Economy

US: Consumer sentiment drops in early July on inflation fears. US consumer sentiment fell sharply and unexpectedly in early July to the lowest level in five months as inflation worries dented confidence in the economic recovery, a survey showed. The University of Michigan said its preliminary consumer sentiment index fell to 80.8 in the first half of this month - the lowest since February - from a final reading of 85.5 in June. "Consumers' complaints about rising prices on homes, vehicles, and household durables has reached an all-time record," Richard Curtin, the survey director said. (Reuters)

US: Retail sales unexpectedly rebound in June. Retail sales in the US unexpectedly increased in June, according to a report released by the Commerce Department. The Commerce Department said retail sales climbed by 0.6% in June after plunging by a revised 1.7% in May. The rebound surprised economists, who had expected retail sales to fall by 0.4% compared to the 1.3% slump originally reported for the previous month. The unexpected rebound in retail sales came despite another steep drop in sales by motor vehicle and parts dealers, which tumbled by 2.0% in June after plummeting by 4.6% in May. (RTT)

US: Business inventories increase in line with estimates in May. A report released by the Commerce Department showed US business inventories increased in line with economist estimates in May. The Commerce Department said business inventories rose by 0.5% in May following a revised 0.1% uptick in April. Economists had expected business inventories to climb by 0.5% compared to the 0.2% dip originally reported for the previous month. The increase in business inventories came as wholesale inventories jumped by 1.3% and manufacturing inventories advanced by 0.9%, more than offsetting a 0.8% drop in retail inventories. (RTT)

EU: Inflation slows as estimated in June. Eurozone inflation fell below 2% in June, as initially estimated, final data from Eurostat showed. Inflation eased to 1.9% in June from 2% in the prior 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. On a monthly basis, the harmonized index of consumer prices gained 0.3% in June. Core inflation that excludes energy food, alcohol and tobacco, eased to 0.9%, as initially estimated, from 1% in the previous month. (RTT)

EU: Trade surplus declines on weak exports. The euro area trade surplus declined in May on weak foreign demand, official data from Eurostat revealed. The trade surplus fell to a seasonally adjusted EUR9.4bn in May from EUR13.4bn in April. Exports dropped 1.5% on a monthly basis in May, while imports grew 0.7%. On an unadjusted basis, the trade balance showed a surplus of EUR7.5bn in May compared to EUR8.9bn surplus in the same period last year. (RTT)

Japan: BoJ keeps policy rate; cuts fiscal 2021 growth outlook. The Bank of Japan (BoJ) decided to maintain its monetary stimulus unchanged and unveiled a preliminary outline for the new programme to support efforts on climate change. The bank also lowered its nearterm growth outlook citing the impact of the coronavirus pandemic and raised its fiscal 2021 inflation forecast. The board voted to hold the interest rate at -0.1% on current accounts that financial institutions maintain at the central bank. (RTT)

China: Central bank says it will steadily push forward digital yuan pilots. China's central bank said ay it would steadily push forward pilot schemes to develop its digital yuan, and will not set a timetable for rolling out the digital currency. China is a front runner in the global race to launch central bank digital currency and has held trials in several major cities including Shenzhen and Shanghai. (Reuters)

Markets

AirAsia X (Underperform, TP: RM0.01): Hearing to set aside enforcement of court judgment obtained by BOC Aviation fixed for 27 Oct. The High Court has fixed 27 Oct for the hearing of AirAsia X and AAX Leasing Ltd's application to set aside the foreign judgement obtained by its creditor BOC Aviation Ltd in the UK against the airlines to pay USD23.37m (RM96.84m) that is enforced in the Malaysian courts here. (The Edge)

MAHB: Network of airports handled 2.4m passengers in June. Malaysia Airports Holdings’ (MAHB) airport network handled 2.4m passenger movements in June 2021, a 153.2% increase from the previous year. This is amid varying operating conditions affected by different levels of travel restrictions and vaccination rollout programmes in Malaysia and Turkey. (BTimes)

Pestech: Sign agreement with Sarawak Energy to explore alternative renewable energy. Pestech International has signed an agreement with Sarawak Energy to work together on a research project to explore clean alternative energy solutions to replace diesel generators or other chemical-based energy storage solutions predominantly used in rural electrification. (Bernama)

Willowglen: Bags RM41.55m contract from Singapore's Public Utilities Board. Willowglen MSC has been awarded a contract worth approximately RM41.55m in Singapore from the republic's Public Utilities Board (PUB). Willowglen said the contract is for security system and facility enhancement at various PUB waterworks and desalination plants. (BTimes)

Privasia: Wins Westports IT outsourcing job. Privasia Technology (Privasia) has secured two IT contracts from Westports Malaysia SB worth RM46.49m. Privasia said the contracts were for the provision of information technology (IT) network, security and internet outsourcing and managed services for one year worth RM6.36m, as well as IT outsourcing and managed services for five years worth RM40.13m. (StarBiz)

Scomi Group: Expands rail services portfolio via JV. Scomi Group (SGB) is expanding its portfolio of services for the rail industry via a joint-venture agreement (JV) signed with railway track specialist and rail infrastructure and maintenance contractor, RC Asia Engineering SB (RCA). (Bernama)

Scope Industries: Rights issue 33% over-subscribed, raises RM64.81m. ACE Market-listed Scope Industries said that its one-for two rights issue at 17.5 sen per rights share was oversubscribed by 33.67%. This is as the group saw 37.36% of valid excess applications, although total valid acceptances only amounted to 96.31% or 370.37m shares, for the printed circuit board (PCB) manufacturer to raise RM64.81m. (The Edge)

IPO: CTOS Digital normalized PATAMI rises 64% to RM15.0m in 2Q. CTOS Digital reported a 64% increase in normalised PATAMI to RM15.0m in the 2Q ended 30 June 2022, up from RM9.1m in the same quarter the previous year. 2Q revenue increased 23% to RM37.8m from RM30.7m same quarter last year. (BTimes)

MARKET UPDATE

The FBM KLCI might open lower today after stocks on both sides of the Atlantic met their worst weekly performance in at least a month on Friday, as optimism over earnings season was tempered by fears about the rapid spread of the Delta variant of coronavirus. Wall Street’s S&P 500 fell 0.8% on Friday in New York, ending the week down 1%, the benchmark’s worst weekly performance since mid-June. The tech-focused Nasdaq Composite similarly slid 0.8%, dropping a total of 1.9% since Monday. Across the Atlantic, stocks also ended the week lower with the continent-wide Stoxx Europe 600 down 0.3% on Friday for a weekly fall of 0.6%. Frankfurt’s Xetra sank 0.6% while London’s FTSE 100 slipped 0.1%, taking its fall since Monday to 1.6%, the index’s biggest drop in four weeks.

Back home, the FBM KLCI ended flat on Friday, as daily new Covid-19 cases in the country retreated from an all-time high the day before. At 5pm, the benchmark index reversed the day’s losses to close slightly higher by 1.66 points or 0.11% to 1,522.48, led by gains at Genting Bhd and Digi.Com Bhd while glovemakers' shares fell. Elsewhere in the region, Japan’s Nikkei 225 fell 0.98%, Shanghai Composite Index fell 0.71% the Hong Kong HSI rose 0.03% to close marginally higher.

Source: PublicInvest Research - 19 Jul 2021