Economy

• US: Consumers sour on housing market's buying conditions. A record-low percentage of US consumers believe now is a good time to buy a home, with worries about surging prices and a small supply of houses on the market outweighing improved sentiment about their jobs and income. The percentage declined in May to 35% from 47%, Fannie Mae said in its monthly survey of the US housing market. This reading, the lowest since Fannie Mae began the survey about a decade ago, marked the second straight monthly decline and represented a drop of 18 percentage points since March. (Reuters)
• US: Factory orders pull back more than expected in April. A report released by the Commerce Department showed new orders for US manufactured goods pulled back by more than expected in the month of April. The factory orders slid by 0.6% in April after surging by an upwardly revised 1.4% in March. The bigger than expected decrease in factory orders came as orders for durable goods tumbled by 1.3% amid a 6.6% slump in orders for transportation equipment. Meanwhile, the new orders for non-durable goods inched up by 0.1% in April after jumping by 1.6% in March. (RTT)
• US: Employment jumps in May but misses economist estimates. Job growth in the US reaccelerated in the month of May, according to a closely watched report released by the Labor Department, although the increase in employment still fell short of economist estimates. The non-farm payroll employment jumped by 559,000 jobs in May after climbing by an upwardly revised 278,000 jobs in April. Economists had expected employment to surge by 650,000 jobs. Employment in the leisure and hospitality sector showed another significant increase, spiking by 292,000 jobs during the month. (RTT)
• EU: Investor morale rises to highest level since Feb 2018. Investor morale in the eurozone rose for the fourth month in a row in June, reaching its highest level since Feb 2018, lifted by reopening restaurants and tourism resuming as coronavirus cases fall, a survey showed. Sentix’s index for the eurozone climbed to 28.1 from 21.0 in May. A poll had pointed to a reading of 26.0. A current conditions index surged to 21.3 from 6.3. An expectations index eased to 35.3 from 36.8 a month earlier. The eurozone is increasingly leaving the painful losses of the Corona year behind. However, there is a downside to the strong economy and that is foreseeable rising prices. (RTT)
• EU: German factory orders drop after mounting supply shortages. German manufacturers unexpectedly saw demand decline in April, signaling that supply shortages and higher prices are undercutting the country’s economic recovery. Orders fell 0.2%, missing a median estimate for a 0.5% gain. The Economy Ministry said weakness was driven in particular by lower domestic demand. Foreign orders were up 2.7% from the previous month. Manufacturing has been a stronghold in Europe’s largest economy over the past months, benefiting from earlier recoveries in places such as China and the US. (Bloomberg)
• UK: Consumer sentiment rises to 5-year high as lockdown eases. British consumer sentiment rose last month to its highest level since April 2016, bolstered by expectations of greater job security and rising house prices, polling company YouGov said. The YouGov/Cebr figures add to signs of a rapid rebound in Britain’s economy in the 2Q when lockdown restrictions in place since the start of the year eased for many retailers, pubs and restaurants. Economists expect on average that April GDP data due on Friday will show a 2.2% rise from March and will be a massive 27.6% higher than a year earlier, when Britain was in the depths of its first lockdown. (Reuters)
• UK: House prices grew at strongest in seven years. UK house prices grew at their strongest pace in almost seven years as consumers unleashed pent-up savings to gain more space after coronavirus lockdowns. Prices grew 1.3% in May, driving the annual pace of growth to 9.5%. That put the average cost of a home at GBP261,743 pounds (USD369,895). The report confirmed findings of Nationwide Building Society, which also showed prices growing at the fastest since 2014. The market is benefitting from a temporary tax break on property purchases, a buildup in savings by consumers and confidence in recovery from the virus. (Bloomberg)
• China: Trade boom continues in May on strong global demand. China’s exports continued to surge in May, although at a slower pace than the previous month, fueled by strong global demand as more economies around the world opened up. Imports soared, boosted by rising commodity prices. Exports grew almost 28% in dollar terms in May from a year earlier, weaker than forecast and below the pace in April, but still well above historical growth rates. Imports soared 51.1%, the fastest pace since March 2010, leaving a trade surplus of USD45.5bn for the month. Overseas demand for Chinese goods remained strong. (Bloomberg)
• Japan: Coincident index rises in April . Japan’s coincident indicator index rose in April, the government said, even as measures to curb coronavirus infections weighed on economic activity. The index of coincident economic indicators, which consists of a range of data including factory output, employment and retail sales, gained a preliminary 2.6 points from the previous month to 95.5 in April, the Cabinet Office said. (Reuters)

Markets

• Top Glove (Trading Buy, RM7.60): Annual glove production capacity hits 100bn pieces . Top Glove Corp said its annual glove production capacity had increased to about 100bn pieces as at June 2021 to meet strong demand for the product due to the Covid-19 pandemic. (The Edge)
• Cycle & Carriage: Jardine CCL takeover bid for Cycle & Carriage Bintang snubbed for second time . Jardine Cycle & Carriage Ltd’s (Jardine CCL) takeover offer for Cycle & Carriage Bintang has fallen through for the second time in two years. Jardine CCL said it only managed to raise its shareholding by 21.57% to 88.04% or 88.69m shares, from 66.47% on April 7. (The Edge)
• Ekovest: Aborts Johor land deal with IWH for the second time, cites Covid-19 situation . Ekovest has aborted plans to purchase the 96.27 acres of freehold land in Pulai, Johor for RM944.62m from Iskandar Waterfront Holdings SB (IWH) for the second time. The group cited the rising Covid-19 cases and nationwide lockdown as justification for the decision. (The Edge)
• Iris: Announces deal extension . Iris Corp has announced a contract extension with Senegal’s Interior Ministry for the supply and production of 3m new biometric smart national identity and voter cards. It said that the contract is valued at FCFA10.5bn (about RM80.39m) and set for a duration of two years commencing May 3,2021. (StarBiz)
• Heineken: Suspends Sungei Way Brewery operations, sees significant impact . Heineken Malaysia said it has temporarily suspended operations of its Sungei Way brewery along Jalan Klang Lama in Selangor in line with the government’s total lockdown from June 1 till June 14 to curb the sharp rise in Covid- 19 infections in the country. "The mandatory closures and restrictions pursuant to the full lockdown are expected to have a significant impact on the market in general as well as the company’s operations and business. (The Edge)
• Freight Management: Plans to grow overseas operations . Freight Management Holdings (FMH) is eyeing a bigger contribution from its overseas markets, especially in countries that have large populations, to boost its income moving forward. “This way, if the world economy shows growth, it would be good for us. We have offices in (populous) countries that are key markets for us such as Indonesia, Vietnam, Thailand and the Philippines, ” says FMH’s group MD Chew Chong Keat. (StarBiz)
• Sarawak Oil Palms: Buys four land parcels for RM14m. Sarawak Oil Palms (SOP) is acquiring four parcels of land from Shin Yang Construction SB for RM14m to expand its landbank. SOP said its subsidiary Wawasan Asiamaju SB had entered into a sale and purchase agreement with Shin Yang to acquire the land in Kuching North Land District, measuring approximately 9.58 hectares. (The Edge)
• DPI: Plans one-for-two bonus issue . DPI Holdings has proposed to undertake a bonus issue of new shares on the basis of one bonus share for every two existing DPI shares. The Johor based aerosol spray paint maker said the entitlement date will be determined later. (The Edge)

Market Update

The FBM KLCI might open flat today after Wall Street equities were mixed ahead of US inflation data later in the week that may determine the future direction of central banks’ monetary policies. The Dow lost 126.15 points, or 0.4%, to close at 34630.24. The blue-chip index briefly advanced into record territory in morning trading before turning lower. The S&P 500 dropped 3.37, or less than 0.1%, to 4226.52, after the index reached its second-highest close in history on Friday. The technology-heavy Nasdaq Composite rose 67.23, or 0.5%, to 13881.72. US stock indices have been mostly muted in recent trading sessions, with investors assessing a range of factors including the economic outlook, supply-chain problems and high valuations for stocks. While inflation expectations have eased in recent days, investors remain on edge for signs that Federal Reserve officials may consider pulling back on easy-money policies that have supported a months-long rally in equities. In Europe, the Stoxx Europe 600 gained 0.2% to end the session at a high, however, as investors rotated into relatively cheap European equities. The UK’s FTSE 100 climbed 0.1%. Meanwhile, major benchmarks in the region were also mixed. The Shanghai Composite Index rose 0.2%. Japan’s Nikkei 225 added 0.3%, while Hong Kong’s Hang Seng Index declined almost 0.5%.

Source: PublicInvest Research - 8 Jun 2021