Economy

US: Wholesale inventories jump more than expected in May. Wholesale inventories in the US increased by more than expected in the month of May, according to report released by the Commerce Department. The report said wholesale inventories surged up by 1.3% in May after jumping by an upwardly revised 1.1% in April. Economists had expected wholesale inventories to jump by 1.1% compared to the 0.8% increase that had been reported for the previous month. The bigger than expected increase in wholesale inventories came as inventories of durable goods and non-durable goods shot up by 1.2% and 1.5%, respectively. (RTT)

UK: Growth likely to slow to 1.9% in 3Q – NIESR. The UK economy is set to grow at a slower pace in the 3Q, the think tank NIESR said. "With catch-up potential still evident in hospitality, transport, business support and the arts, we forecast growth of 1.9% in the 3Q, still notably above historical trend growth rates," the NIESR said in its latest monthly GDP tracker report. The institute had predicted 4.8% growth for the 2Q and 0.9% for June. (RTT)

UK: Visible trade deficit at 11-month low. The UK visible trade deficit narrowed to an 11-month low in May, the Office for National Statistics reported Friday. The trade in goods resulted in a shortfall of GBP 8.48 billion in May compared to a GBP 10.95 billion deficit in the previous month. This was the lowest shortfall since June 2020 and also smaller than the expected level of -GBP 11.1 billion. Exports of goods grew at a faster pace of 7.1 percent in May, while imports dropped 1.4 percent from the previous month. (RTT)

EU: Italy industrial production falls for first time in 6 months. Italy's industrial production declined for the first time in six months in May, data published by the statistical office Istat. Industrial output dropped unexpectedly 1.5% on a monthly basis in May, reversing a 1.5% rise in April. This was the first decrease since Nov 2020. Economists had forecast a monthly growth of 0.3%. All sectors showed negative variations in May. Energy output was down 5.2% and capital goods production decreased 1.8%. Consumer and intermediate goods output fell 0.8%, each. On a yearly basis, industrial production growth eased to 21.1% from 79.0% in the previous month. (RTT)

China: Lowers reserve requirement ratio. China's central bank cut its reserve requirement ratio for major commercial banks in order to increase the fund available for lending and support economic growth. The PBoC said that it will cut the reserve requirement ratio by 0.5% points, with effect from 15 July. The bank had last reduced the RRR for major banks in March 2020. The latest measure will release CNY1trn of liquidity into the system, the central bank said. The PBoC is trying to nudge banks to lower lending rates without shifting its broader policy settings, such as its quantitative controls on credit, Julian Evans-Pritchard, economist at Capital Economics said. (RTT)

China: Inflation slows in June; factory gate price growth eases. China's consumer price inflation eased in June on falling food prices and factory gate price growth slowed, driven by the levelling off in global commodity prices, data from the National Bureau of Statistics. Consumer prices rose 1.1% YoY in June, slower than the 1.3% increase seen in May. The rate was forecast to remain unchanged at 1.3%. Core inflation that excludes food and energy prices, held steady at 0.9% in June. Food prices declined 1.7% due to a 36.5% fall in pork prices. (RTT)

China: June new bank loans rise to CNY2.12trn, beat expectations. Chinese banks extended CNY2.12 trn (USD327bn) in new CNY loans in June, up from May and exceeding analysts’ expectations. Analysts polled by Reuters had predicted new CNY loans would rise to CNY1.8trn in June from CNY1.5trn the previous month and against CNY1.81trn a year earlier. Broad M2 money supply grew 8.6% YoY, central bank data showed, also above estimates of 8.2% forecast in the Reuters poll. M2 grew 8.3% in May YoY. (Reuters)

Japan govt ready to deploy economic stimulus flexibly, spokesman says. Japan stands ready to pump more money into the economy to ease the pain of a prolonged pandemic, the top government spokesman said, nodding to growing political calls for additional stimulus to prop up growth. Less than two weeks before hosting the Olympics, Tokyo goes into its fourth COVID-19 state of emergency from Monday through Aug 22, fuelling fears of extended pain for restaurants hit by

Markets

Top Glove (Neutral, TP: RM4.40): Police probing over moving workers prior to MCO – report. The police are investigating Top Glove for allegedly moving 1,606 workers out of their dormitories in Petaling Jaya, Selangor, to eight hotels, prior to the imposition of the EMCO there, according to a report by Malaysiakini. The news portal wrote that local authorities had instructed Top Glove to cease operations with immediate effect, amid the probe. (The Edge)

Ibraco: Bags RM169m turnkey contract for house construction job in Sarawak. Ibraco has secured a turnkey engineering, construction and commissioning contract worth about RM169m for houses under the Rumah Pertiwi Scheme in Kuching, Sarawak. “The project shall be carried out in four phases over an indicative construction period of five years from the approval of the development plans, tentatively end of 3Q21,” it said. (The Edge)

Awantec: Bags RM22.7m 3-year contract from Education Ministry. Awantec Technology has secured a RM22.77m contract to supply the G suite enterprise for education to schools under the Education Ministry. The contract is for a period of three years. The Education Ministry had issued the acceptance letter and the terms of the transaction would be finalised in a formal contract. (StarBiz)

KPower: Selling UK asset for RM7m. KPower has entered into a deal to sell a property in Liverpool, UK, for GBP1.25m (RM7.2m), shedding a legacy asset to focus on its new ventures in the sustainable energy and utilities sector. The property is a 36-bed student hall of residence, which was converted from its previous use as a hostel in 2011. (StarBiz)

TCS Group: Plans up to RM46m placement. TCS Group is planning to raise up to RM46.44m via a private placement. This will involve the issuance of new TCS shares representing about 20% of the existing total number of issued shares. “The proceeds will be utilised for the working capital of construction projects with a timeframe of 24 months,” TCS said. (StarBiz)

Gas Malaysia: Raises average natural gas selling price to RM30.03/MMBtu for 3Q21. Gas Malaysia has raised the average natural gas selling price for the distribution segment of its unit Gas Malaysia Energy and Services SB to RM30.03 per MMBtu for 3Q21, compared with RM26.85 per MMBtu in 2Q21. The average natural gas selling price for 2020 was RM33.65 per MMBtu. (The Edge)

Naim: Declares 7.9sen interim dividend for FY21. Naim Holdings has announced an interim dividend of 7.9 sen per share for FY21. It said its shares will trade ex-dividend on July 26, with the dividend to be payable on Aug 6. The dividend payment amounts to RM40m, marking the second consecutive year the group has announced dividends. (The Edge)

NCT Alliance: To focus exclusively on property development. Previously known as Grand-Flo SB (Grand-Flo), NCT Alliance now intends to focus exclusively on property development. (NST)

MARKET UPDATE

The FBM KLCI might open higher today after Wall Street’s stocks rebounded to record highs and a rally in core government debt paused on Friday as investors shrugged off caution about the global economic outlook to focus on buying opportunities. The S&P 500, the blue-chip US gauge, hit another high, rising 1.1% by the closing bell in New York after having slid 0.9% a day earlier amid fears of an economic slowdown in China and worries linked to the spread of the Delta variant of Covid-19. The tech-heavy Nasdaq Composite ended the week almost 1% higher. The pattern was repeated in Europe, where the continent-wide Stoxx 600 index closed up 1.3%, after sliding 1.7% in the previous session. A rally in government bonds also reversed on Friday, with the yield on the benchmark 10-year US Treasury, which moves inversely to its price, climbing 0.07 percentage points to 1.36%. The yield had its second consecutive weekly decline.

Back home, the FBM KLCI finished 0.79% or 11.87 points higher at 1,520.58 points, snapping a four-day losing streak, as bargain hunting emerges. Meanwhile, regional markets closed mixed. The Hong Kong Hang Seng delivered a 0.7% gain to settle at 27,344.54, while the Shanghai Composite was down a marginal 0.04% to 3,524.09. The Nikkei 225 also slid 0.63% or 177.61 points to 27,940.42.

Source: PublicInvest Research - 12 Jul 2021