Economy

US: Consumer prices surge in June. US consumer prices rose by the most in 13 years in June amid supply constraints and a continued rebound in the costs of travel-related services from pandemicdepressed levels as the economic recovery gathered momentum. The consumer price index increased 0.9% last month, the largest gain since June 2008, after advancing 0.6% in May, the Labor Department said. In the 12 months through June, the CPI jumped 5.4%. That was the largest gain since Aug 2008 and followed a 5.0% increase in the 12 months through May. Excluding the volatile food and energy components, the CPI accelerated 0.9% after increasing 0.7% in May. (Reuters)

US: Yellen sees US companies pushing to back global tax deal. Treasury Secretary Janet Yellen said US companies are likely to provide crucial support in pushing lawmakers to back a global overhaul of corporate taxation, helping overcome Republican opposition that may slow or stop ratification of an accord endorsed by Group of 20 nations over the weekend. “To the extent that the Republican side is going to be looking to business and trying to protect business interests, my guess is that businesses are going to be saying to members of Congress, please approve this,” Yellen said in an interview in Brussels, as she wrapped up a week in Europe. (Bloomberg)

EU: France inflation accelerates in June. France's consumer price inflation accelerated slightly in June driven by the rebound in manufactured goods prices, latest data from the statistical office Insee confirmed. Consumer price inflation rose to 1.5% in June from 1.4% in May. The harmonized inflation, which is for EU comparison, rose marginally to 1.9% from 1.8% in the previous month. Thus, the preliminary estimates for annual inflation were confirmed. Core inflation, which excludes prices of fresh food and energy, accelerated to 1.1% from 0.9% in the previous month. Manufactured product prices advanced 0.7%, after falling in the previous four months. Food prices decreased 0.2%, after a 0.3% fall in May. (RTT)

UK: BoE scraps curbs on bank dividend. The BoE removed the restrictions put in place regarding the distribution of bank profits last year as the banking system proved resilient to a wide range of risks. The extraordinary guardrails on shareholder distributions are no longer necessary, the Financial Policy Committee said in its meeting held on June 30. As the banking sector is well capitalized, the FPC scrapped the temporary curb imposed on paying dividend and share buybacks. The FPC judged that the interim results of the 2021 solvency stress test, together with the central outlook, are consistent with the Prudential Regulation Committee's decision. (RTT)

China: Exports growth exceeds expectations in June. China's exports grew more-than-expected in June despite the closure of major ports in southern China due to Covid-19 cases among port workers. In dollar terms, exports advanced 32.2% YoY in June, data from the General Administration of Customs showed. The annual rate was bigger than the economists' forecast of 23.1% and May's 27.9% increase. Likewise, imports climbed 36.7% on a yearly basis, faster than the expected rate of 30%. But the pace of expansion eased from 51.1% posted in May. As a result, the trade surplus increased to USD51.5bn in June from USD45.5bn in the previous month. The expected level was USD44.2bn. (RTT)

China: PBOC reiterates that policy unchanged despite RRR cut. The recent cut in the amount of money banks must keep in reserve doesn’t mean a change in the China’s monetary policy, the PBoC said. “The RRR cut is a standard liquidity operation after monetary policy returned to normal and the prudent monetary policy direction has not changed,” Sun Guofeng, head of the central bank’s monetary policy department, said at a press briefing. That was a reiteration of what the bank said when it announced the reduction. (Bloomberg)

Australia: NAB business confidence weakens in June. Australia business confidence weakened in June due to rising number of infections in New South Wales and subsequent lockdowns, survey results from the National Australia Bank showed. The business confidence index dropped to 11 from 20 in May. The decline in confidence was led by declines in NSW and Queensland. Confidence weakened in all industries except mining and manufacturing. (RTT)

Markets

G Capital: Makes cash call to raise up to RM102.62m to fund its renewable energy projects. G Capital has proposed renounceable rights issue of redeemable convertible unsecured loan stocks (RCULS) to raise up to RM102.62m to part finance its 52.6MW renewable energy projects. The proposal entails the issuance of 1.28bn five-year, 5%, RCULS at 100% of its nominal value of eight sen each, on the basis of four RCULS for every one existing share. Of the proceeds, RM99.46m will be used to finance the group’s project costs while RM2.31m will be used for working capital. (The Edge)

Pasukhas Group: Raises RM99.2m from the rights issue. Pasukhas Group has raised RM99.2m from the capital market with the completion of its rights issue exercise. Part of the funds raised would be used to execute turnkey construction projects for specialised factories. The company will embark on its internal five-year strategic plan to expand its scope of operations to include more lucrative construction and turnkey projects across various industries. (NST)

Pelikan: To pay 20sen special dividend from proceeds of German logistics centre sales. Pelikan International, which earlier disposed of its logistics centre in Germany for a cash consideration of EUR81m (RM399.3m), has decided to distribute a special dividend of 20sen per share to its shareholders. It will allocate RM120.64m for the special dividend following the disposal. Meanwhile, RM200m of the proceeds will be used to repay bank borrowings; RM41.29m will be used for working capital; RM24.6m will be used for internal reorganisation. (The Edge)

Sedania: Offspring expands into Thailand. Sedania Innovator’s 51%-owned subsidiary Offspring Inc has made its foray into Thailand, in line with its ongoing expansion into key markets. Offspring had earlier announced its expansion into Spain, Finland, Cambodia and South Korea, and with its venture into Thailand, is currently available in 11 export countries. "Expansion plan has always been the key focus for Offspring. Getting into Thailand further solidifies the growth strategic plan for the Company," said Sedania founder and MD Datuk Azrin Mohd Noor. (StarBiz)

Boustead Plantations: Yet to engage with any party over plan to sell Sarawak estates. Boustead Plantations said that it has yet to engage with any interested party over its plan to sell its Sarawak estates. The Group said: As a corporate entity that will always find ways to provide the best shareholder value, Boustead Plantations seeks prospects to unlocking the values of our assets, including the estates in Sarawak. (The Edge)

Aviation (Underweight): Mavcom continues to allow airlines to keep air traffic rights unutilised due to Covid-19. The Malaysian Aviation Commission (Mavcom) has eased the conditions which automatically revoke unutilised air traffic rights (ATR) within six months from the date of ATR approval. This flexibility has been in effect since June 5, 2020. It was implemented to facilitate the administrative and regulatory challenges of airlines as well as to enable them to keep their current ATR portfolio active. In 2Q21, Mavcom approved 100% of ATR applications. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today as the dollar had its strongest day in almost a month while shares of big tech companies rose on Tuesday, after a stronger than expected jump in US consumer prices rippled through currency and equity markets. Despite Wall Street’s blue-chip S&P 500 index slipping 0.4%, the technology sector of the index bucked the trend, rising 0.4%. The tech-heavy Nasdaq Composite index also gave up early gains, falling to a 0.4% loss. While the broad indices slipped — with 85% of the companies within the S&P 500 finishing the day lower — shares of big tech groups including Apple and Microsoft advanced. The slide in the two closely followed indices coincided with a lacklustre Treasury auction, as the US sold $24bn worth of 30-year bonds. The sale garnered the lowest demand, as measured by the bid-tocover ratio, since February. In Europe, the region-wide Stoxx 600 benchmark closed flat to retain its record high hit a day earlier. Bourses in the UK, Germany and France were also little changed on the day.

Back home, the FBM KLCI closed 0.44% higher, thanks to late buying support in selected index-linked stocks, particularly glove, telco and plantation counters. At 5pm, the FBM KLCI was up 6.67 points at 1,519.56 points, after hovering between 1,513.54 points and 1,520.03 points. Elsewhere in the region, Japan's Nikkei 225 rose 0.52%, while Seoul's Kospi added 0.77%. In China, Hong Kong’s Hang Seng Index jumped 1.63%, while the Shanghai Stock Exchange Composite Index closed up 0.53%.

Source: PublicInvest Research - 14 Jul 2021