Economy

US: Pending home sales unexpectedly rise in May. Contracts to purchase previously owned US homes rose by the most in 11 months in May driven by a decline in mortgage rates as well as an uptick in listings. The increase could signal some imminent relief from the shortage of homes for sale that has weighed on sales and driven residential property prices to record highs. The National Association of Realtors (NAR) said its Pending Home Sales Index, based on contracts signed last month, rose 8.0% to 114.7. Economists had forecast pending home sales would decline 0.8%. (Reuters)

US: Mortgage applications decrease by most in nearly five months - MBA. US applications for home mortgages decreased by the most in almost five months driven by sharp declines in refinancing activity and purchase applications. The Mortgage Bankers Association (MBA) said its seasonally adjusted market index fell 6.9% in the week ending June 25 from a week earlier, the largest drop since early Feb. This reflected an 8.2% decrease in applications for refinancing existing loans and a 4.8% drop in applications to purchase a home. (Reuters)

EU: Inflation falls below 2% in June. The euro area inflation fell below 2% in June as the annual growth in energy prices eased, preliminary data from Eurostat showed. Inflation came in at 1.9% in June, as expected, down from 2% in the previous month. The inflation rate had exceeded the European Central Bank's target of below, but close to 2% in May for the first time since 2018. Most of the evidence points to this slowdown as temporary, but upside risks to the inflation outlook have not been this substantial in years and should keep the ECB on the edge of its seat. (RTT)

EU: France household consumption rebounds strongly. France's household consumption surged in May after a decline in April that was due to a third lockdown to curb the spread of the coronavirus, preliminary data from INSEE showed. Household spending rose 10.4% from April, when it fell 8.7%. The latest rebound was mainly driven by a 26.0% jump in the manufactured goods purchases as all stores reopened on May 19. Spending on clothing and textiles surged 149.2%. Purchases of durable goods rose 11.3% and spending on engineered goods grew 15.2%. Spending on energy grew 2.6% after stagnating in previous months. (RTT)

China: Manufacturing slows as supply shortages roil Asia industry. Growth in China’s June factory activity dipped to a fourmonth low on higher raw material costs, a shortage of semiconductors and a Covid-19 outbreak in the major export province of Guangdong, amid wider supply chain disruptions in Asia. The chip supply crunch has hammered other manufacturing powerhouses in Asia. China’s June official manufacturing Purchasing Manager’s Index (PMI) eased slightly to 50.9 versus 51.0 in May, data from the National Bureau of Statistics showed. It, however, exceeded analysts’ forecast for a slowdown to 50.8. (Reuters)

Japan: May factory output records biggest drop in a year. Japan’s industrial output posted the biggest monthly drop in a year in May, as a sharp fall in car production threatened to undermine the country’s economic recovery just weeks before Tokyo is set to host the Olympic Games. Factory output slumped 5.9% in May from the previous month, official data showed, hit by declines in the manufacturing of cars and production machinery to post its largest monthly drop since May last year. The contraction, which was the first drop in three months, was much weaker than a 2.4% fall forecast in a poll of economists. It followed a 2.9% gain in the previous month. (Reuters)

Japan: Housing starts, consumer confidence increases. Japan's housing starts increased in May and consumer confidence improved in May, data showed. Housing starts increased 9.9% YoY in May, following a 7.1% rise in April, data from the Ministry of Land, Infrastructure, Transport and Tourism revealed. Economists had forecast an annual 8.3% rise. Annualized housing starts decreased to 875,000 in May from 883,000 in the previous month. Data also showed that construction orders received by big 50 contractors grew 7.4% on year in May. (RTT)

Hong Kong: Retail sales growth eases in May. Hong Kong's retail sales grew at a softer pace in May, figures from the Census and Statistics Department showed. The retail sales volume rose 7.8% YoY in May, after a 11.0% growth in April. The value of retail sales increased 10.5% annually in May, slower than a 12.1% gain in the preceding month. Sales value of jewelry, watches and clocks, and valuable gifts surged 54.8% annually in May. Sales of clothing, footwear and allied products gained 12.1% and those of other consumer durable grew 22.9%. (Reuters)

South Korea: Industrial production falls in May. South Korea's industrial production declined at a softer pace in May, data from Statistics Korea said. Industrial production fell a seasonally adjusted 0.7% MoM in May, following a 1.6% decline in April. Economists had expected a 0.8% fall. Manufacturing output decreased 1.0% monthly in May, following a 1.6% fall in the previous month. On a yearly basis, industrial production grew 15.6% in May, following a 12.6% rise in the preceding month. (RTT)

Markets

Serba Dinamik (Neutral, TP: RM0.44): EPF ceases to be substantial shareholder while Abdul Karim forced to trim stake. The EPF has ceased to be a substantial shareholder in Serba Dinamik, after selling another 96m shares or 2.57% in the oil and gas services group on June 25. The group’s filing showed that Abdul Karim sold 46.3m shares or 1.2% in the group on June 28, citing force-selling as the reason for the disposal. The sale leaves Abdul Karim with 957.76m shares, representing a 25.8% stake in the group. (The Edge)

DNeX: Raises stake in Ping Petroleum to 90%. Dagang NeXchange’s (DNeX) equity stake in Ping Petroleum Ltd rose to 90%, following the completion of the acquisition for an additional 60% stake in the upstream oil & gas (O&G) player, valued at USD78m (RM314.3m). (SunBiz)

AEON Credit Service: Jointly bid for digital bank licence. AEON Credit Service (M) and its parent company AEON Financial Service Co Ltd (AFS) have submitted a joint application to Bank Negara Malaysia for a digital bank licence. (The Edge)

Nestcon: Bags RM230m contract to develop serviced apartments in Selangor. Nestcon has bagged a RM230m contract to build serviced apartments in Sungai Buloh, Selangor. The contract involves earthworks, foundation, substructure, main building works and infrastructure for the construction of one 46- storey serviced apartment block — comprising 593 units, with a four-storey podium and relevant facilities, 27 retail units, and a five-storey basement car park — at Damansara Perdana. (The Edge)

AE Multi: AE Multi secures RM65m contract from Green Ocean for glove production. AE Multi Holdings has secured a RM65.18m contract from Green Ocean Corp to design, install and commission eight double former dipping lines for rubber glove production. The contract is expected to have a positive contribution to its earnings, net assets and gearing for the current financial year ending March 31, 2022. (The Edge)

Petronas Dagangan: Sells working inventory, deadstock to PETCO Trading Labuan for RM23.12m. Petronas Dagangan is selling its working inventory and deadstock with 16.51m litres of fuel at selected fuel terminals to PETCO Trading Labuan Company Ltd (PTLCL) for about RM23.12m. (The Edge)

Cypark: 2Q21 profit slips 2.5% as MCOs slow down work progress. Cypark Resources net profit for its 2QFY21 slid 2.55% to RM18.03m from RM18.5m a year ago, as a slowdown in its consecution and engineering division more than offset the additional work progress recognised from its waste-to-energy (WTE) projects. (The Edge)

IPO: CTOS Digital IPO to raise RM1.2bn, including RM990m for existing shareholders. CTOS Digital (formerly known as CTOS Holdings SB) is raising RM1.2bn from its Main Market listing exercise at the offer price of RM1.10 per share. Based on the issue price of RM1.10 per share, CTOS Digital, which owns credit reporting agency CTOS Data Systems SB, is valued at a market cap of RM2.4bn. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today after a mixed performance on Wall Street overnight as the dollar strengthened and government bonds firmed ahead of Friday’s US jobs data that will be closely watched by rate-setters at the Federal Reserve. The US dollar index, which measures the currency against its peers, edged up on Wednesday to post monthly gains of almost 3%. Investors also bought government debt, which — like the dollar — tend to rally when uncertainty causes investors to hold back from buying riskier assets. On Wall Street on Wednesday the blue-chip S&P 500 closed higher by 0.1%. The index’s gains surpassed 2% in June, marking the fifth-straight month of gains. The tech-heavy Nasdaq Composite, meanwhile, slipped 0.2 %, after notching a new record high this week. Across the Atlantic, the region-wide Stoxx Europe 600 slid 0.8%.

Back home, the FBM KLCI closed by more than 1% on investors’ concern about Malaysia’s daily Covid-19 figures and economic outlook. The benchmark index closed 15.68 points or 1.01% lower at 1,532.63. In the region, Japan’s Nikkei 225 fell 0.07% while South Korea's Kospi advanced 0.3%. Hong Kong’s Hang Seng Index dropped 0.57% while the Shanghai Stock Exchange Composite Index rose 0.5%

Source: PublicInvest Research - 1 Jul 2021