Economy

US: Housing starts rebound in May but building permits slump . After reporting a sharp pullback in new residential construction in the US in the previous month, the Commerce Department released a report showing housing starts rebounded in the month of May. The Commerce Department said housing starts jumped by 3.6% to an annual rate of 1.57m in May after plunging by 12.1% to a revised rate f 1.52m in April. (RTT)

US: Import prices accelerate in May; export prices surge. US import prices increased more than expected in May as the cost of petroleum products rose and supply chain bottlenecks boosted prices of other goods, adding to signs that inflation was heating up amid a reopening economy. Import prices rose 1.1% last month after gaining a 0.8% in April, the Labor Department said. The seventh straight monthly gain lifted the YoY increase to 11.3%, the largest rise since Sept 2011. Import prices surged 10.8% on a YoY basis in April. Economists polled by Reuters had forecast import prices, which exclude tariffs, rising 0.8%. (Reuters)

EU: German Ifo institute lowers growth outlook . The German economy is set to grow at a slower than previously estimated pace this year as the bottlenecks in the supply of intermediate products weigh on manufacturing activity, the ifo Institute said in its Summer forecast. GDP is expected to grow 3.3% in 2021, down from the 3.7% growth estimated in March. However, the projection for next year was lifted to 4.3% from 3.2%. With falling infection rates and progress in vaccination against Covid-19, the existing economic restrictions should gradually be lifted, the think tank noted. (RTT)

UK: Inflation’s jump above BOE goal heats up debate on prices . UK inflation surged unexpectedly past the BoE’s target for the first time in almost two years, lifting the pound and adding to speculation about when monetary policy could be tightened. Consumer prices rose 2.1% from a year earlier, the highest since July 2019, the Office for National Statistics. Economists and the BOE had expected an increase of 1.8%. Core inflation jumped to 2%, the most since Aug 2018. (Bloomberg)

China: Economic data disappoints as consumer spending lags . China’s main economic data missed estimates in May as the recovery continues to stabilize from the first quarter’s record expansion, with retail spending still lagging expectations. Industrial output rose 8.8% in May from a year earlier, below the 9.2% forecast by economists in a Bloomberg survey. Retail sales increased 12.4% versus an estimate of 14%. Fixed-asset investment increased 15.4% in the first five months of the year from the same period in 2020. The unemployment rate eased to 5% in May from 5.1% in the previous month. On a two year average basis, which strips out the impact of last year’s pandemic, industrial production rose 6.6% in May, while retail sales grew 4.5%. Manufacturing investment rose 0.6% in January-May on this basis, after four previous months of declines. (Bloomberg)

Japan: Core machine orders gain 0.6% in April . The overall value of core machine orders in Japan advanced a seasonally adjusted 0.6% on month in April, the Cabinet Office said - standing at JPY802.9bn. That missed expectations for an increase of 2.7% and was down from 3.7% in March. On a yearly basis, core machine orders gained 6.5% - again missing expectations for 8.0% following the 0.2% contraction in the previous month. The total value of machinery orders received by 280 manufacturers operating in Japan (including volatile ones from ships and electric power companies) jumped 18.2% on month and 19.5% on year in April. (RTT)

Australia: Westpac leading index signals above trend growth . Australia's economy is set to log a more sustainable above trend growth through the remainder of 2021 and 2022, according to Westpac report. The six-month annualized growth rate in the Westpac-Melbourne Institute Leading Index, slowed to 1.47% in May from 2.86% in April. Over the second half of 2021, Westpac expects that annualised pace to slow further to 4.5%, while the next year growth is forecast at a more normal but still healthy 3.2%. (RTT)

Markets

Magni-Tech (Outperform, TP: RM2.88): Sells freehold land in Penang for RM23m. Magni-Tech Industries is disposing of 26,951 sqm of freehold land at the Valdor Industrial Area in Seberang Perai for RM23.3m to Hiap Hoong Industry (M) SB. The disposal is aimed at unlocking the value of the property which is not being used and not generating any income. (The Edge)

Cypark: Proposes up to 105m new ordinary shares private placement. Cypark Resources has proposed to undertake a private placement of up to 105m new ordinary shares, representing up to 20% of the total number of shares. The utilisation would expand the competitive advantage and increase its foothold as a contributor to the government initiatives to increase renewable energy production. (The Edge)

Yinson: Invests in Oyika to accelerate e-mobility adoption. Yinson Holdings has invested in Singapore technology company Oyika Pte Ltd to accelerate electric vehicle (EV) adoption in Southeast Asia. The energy infrastructure and technology company shares the same goal with Oyika, which is to develop a more environmentally sustainable transport network. (Bernama)

Techna-X: Inks agreement for smart city lighting projects. Techna-X has signed a sale and purchase agreement to acquire a 49% stake in NHK Energy Construction SB (NHK) which will fast-track the former's expansion into the green energy segment in smart city developments in Malaysia as well as in the Asia Pacific region. (BTimes)

Seni Jaya: Identifies programmatic digital out-of-home advertising as key strategy. Seni Jaya Corporation (SJCB) has identified programmatic digital out-of-home (PDOH) advertising as one of its key strategies to adapt to the rapidly changing landscape of the advertising industry. PDOH advertising would be one of the company's key focuses going forward, given its vast potential. (BTimes)

CAB Cakaran: Suspends ops at one of its factories after 162 workers tested positive for Covid-19. CAB Cakaran Corp has suspended operations at one of its factories after 162 Covid-19 infections were found among its workers. The Covid-19-positive cases were confirmed between June 10 and June 11. The affected factory received a notice with instructions to suspend its operations from June 11 until further notice. (The Edge)

Techbond: New upstream polymerisation plant in Vietnam commenced operation. Techbond Group (TGB) new upstream polymerization plant in Vietnam has commenced production of base material, polyvinyl acetate (PVAc) polymer, the raw material used by TGB to manufacture industrial adhesives. The production will enable TGB to achieve cost savings through reduced transportation of raw materials from third-party suppliers. (BTimes)

NPC Resources: Faces suspension if it fails to submit 2020 annual report by June 22. NPC Resources faces a suspension of the trading of its shares on Bursa Malaysia with effect from June 23 if it is unable to submit its 2020 annual report by June 22. The company had failed to issue the annual report by the extended deadline of June 15. (The Edge)

Market Update

The FBM KLCI might open lower today as treasury yields surged and US stocks slipped after policymakers at the Federal Reserve signalled that they expected to lift interest rates in 2023, a year earlier than previously thought. The equity market slid alongside the rise in Treasury yields, with the blue-chip S&P 500 declining 0.5% and the technology-heavy Nasdaq Composite sliding 0.2%. Meanwhile, European stocks finished at new records before the release of the Fed decision. The Stoxx Europe closed up 0.2% for another all-time peak, the region-wide benchmark’s ninth session of back-to-back rises. Frankfurt’s Xetra Dax rose 0.1%, while both the CAC 40 in Paris and London’s FTSE 100 climbed 0.2%.

Back home, the FBM KLCI fell as investors stayed cautious while awaiting the outcome of the US Federal Open Market Committee (FOMC) meeting. The benchmark index closed 3.05 points or 0.19% lower at 1,578.32. Regional markets were mixed ahead of the FOMC meeting. South Korean shares posted another record high closing with KOSPI rising 0.62% to 3,278.68, but Japan’s Nikkei 255 slid 0.51% to 29,291.01 and Hong Kong’s Hang Seng ended 0.77% lower at 28,418.61.

Source: PublicInvest Research - 17 Jun 2021