Economy

US: Core capital goods orders flat in July, shipments increase. New orders for key US made capital goods were steady in July, but an acceleration in shipments suggested business investment in equipment could offset an anticipated slowdown in consumer spending and keep the economy on a solid growth path in the 3Q. The unchanged reading in orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, last month followed a 1.0% increase in June. Economists had forecast core capital goods orders climbing 0.5%. Shipments of core capital goods rose 1.0% after increasing 0.6% in June. (Reuters)

US: Mortgage applications rise as mortgage rates edge down - MBA. Mortgage applications increased last week, as purchasing applications posted their largest increase since early July while mortgage rates edged down. The Mortgage Bankers Association (MBA) said its average contract interest rate for traditional 30-year mortgages declined to 3.03% from 3.06% in the week ending Aug. 20. The seasonally adjusted market composite index tracking mortgage applications rose 1.6% from a week earlier, reflecting a 0.9% increase in applications to refinance existing loans. Purchase applications rose 3.0%, the MBA said. (Reuters)

EU: German Ifo business confidence weakens for second straight month. German business confidence weakened for the second straight month in August mainly due to significantly less optimism in companies' expectations, survey results from ifo Institute showed. The business climate index fell to 99.4 in Aug from 100.7 in July. The score was expected to ease moderately to 100.4. Expectations among companies deteriorated to a six-month low in Aug. (RTT)

EU: German GDP to increase sharply in 3Q. Germany's economy is set to grow strongly in the 3Q despite the pace of recovery losing momentum partly due to the pandemic-induced supply chain constraints. Results of the latest ifo survey showed that the German business confidence eased for a second straight month. This provides further evidence that Germany's recovery is losing some momentum, partly due to supply chain difficulties in the manufacturing sector and the Delta variant. The slump in the expectations measure outweighed the improvement in the current situation index for a second month in a row. Activity weakened in all sectors. (RTT)

EU: German exports to China fall for first time in nearly a year. German exports to China declined for the first time in nearly a year in July, easing by 3.9% year-on-year to EUR8.4bn (USD9.9bn), the statistics office said. That was the first decline in exports to China, Germany’s second biggest sales market outside the European Union, since August 2020, and it was the biggest slump since May 2020, when the world was gripped in the first wave of the coronavirus pandemic. Exports to the United States grew by 15.3% to 10.8 billion euros, the statistics office said. (Bloomberg)

Japan: Leading index rises as estimated. Japan's leading index increased in June, as initially estimated, final data from the Cabinet Office showed. The leading index, which measures the future economic activity, rose to 104.1 in June from 102.6 in May, as estimated. The coincident index increased to 94.5 in June from 92.1 in the previous month. In the initial estimate, the reading was 94.0. The lagging index grew to 94.5 in June from 92.1 in the prior month. According to the initial estimate, the reading was 96.5. (RTT)

Taiwan: Central bank says economy not overheating, inflation stable. Taiwan’s economy is not overheating and inflation is well under control, central bank governor Yang Chin-long said, as he responded to lawmakers’ questions about prospects for an interest rate rise. The central bank cut the benchmark discount rate to 1.125% in March last year, a historic low, as the COVID-19 pandemic began to bite, where it has remained ever since. Taiwan’s economy has remained resilient throughout the pandemic, largely on demand for its tech exports like laptops and tablets to support the work and study from home trend that kept millions away from offices and schools around the world. (Reuters)

South Korea: Seen delivering its first pandemic-era rate hike. South Korea is expected to become the first major Asian economy to raise interest rates since the pandemic began to curb surging household debt and cool brisk consumer prices and an overheating housing market. A slim majority of a polled expect the Bank of Korea to raise the benchmark interest rate from a record low at its policy meeting. A hike would the first since Governor Lee Ju-yeol and his board raised the benchmark interest rate in Nov 2018. A 25 basis point increase to 0.75% and possible forecasts for more tightening would be underpinned by growing inflationary pressures and the strong export-led recovery. (Reuters)

Markets

Lagenda Properties, Solarvest: To build largest residential PV systems in Perak. Lagenda Properties has appointed Solarvest Holdings as its solar photovoltaic (PV) systems partner to install 1,000 residential solar PV systems across three township projects developed by it in Perak. The project would be Malaysia's largest sustainable clean energy generation in affordable townships. (BTimes)

TIME dotcom: Chooses IBM AI-powered automation software to transform service delivery. TIME dotCom (TIME) has turned to IBM technologies to modernise its network operations. TIME would be deploying the IBM Cloud Pak for network automation built on Red Hat OpenShift to make its network operations more efficient and flexible across various environments. It would also increase the speed of delivery for new services. (BTimes)

Ekovest: Seeks to provide RM240m financial aid to Spore JV firm via deed of undertaking. Ekovest is proposing to provide financial assistance amounting to SGD77.28m (RM240.34m) to its indirect 29%-owned JV company MCC Land (TMK) Pte Ltd in the form of deed of undertaking for banking facilities obtained by the latter from licensed financial institutions based in Singapore. (The Edge)

Handal Energy: Breaks six-year streak of losses by posting net profit for FY2021. Handal Energy has returned to the black for the FYE June 30, 2021 for the first time since financial year 2016, recording a net profit of RM227,000 against a net loss of RM25.28m in the same period a year ago fuelled by new contracts. Its revenue slipped to RM73.69m. (The Edge)

Matrix Concepts: 1Q net profit steady at RM32m, declares 2 sen dividend. Matrix Concepts Holdings’ net profit in the 1QFY22 grew by 2% to RM31.7m, supported by revenue growth despite the challenging property market. Its quarterly revenue rose marginally by 0.9% to RM163.44m, underpinned by robust demand for its affordably priced landed properties. (The Edge)

Velesto: Returns to black in 2Q with recognition of insurance claim from Naga 7 incident. Velesto Energy returned to the black with a net profit of RM16.27m for the 2QFY21, from a net loss of RM15.25m in the corresponding quarter a year ago, despite lower revenue, following the recognition of insurance claims in relation to its Naga 7 incident. Quarterly revenue fell 40.7% to RM83.55m. (The Edge)

Sunsuria: 3Q net profit up 27% on higher contribution from property development business. Sunsuria’s net profit rose 27.12% to RM3.57m in the 3QFY21, from RM2.81m a year ago, underpinned by better profit contribution from its property development business. Revenue tripled to RM62.21m from RM20.20m in 3QFY20 driven by its ongoing property developments. (The Edge)

Sam Engineering: Reports better 1Q top and bottom-line growth. SAM Engineering & Equipment (M) has reported an improved top and bottom-line growth for its 1QFY22, compared to a year ago. Net profit increased 66.22% to RM11.98m, while revenue rose 18.6% to RM202.78m. The group attributed the better earnings to higher profit contribution from its equipment segment. (The Edge)

MARKET UPDATE

The FBM KLCI might open with a positive bias today after Wall Street stocks hit record highs while government debt prices fell on Wednesday, as investors predicted central bankers would maintain a dovish tone at a closely watched meeting later this week. The blue-chip S&P 500 and techfocused Nasdaq Composite indices closed at highs, each up about 0.2%. Growth-sensitive stocks such as financials, energy and industrials led the gains. Markets followed a similar pattern in Europe, with government bonds selling off while most main stock indices were positive or flat. London’s FTSE 100 stock index rose 0.3% but lagged behind the midcap FTSE 250 index, which climbed 0.4% to an all-time high. The region-wide Stoxx 600 closed flat, with Frankfurt’s Xetra Dax down 0.3% and the CAC 40 in Paris up 0.2%.

Back home, the FBM KLCI closed higher for the fourth consecutive day, as dust seems starting to settle in the political scene after the recent change of premiership. The benchmark index went up 16.43 points or 1.06% to close at a two-month high of 1,564.66 points. The index touched an intraday high of 1,569.80 points. Regionally, Tokyo's Nikkei 225 fell 0.03% and Hong Kong's Hang Seng Index declined 0.13%, while Seoul's Kospi and the Shanghai Composite Index rose 0.27% and 0.74% respectively

Source: PublicInvest Research - 26 Aug 2021