Economy

US: Labor market recovery gaining steam, worker shortages an obstacle. The number of Americans filing new claims for unemployment benefits fell more than expected last week, while layoffs plunged to a 21-year low in June, suggesting the labor market recovery from the Covid-19 pandemic was gaining traction. (Reuters)

US: Manufacturing growth slows modestly in June. A report released by the Institute for Supply Management showed a modest slowdown in the pace of growth in US manufacturing activity in the month of June. The manufacturing PMI slipped to 60.6 in June from 61.2 in May, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to 61.0. (RTT)

US: Construction spending unexpectedly dips 0.3% In May. Construction spending in the US unexpectedly decreased in the month of May, according to a report released by the Commerce Department. The construction spending fell by 0.3% to an annual rate of USD1.545trn in May after inching up by 0.1% to a revised rate of USD1.550trn in April. (RTT)

US: CBO doubles growth forecast to 7.4%, sees slight drop in federal deficit. The Congressional Budget Office (CBO) doubled its forecast for US economic growth in fiscal 2021 to 7.4% and said it expected the federal budget deficit to decline slightly to about USD3trn despite higher coronavirus aid spending. (Reuters)

EU: Factory growth, input costs rose at record pace in June - PMI. Eurozone manufacturing activity expanded at its fastest pace on record in June, according to a survey which also showed factories faced the steepest rise in raw materials costs in well over two decades. (Reuters)

China: June new home prices held back by curbs - private survey. Growth in China’s new home prices remained largely steady in June, with momentum slowed by government curbs on rampant borrowing and caps on prices of housing projects in some cities, a private-sector survey showed. New home prices in 100 cities rose 0.36% in June from a month earlier, up slightly from 0.34% growth in May, according to data from China Index Academy, one of the country’s largest independent real estate research firms. (Reuters)

India: June jobless rate falls to 9.17% - private think-tank CMIE. India’s June unemployment rate fell to 9.17% from the May figure of 11.90%, data from the Centre for Monitoring Indian Economy (CMIE) showed. Most economic activities have resumed in the south Asian nation after state governments eased pandemic curbs following a fall in coronavirus infections, which peaked in May. (Reuters)

Japan: Business mood at 2.5-year high as COVID hit eases - Tankan. Japanese big manufacturers’ business confidence improved in the 2Q to hit a two-and-half-year high, a central bank survey showed, a sign solid global demand was helping the economy emerge from the coronavirus pandemic-induced doldrums. (Reuters)

Indonesia: Consumer prices rise less than expected. Indonesia's consumer prices increased less than expected in June, data from the statistics bureau showed. Consumer prices rose 1.33% YoY in June. Economists had expected a 1.41% rise. Core inflation was 1.49% in June, which was above the 1.43% economists had forecast. On a monthly basis, consumer prices fell 0.16% in June, after a 0.32% increase in the prior month. (RTT)

Indonesia: May foreign visitor arrivals down 3.85% YoY. Foreign visitor arrivals to Indonesia fell 3.85% in May on a yearly basis, to about 155,600, data from the statistics bureau showed, as the coronavirus pandemic disrupts global travel. The Southeast Asian nation typically saw more than a million foreign visitors each month before the pandemic. (Reuters)

Markets

TNB (Outperform, TP: RM12.35): Sets up Vantage RE to manage UK investments, assets. Tenaga Nasional (TNB) is picking up pace on its global environmental, social and governance effort with the launch of Vantage RE Ltd, a renewable energy (RE) investment and asset management company. (BTimes)

AirAsia (Underperform, TP: RM0.19): Operating at 19% of pre-pandemic capacity, Malaysia unit at only 8%. AirAsia Group is operating at 19% of its pre-pandemic capacity, logging just over 2,000 outbound flights planned for the week of July 19, 2021 compared with 10,800 for the same week in 2019, according to an aviation news portal. (The Edge)

Bursa Malaysia: Derivatives to launch night trading. Bursa Malaysia Derivatives will be launching an after-hours (T+1) trading session (Night Trading) by the 4Q of 2021, to enhance the attractiveness of the Malaysian derivatives market to traders around the world. (The Edge)

Yinson: Secures USD18m contract extension for FPSO Lam Son. Yinson Holdings said its floating production storage offloading (FPSO) vessel Lam Son has secured another extension for the charter offshore Vietnam for an estimated USD18.1m (RM75.17m). (The Edge)

Samaiden: Clinches solar power plant contract. Samaiden Group had accepted a letter of award to undertake, among others, engineering, procurement, construction and commissioning work for a proposed 10MWac solar power plant in Penang for a contract price of RM46.4m. (The Edge)

Vivocom: Inks HOA for RM1.45bn investment from US-based Strattner. Vivocom International Holdings has entered into a heads of agreement (HOA) with US-based global alternative investment group Strattner Alternative Credit Fund LP for the latter’s USD350m (RM1.45bn) investment. (SunBiz)

Freight Management: See RM5m in tax saving from logistics services, e-commerce fulfilment hub. Freight Management Holdings is expected to register a tax savings of RM5m per annum, with the Malaysian Investment Development Authority's approval to carry out integrated logistics services and ecommerce fulfilment hub activities. (BTimes)

Jiankun: To expand landbank in anticipation of property demand rebound. Jiankun International aims to increase its landbank to around 50 acres by the end of 2021 in anticipation of a rebound in property demand. (SunBiz)

Green Packet: Calls off RM328m rights issue, proposes private placement. Green Packet has called off its proposed three-for-five rights issue to raise RM328.37m, citing prevailing market conditions and its volatile share price since the proposal was announced. (The Edge)

T7 Global: Partners Siemens Logistics for business opportunities in Malaysia's logistics sector. T7 Global is teaming up with Singapore-based Siemens Logistics Pte Ltd to collaborate for business opportunities in Malaysia, especially the growing logistics sector. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today as concerns on elevated Covid-19 cases in the country and the Enhanced Movement Control Order (EMCO) which will be imposed in 34 mukims in Selangor and 14 localities in Kuala Lumpur for 14 days, starting this Saturday (July 3) to July 16 to continue to weigh down market sentiment. Overnight, the US stock market rose to further highs on Thursday as investors awaited the Federal Reserve’s next move ahead of crucial jobs data on Friday. The S&P 500 gained 0.5% in New York, adding to recent records as traders weigh strong corporate earnings forecasts with concerns that the Fed will trim its monthly bond purchases that have underpinned asset prices throughout the pandemic. The technology-focused Nasdaq Composite index rose 0.1%, having traded lower earlier in the day. In Europe, the Stoxx 600 equity index closed up 0.6% as traders sidestepped the complex outlook for US assets to focus on the eurozone’s nascent economic recovery from Covid-19 crisis.

Back home, bargain hunting lifted the FBM KLCI higher on the first trading day of the second half of this year, with market sentiment also boosted by higher crude oil prices. The benchmark index closed off the day’s high at 1,534.23 — up 0.1% or 1.6 points from yesterday. Elsewhere in region, Japan's Nikkei 225 fell 0.29%, South Korea's Kospi fell 0.44%, Hong Kong’s Hang Seng Index dropped 0.57% and the Shanghai Stock Exchange Composite Index closed down 0.81%.

Source: PublicInvest Research - 2 Jul 2021