2. MMC Corp’s board today received a notice from its controlling shareholder Seaport Terminal (Johore) SB to privatise the group by undertaking a selective capital reduction (SCR) and repayment exercise at a proposed cash offer of RM2 per share. The exercise is expected to translate into a total capital repayment of RM2.94bn or 48.24% of its share capital. (SunBiz)

Pintaras Jaya: Secures RM108m worth of piling jobs. Pintaras Jaya has secured four new piling contracts worth SGD34.5m or approximately RM108m in Singapore. These projects have commencement dates from May to July this year with contract periods varying from three to seven months. These contracts are expected to contribute positively to FY2021 and FY2022 earnings. (The Edge)

NWP: Leverages on GS Realty to become property developer. NWP Holdings will leverage on GS Realty SB's expertise as part of its diversification plans into the property development. NWP had entered into a memorandum of understanding with Datuk Seri Nelson Kee Soon Ling last month to inject property projects with a total gross development value of RM150m to transform into a property developer. (BTimes)

Mah Sing: Obtains certification to export gloves to Europe. Mah Sing has received approval from European Conformity for its powder-free nitrile examination gloves and powder-free latex examination gloves, which would facilitate the company to tap into the export market to the European region. This marks a step forward for the group to tap the global glove market. (The Edge)

Cahya Mata Sarawak: Appoints KPMG as independent consultant to review certain investments, contracts. Cahya Mata Sarawak has now appointed KPMG Management & Risk Consulting SB as the independent consultant to review the financial management of certain investments and contracts. On May 5, the group announced it had suspended group CFO for 30 days to facilitate investigations. (The Edge)

Sedania: Secures 24 new telco sites. Sedania Innovator has received an additional award from a telco client to expand its GreenTech solutions from the current 10 sites to a total of 34 sites. T he additional 24 sites would be an expansion to the existing energy performance Contract (EPC) which included all measures to reduce energy cost by improving energy efficiency (EE) within the client's facilities. (BTimes)

MR DIY, Supermax: MR DIY Joins FBM KLCI constituents replacing Supermax. MR DIY Group (M) has been included as one of the 30 constituents of the FTSE Bursa Malaysia KLCI to replace rubber glove maker Supermax Corporation. The change was made following the semi-annual review of the FTSE Bursa Malaysia Index Series, which was done in accordance with the index ground rules. (BTimes)

Market Update

The FBM KLCI might open lower today after US stocks came under pressure on Thursday, as investors digested a new investment ban from the Biden administration, fresh economic data pointing to a strengthening labour market and the prospects the Federal Reserve may begin considering scaling back its policy support as inflationary pressures build. The technology-heavy Nasdaq Composite led the day in terms of losses, closing lower by 1%. The blue-chip S&P 500, meanwhile, dropped 0.4%. Big tech stocks including Facebook and Apple fell roughly 1% by the end of trading in New York, while Google parent company Alphabet slid 0.7%. The weakness on Wall Street came as global food prices surged by the biggest margin in a decade in May, according to the UN Food and Agriculture Organization’s monthly food price index. Data out on Thursday also showed initial jobless claims fell to a cycle low last week in the US, indicating the labour market continues to mend. Investors were also forced to grapple with an announcement from the Biden administration that it is banning US entities from investing in dozens of Chinese defence and surveillance technology companies.

Across the Atlantic, the region wide Stoxx Europe 600 benchmark closed down 0.1%, ending two days of back-to-back record highs. The CAC 40 in Paris fell 0.2% while Frankfurt’s Xetra Dax rose 0.2% to close the session at another all-time high.

Meanwhile, London’s FTSE 100 dipped 0.6%.

Back home, the FBM KLCI came down after two days of gains on lack of buying support, amid continued high number of Covid-19 infections and the ongoing full lockdown. The benchmark index opened at 1,599.08 and thereafter remained below the 1,600 psychological levels to close 7.37 points or 0.46% lower at 1,590.57.

In the region, Japan’s Nikkei 225 closed 0.39% higher, while the Shanghai Composite finished 0.36% lower, and Hong Kong's Hang Seng ended 1.13% down.

Source: PublicInvest Research - 4 Jun 2021