Economy

US: Consumers' short-term inflation outlook jumps, NY Fed survey shows. US consumers expect the economy to continue its rapid resurgence from the COVID-19 pandemic over the next year, with forecasts for inflation, earnings, income growth and spending all increasing in June, according to a monthly survey released by the New York Fed. One-year-ahead median inflation expectations jumped for the eighth consecutive month to 4.8% in June, up from 4.0% in May and marking a new series high since the survey was launched in 2013. At the three-year outlook, they were unchanged at 3.6%. The internet-based survey taps a rotating panel of 1,300 households and is a useful barometer for the US central bank as it weighs its inflation outlook. (Reuters)

EU: ECB to chart new policy path next week. The ECB will chart a new policy path at its next meeting to reflect its change of strategy and show it is serious about reviving inflation, ECB policymakers said. Announced last week, the ECB’s new strategy allows it to tolerate inflation higher than its 2% goal when rates are near rock bottom, such as now. This is meant to reassure investors that policy will not be tightened prematurely and cement their expectations about price growth, which has lagged below the ECB’s target for most of the past decade. ECB President Christine Lagarde, her deputy Luis de Guindos, and Portugal’s central bank governor Mario Centeno said the new strategy will be incorporated into the central bank’s policy guidance at the 22 July meeting. (Reuters)

EU: Delays push for digital levy to focus on global tax deal. The EU said that it would postpone its push for a controversial digital levy to focus on a negotiation over a broader minimum global tax deal struck by the world’s largest economies. The US has lobbied against the levy on digital sales that was likely to hit Silicon Valley giants’ business in Europe. The EU had pledged to introduce a levy if there was no progress on a sweeping effort to tax corporations more uniformly. Such a pact now seems more likely after the Group of 20 endorsed the principles of a global-tax agreement. Taxation is a hot topic in Europe with officials in Berlin and Paris taking aim at complicated structures used by multinationals, many of them American, that allow them to reduce their effective tax rates. (Bloomberg)

China: Trade data on tap. China will release June figures for imports, exports and trade balance, highlighting a light day for AsiaPacific economic activity. Imports are expected to jump 30.0% on year after surging 51.1% in May. Exports are called higher by an annual 23.1%, slowing from 27.9% in the previous month. The trade surplus is pegged at USD44.2bn, down from USD45.53bn a month earlier. (RTT)

China: Slowing V-shaped economic recovery sends global warning. China’s V-shaped economic rebound from the Covid-19 pandemic is slowing, sending a warning to the rest of world about how durable their own recoveries will prove to be. The changing outlook was underscored when the PBoC cut the amount of cash most banks must hold in reserve in order to boost lending. While the PBOC said the move isn’t a renewed stimulus push, the breadth of the 50 basispoint cut to most banks reserve ratio requirement came as a surprise. (Bloomberg)

India: Industrial production expands in May. India's industrial production grew notably in May, largely reflecting low base effects, official data showed. Industrial output grew 29.3% on a yearly basis in May, after surging 134.6% in April. Output was forecast to advance 32%. Manufacturing output registered a double-digit growth of 34.5% and mining output advanced 23.3%. At the same time, electricity output was up 7.5%. During April to May period, industrial output expanded sharply by 68.8% from the same period last year. (RTT)

Japan: BOJ expected to offer interest on green loans, tweak growth view. The BOJ is seen standing pat on its main tools at this week’s meeting while putting meat on the bones of its climate change policy with an offer to pay interest to banks lending to green projects. The BOJ will also trim its growth forecast for this fiscal year, while boosting next year’s, according to economists polled before a meeting of the central bank that ends 16 July. The tweaks would reflect a delay in Japan’s recovery due to renewed restrictions to contain the coronavirus. (Bloomberg)

Indonesia: Bank Indonesia mulls tightening policy from late next year. Bank Indonesia could begin tightening monetary policy next year, including potential moves on interest rates, if the economic recovery remains on track and policy makers see signs of inflation, Governor Perry Warjiyo said. The bank’s exit strategy is to gradually reduce liquidity in the financial system “and then later, the end of next year, maybe some interest-rate action,” Warjiyo told Bloomberg Television’s Haslinda Amin. “But this is very uncertain”. (Bloomberg)

Philippines: Economy set for rebound, pandemic impact 'transitory'. The Philippines is set for an economic rebound, with medium-term growth prospects on solid footing, its economic managers said, after Fitch Ratings affirmed the country’s investment grade score but downgraded its outlook to negative. Fiscal and monetary policies are in place to support recovery of the Philippine economy, one of Asia’s fastest growing before the pandemic. “We expect the drag caused by COVID-19 on the Philippine economy to be transitory,” Philippines’ central bank Governor said. (Reuters)

Markets

Impiana Hotel: To jointly develop RM189m luxury resort in Tioman. Impiana Hotels has entered into a deal to jointly develop a luxury resort in Tioman island valued at RM188.6m. The luxury resort will consist of villas and other facilities on five contiguous parcels of land measuring 5.089 hectares. The joint development agreement was signed with Impiana Tioman SB, Selo Tioman Resort Holdings Ltd and Impiana Selo Tioman Resorts SB. (The Edge)

Nexgram: To buy 10.03-hectare land in Melaka for RM61.53m. Nexgram Holdings has proposed to acquire a 10.03- hectare piece of leasehold land in Melaka from Melaka State Development Corporation (PKNM) for RM61.53m. Nexgram said there were “no contingent liabilities and guarantees to be assumed, other than the quit rent, rates, assessments, taxes, utility bills, and other outgoings on the land, to be apportioned equally between the vendor and the purchaser on the date of vacant possession.” (The Edge)

Johan Holdings: Gains RM210.85m from Diners Club sale. Johan Holdings gained RM210.85m from the disposal of its entire equity interest in Diners Club (Singapore) Pte Ltd (DCS) and DinersPay Pte Ltd (DPPL), resulting in estimated net assets per share of 32.25 sen. Johan Holdings completed the divestments on July 9, 2021 to Ezy Net Pte Ltd. (The Edge)

Muda: 70%-owned subsidiary sells 16.88% stake in KL Resources for RM12.34m. Muda Holdings’ indirect 70%-owned subsidiary Intrapac (Singapore) Pte Ltd has disposed of its 16.88% stake in KL Resources Pte Ltd for SGD3.997m (RM12.34m) cash to generate funds for working capital. KL Resources is principally engaged in the waste paper recovery and processing business in Singapore. (The Edge)

Straits Inter Logistics: Unit gets approval to develop ship-toship energy transshipment hub. Straits Inter Logistics said Victoria STS (Labuan) SB, an indirect subsidiary of the group, has received a letter of approval (LOA) from the Marine Department Malaysia for the development of a ship-to-ship energy transshipment hub to provide and carry out liquid cargo transfer activities in Labuan. The hub will provide and carry out liquid cargo transfer transfer activities from ship to ship within the port limits of Victoria Bay, Labuan. (The Edge)

Nova Wellness: Factory shut for one week after Covid-19 cases detected. Nova Wellness said a subsidiary is temporarily ceasing operations for one week till July 18 after detecting several Covid-19 cases among its factory employees. The temporary closure “is not expected to have a significant impact” on its financial performance, but may delay shipments to its customers. (The Edge)

Green Ocean: Glove-dipping lines to be funded from rights issue, placement. Green Ocean said the sources of funds for the total contract price awarded to AE Multi Industries SB for the design, fabricate, install and commissioning of the glove-dipping lines will be from the available funds from its rights issue which was completed. Part of the funds would also come from the proposed private placement announced, and any shortfall shall be met via internally funds or bank borrowings. (Bernama)

MARKET UPDATE

The FBM KLCI might open flat today after US markets began the week on a subdued note, with investors awaiting corporate earnings reports and inflation data to weigh against the potentially damaging economic effects of the Delta coronavirus variant. Wall Street’s blue-chip S&P 500 closed 0.4% higher, building on the high hit on Friday. The tech-focused Nasdaq Composite moved up 0.2%. Earnings season on Wall Street begins in earnest on Tuesday with JPMorgan Chase and Goldman Sachs reporting results. Analysts have forecast earnings for companies on the S&P 500 index to surge more than 60 per cent in the second quarter from the same time last year. It would mark the second-straight quarter of sharp profit increases, a sign big US groups are recovering swiftly from the pandemic. Across the Atlantic, the equity moves were firmer. The continent-wide Stoxx Europe 600 closed up 0.7% at a high, while Frankfurt’s Xetra Dax index climbed by the same margin and the CAC 40 in Paris rose 0.5%.

Back home, the FBM KLCI bucked the regional trend to close lower as investor sentiment was dented by political uncertainty and the likelihood of the Government lowering its 2021 economic growth projection. The FBM KLCI closed down 7.69 points or 0.51% at 1,512.89 after lingering in the negative territory for most of the day's session. Elsewhere in the region, Japan's Nikkei 225 jumped 2.25%, while Seoul's Kospi rose 0.89%. Hong Kong’s Hang Seng Index gained 0.62% while the Shanghai Stock Exchange Composite Index closed up 0.67%.

Source: PublicInvest Research - 13 Jul 2021