Economy

US: Retail sales tumble 1.1% in July amid continued drop in auto sales. With auto sales continuing to fall sharply, the Commerce Department released a report showing US retail sales tumbled by much more than expected in the month of July. The report said retail sales slumped by 1.1% in July after climbing by an upwardly revised 0.7% in June. Economists had expected retail sales to dip by 0.3% compared to the 0.6% increase originally reported for the previous month. The bigger than expected decrease in retail sales was partly due to a continued nosedive in sales by motor vehicle and parts dealers, which plunged by 3.9% in July after tumbling by 2.2% in June. Excluding the steep drop in auto sales, retail sales fell by 0.4% in July after jumping by 1.6% in June. Ex-auto sales were expected to inch up by 0.1%. (RTT)

US: Industrial production climbs more than expected in July. Industrial production in the US increased by much more than expected in the month of July, according to a report released by the Federal Reserve. The Fed said industrial production advanced by 0.9% in July after edging up by a downwardly revised 0.2% in June. Economists had expected industrial production to rise by 0.4%, matching the increase originally reported for the previous month. The report showed manufacturing output surged up by 1.4% in July after dipping by 0.3% in June, reflecting an 11.2% spike in the production of motor vehicles and parts. (RTT)

US: Higher inflation target could trigger jobs boom, former Fed staffers say. The Fed may be wrestling with an inflation problem, but two former senior staffers at the US central bank argue that continued higher prices in the future may be what is needed to shift the whole economy to a higher plateau and deliver a jobs boom that helps the broadest set of people. David Wilcox, a former Fed research director, and David Reifschneider, argue in a new research paper that once the coronavirus pandemic passes and the Fed is able to raise interest rates to more normal levels, it should then increase the national inflation target from 2% to 3%. (Reuters)

EU: Euro zone growth confirmed at 2% in 2Q, employment rises. The euro zone economy grew 2% in the 2Q, the EU statistics office said, confirming its earlier reading as the easing of coronavirus restrictions spurred economic activity after a brief recession. In a separate release, Eurostat also said that employment in the 19-nation bloc grew 0.5% in the April-June period compared to the previous quarter, in line with forecasts of economists. The healthy 2% increase in GDP compared to the previous quarter was paired with a 13.6% rise from the same period last year, when the euro zone economy suffered the worst phase of the pandemic. (Reuters)

UK: Wage growth hits a record as vacancies pass one million. UK wage growth hit a record as companies posted more than one million new job vacancies for the first time in an unprecedented scramble for staff following the loosening of lockdown rules. Average earnings in the three months through June surged a record 8.8%YoY, the Office for National Statistics said. While the figure partly reflects distortions created by the pandemic, underlying wage pressures are also gathering pace. The pickup underscores the scale of the recovery from the deepest economic slump in 300 years. (Bloomberg)

China: Port congestion worsens as Ningbo shuts for seventh day. The partial closure of the world’s third-busiest container port is worsening congestion at other major Chinese ports, as ships divert away from Ningbo amid uncertainty over how long virus control measures in the city will last. In nearby Shanghai and in Hong Kong, congestion is once again increasing after dropping due to the reopening of Yantian port in Shenzhen, which shut in May for a seperate outbreak. The number of container ships anchored off Xiamen on China’s southeast coast rose to 24 from 6 at the start of the month. (Bloomberg)

Singapore: Non-oil domestic exports jump 12.7% on year in July. The total value of non-oil domestic exports in Singapore was up 12.7% on year in July, Enterprise Singapore said - exceeding expectations for 12.0% following the 15.9% gain in June. Growth was mainly due to non-electronics such as specialized machinery, pharmaceuticals and petrochemicals - while electronics also rose. NODX to the top 10 markets as a whole rose in July, mainly due to China, the EU 27 and Taiwan while NODX to the United States declined. (RTT)

Markets

Sime Darby (Outperform, TP: RM2.78): JV no longer required to pay additional interest to Chinese contractor. Sime Darby’s 36.63%-owned joint venture in China said it is no longer required to pay additional interests of CNY187m (RM122.33m) to CCCC Tianjin Dredging Co Ltd over the late payment of an instalment sum. (The Edge)

Comments: This resolution brings the case to a close with no further costs involved apart from legal expenses. A muchwelcomed relief, our Outperform call is reiterated on basis of stronger cyclical recoveries from 2022 onwards for the Group's diversified business operations across various geographies.

Boustead: Sells controlling stake in University of Nottingham for RM137m. Boustead Holdings is selling its controlling stake of 66.41% in the University of Nottingham (UNM) in Selangor for GBP23.5m (RM137m). The conglomerate said it would enter a conditional share sales agreement with the University of Nottingham, United Kingdom, to exit its venture in UNM and a campus in Semenyih. (BTimes)

MISC: Co-invests with BCG Digital in three ventures to disrupt maritime solutions. BCG Digital Ventures (BCGDV) and MISC are co-investing in three ventures that aim to disrupt the maritime solutions space with deep technology. The coinvestment is expected to transform the international shipping industry by improving maritime safety and introducing digitalized decarbonization and inventory management systems. BCGDV has previously invested in three ventures, namely SOL-X, Chord X, and Spares CNX. (BTimes)

Apollo: Manufacturing plant in Johor resumes operations. Apollo Food Holdings said its Johor manufacturing facility has resumed operations after a temporary suspension as a measure to prevent the spread of Covid-19. Apollo said the Ministry of Health (MoH) approved the resumption of operations for its subsidiary Apollo Food Industries (M)'s premises located in Kawasan Perindustrian Larkin after a thorough disinfection was carried out. (The Edge)

Willowglen: Wins two contracts in Singapore worth RM24.36m. Willowglen MSC has bagged two contracts worth RM24.36m. The contract involves the provision of design, supply, instal, testing and commissioning of a security system for the proposed development of intra airside road connection, second parallel taxiway and fire station No 2 for Changi East at Singapore Changi Airport. The commencement date of the contract is Aug 24. (The Edge)

GUH: Temporarily halts Penang plant as workers test positive for Covid-19. GUH Holdings has been ordered by the Ministry of Health to shut down from Aug 13 to 21, after Covid-19 positive cases were detected among its production workers. This is to enable GUH Circuit Industry (PG) SB to undertake deep sanitisation of its factory and hostels. The temporary cessation of manufacturing operations is expected to result in delay of deliveries for several orders to customers. (The Edge)

Iqzan: Bursa publicly reprimands Iqzan over deviation between unaudited and audited results. Bursa Malaysia Securities has publicly reprimanded Iqzan Holding over a major deviation between its unaudited and audited financial results for the 9M FPE 31 March 2020. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today as Wall Street recorded its worst day in almost a month on Tuesday as investors ditched equities following a stock sell-off in China and weak US retail sales data. The blue-chip S&P 500 closed down 0.7%, its steepest fall since mid-July. The tech-focused Nasdaq Composite was 0.9% lower at the bell, its biggest drop since late-July. The declines come a day after the S&P 500 finished at a record high, having doubled from lows it recorded during the market turmoil of March 2020. The Commerce Department on Tuesday morning reported that US retail sales fell 1.1% in July compared to June, worse than the 0.3% decline expected by economists surveyed by Bloomberg. Across the Atlantic, Europe’s Stoxx 600 ended the day almost flat as did Germany’s Dax. France’s CAC 40 fell 0.3%. London’s FTSE 100 closed 0.4% higher as investors cheered restructuring plans by miner BHP Group, the index’s second-largest company.

Back home, the FBM KLCI bucked the regional trend to close higher on broad-based buying, helped by attractive valuations after the recent decline. The index finished 1.38% or 20.69 points higher at 1,523.59, after staying in the positive territory for the entire session. Elsewhere in the region, Japan's Nikkei 225 fell 0.36%, South Korea's Kospi declined 0.89%, Hong Kong’s Hang Seng Index dropped 1.66% and the Shanghai Stock Exchange Composite Index closed down 2%.

Source: PublicInvest Research - 18 Aug 2021