Economy

US: Labor productivity jumps 2.3% in 2Q but misses economist estimates. Preliminary data released by the Labor Department showed labor productivity in the US increased by much less than expected in the 2Q. The Labor Department said labor productivity jumped by 2.3% in the 2Q after soaring by a downwardly revised 4.3% in the 1Q. Economists had expected productivity to surge up by 3.5% compared to the 5.4% spike that had been reported for the previous quarter. The smaller than expected increase in productivity, a measure of output per hour, came as a 7.9% leap in output was partly offset by a 5.5% jump in hours worked. (RTT)

EU: Euro zone investor morale falls to 3-month low on outlook angst. Investor morale in the euro zone fell in Aug to a three-month low on a sharp drop in expectations due to concerns that new lockdown restrictions could loom in the autumn and beyond, a survey showed. Sentix’s index for the euro zone fell to 22.2 points in Aug from 29.8 in July. A Reuters poll had pointed to an Aug reading of 29.0. An expectations sub-index suffered its third decline in a row and fell to its lowest since May 2020. (Reuters)

EU: German investor confidence plunges amid virus variant concerns. Investor confidence in Germany’s recovery dropped to the lowest level since late last year after a rise in infection rates stoked concerns over a possible tightening of pandemic curbs. ZEW’s gauge of expectations declined to 40.4 in Aug from 63.3 the previous month, with the institute’s President Achim Wambach warning of “increasing risks” to the economy. A measure of current conditions improved. Although more than half of Germany’s population is fully vaccinated, coronavirus infections in Europe’s largest economy are on the rise. (Bloomberg)

EU: Germany exports Growth Improves In June. Germany's exports grew at a faster pace in June, while the annual growth in imports weakened, data from Destatis showed. Exports grew 1.3% MoM in June, following May's revised 0.4% increase. The rate was expected to climb 0.4% after 0.3% growth initially estimated for May. Meanwhile, growth in imports eased to 0.6% from 3.4%. Economists had forecast the annual growth to slow to 0.5%. As a result, the trade surplus increased to EUR13.6bn from EUR12.8bn a month ago. The expected level was EUR13.4bn. (RTT)

China: Inflation slows slightly in July. China's consumer price inflation slowed marginally in July, while factory gate inflation accelerated on commodity prices, data published by the National Bureau of Statistics showed. Consumer prices grew 1% YoY in July, slightly slower than the 1.1% rise seen in June. The annual rate was expected to ease to 0.8%. On a monthly basis, consumer prices gained 0.3%, in contrast to the 0.4% drop in the previous month. Prices were forecast to rise 0.2%. Core inflation that excludes food and energy prices, rose to 1.3% from 0.9% a month ago. (RTT)

Taiwan: July exports hit record high, optimistic outlook on tech. Taiwan’s exports rose for a 13th straight month in July with the stronger-than-expected pace setting a new record, as the island’s manufacturers rushed production to meet a global shortage of computer chips for cars and technology gadgets. Exports rose 34.7% from a year earlier to USD37.95bn last month, the Ministry of Finance said, the highest monthly figure on record. (Reuters)

Australia: Business conditions, confidence weaken amid lockdown in July - NAB. Australia's business conditions and confidence declined sharply in July amid strict restrictions in many states to curb the spread of the virus, survey results from NAB showed. The business conditions index fell to 11 in July from 25 in June. Conditions softened in all industries, with the exception of mining - where it remained elevated. (RTT)

Markets

DNeX: Bags RM88m ICT contract from MoF. Dagang NeXchange (DNeX) has bagged an information and communication technology (ICT) contract from the Ministry of Finance (MoF) worth RM88m. DNex said it would be responsible for the maintenance, support services and application improvement of the integrated government financial and management system (iGFMAS) for a duration of 45 months. Group MD Tan Sri Syed Zainal Abidin Syed Mohamed Tahir said the contract is a testament to the company's commitment and ability to deliver effective digital solutions to the public sector. (NST)

DNeX: Subsidiary buys remaining 50% oilfield stake from Sumitomo unit. DNeX’s subsidiary PING Petroleum UK Ltd (PING UK) is acquiring the remaining 50% stake in the UK offshore Avalon Oilfield from Sumitomo Corp's for USD17m (RM71.72m) under a deal said to stem from the seller’s intention to shift away from the fossil fuel business and the buyer’s decision to avoid any potential conflicts which may arise should the 50% stake be sold to a third party. DNeX said the Avalon Oilfield, which was initially discovered in May 2014 and further appraised in July 2017, lies entirely in the UK block 21/6b of the North Sea at 120km northeast of Aberdeen. (The Edge)

Pecca: Acquisition target Rentas Health secures contract to supply PCR test kits to MoH. Rentas Health SB, in which Pecca Group has proposed to acquire a 51% stake, has secured a RM25.2m contract to supply Covid-19 polymerase chain reaction (PCR) test kits to the Ministry of Health (MoH). Rentas said its PCR test kit will be used in 21 government hospitals nationwide. The test kit venture is being undertaken in partnership with LG International Corp, with Rentas appointed as the sole distributor in Malaysia. (The Edge)

Majuperak: Launches Perak vaccination programme with 200k Covid-19 vaccine doses in store. Majuperak Holdings has launched its SilverVax vaccination programme in Perak with a total of 200kCovid-19 vaccine doses expected to be made available to targeted groups, namely the private sector and government-linked companies (GLCs) in the state. Majuperak said its SilverVax vaccination programme commenced on Aug 2, which to date had around 300 private companies across Perak registered to procure and provide vaccines for their workforce and family members since applications were opened on July 23. (The Edge)

Construction: Sector up 42.6% in 2Q YoY, highest since 2012. Malaysia's construction sector grew 42.6% YoY in 2Q21 RM28.2bn, the highest growth recorded since 2Q12, due to the lower base last year. The Department of Statistics Malaysia (DOSM) said the special trades activities subsector registered a growth of 75% YoY in 2Q21. Meanwhile, the other three subsectors, namely civil engineering, non-residential buildings and residential buildings showed a growth of 59.5%, 37.0% and 18.0% YoY respectively. (Bernama)

MARKET UPDATE

The FBM KLCI might add a few points at opening today as Wall Street stocks closed at highs on Tuesday after the US Senate passed a USD1trn infrastructure bill, while the dollar and Treasury yields rose ahead of the release of important US inflation data. The S&P 500 index of blue-chip stocks gained 0.1% in New York, notching another high. The Dow Jones Industrial Average also achieved a record close, rising 0.5%. The technology-focused Nasdaq Composite fell 0.5%. The US Department of Labor will on Wednesday release its monthly consumer price index figures, which are expected to show a continued rise in inflation, albeit at a slower pace than in June. The CPI print will provide investors with further clues as to how soon the Fed may roll back its ultra-loose policies, beginning with a taper of its monthly USD120bn of government debt purchases.

In Europe, the regional Stoxx 600 index reached a closing high, up 0.3%, having traded up as much as 0.5% earlier in the day, led by the food-delivery services Deliveroo and HelloFresh, which have prospered during pandemic lockdowns. In the region, markets were mixed as the Delta coronavirus variant spreads rapidly across the region. Covid-19 infection figures in China on Monday appeared to show the most serious resurgence of the disease in the world’s second-largest economy since mid-2020. Beijing has increased testing and travel restrictions in recent days. Hong Kong’s Hang Seng index rose 1.2% and the mainland China CSI 300 gained 1.2%, led by tech shares recovering ground lost in recent weeks as investors were rattled by a government crackdown. South Korea’s Kospi fell 0.5%

Source: PublicInvest Research - 11 Aug 2021