Economy

US: Small business confidence steady in April -NFIB. US small business confidence held steady in April after three straight monthly declines, but owners remained worried about high inflation and worker shortages, a survey showed. The National Federation of Independent Business (NFIB) said its Small Business Optimism Index was unchanged at a reading of 93.2 last month. The index had declined since Jan. Thirty-two percent of owners reported that inflation was their single most important problem in operating their business. That was the largest share since the fourth quarter of 1980 and was up a point from March. The economy is experiencing high inflation caused by shortages, massive fiscal stimulus and low interest rates. Annual inflation is rising at the fastest pace in 40 years. The Federal Reserve last week raised its policy interest rate by half a percentage point, the biggest hike in 22 years, and said it would begin trimming its bond holdings next month. The US central bank started raising rates in March. According to the NFIB survey, more owners expected business conditions to worsen over the next six months. But there are signs inflation has likely peaked. (Reuters)

EU: German ZEW economic confidence improves in May. Germany's economic confidence improved in May but remained at a very low level as the economy is expected to continue to deteriorate in the near-term in the face of the war in Ukraine and the coronavirus restrictions in China, survey results from the ZEW - Leibniz Centre for European Economic Research. The ZEW Indicator of Economic Sentiment unexpectedly rose to -34.3 in May from -41.0 in April. The reading was forecast to fall to -42.0. Meanwhile, the current situation indicator fell by 5.7 points -36.5 in May. This was the third consecutive decline since the beginning of the war in Ukraine. The expected reading was -35.0. The survey suggested that the economy will contract in the 2Q, Jack Allen Reynolds, an economist at Capital Economics, said. The ZEW economic expectations as well as the assessment of the situation continued to point to deterioration in the German economy over the next six months. The financial market experts assessed that the situation will continue to deteriorate, but with less intensity. (RTT)

EU: Italy industrial production remains flat in March. Italy's industrial production remained unchanged in March, in contrast to the expected decline, data from the statistical office Istat. On a monthly basis, industrial production remained flat in March, following Feb's 4.0% increase. Output was forecast to decline 1.9%. Industrial production grew by calendar-adjusted 3% annually in March, but slower than the 3.4% rise in Feb. The annual growth was underpinned by an 8.1% rise in consumer goods output, followed by a 5.2% increase in energy production. Capital goods output gained 3.0%, while the production of intermediate goods fell 0.4%. The unadjusted industrial output growth improved to 3.8% annually from 3.4% in Feb. In the 1Q, industrial production decreased 0.9% from the previous three months. (RTT)

UK: BRC retail sales fall in April. UK retail sales declined in April as consumers reduced their spending amid rising cost of living, data compiled by the British Retail Consortium and the advisory services firm KPMG. Total sales were down 0.3% in April from the last year, the first fall since Jan 2021. At the same time, like-for-like sales decreased 1.7% annually. The rising cost of living has crushed consumer confidence and put the brakes on consumer spending, Helen Dickinson, chief executive at BRC, said. Sales growth has been slowing since January, though the real extent of this decline has been masked by rising inflation. Paul Martin, UK Head of Retail, KPMG, said with interest rates and inflation rising and the BOE warning of a possible recession, the squeeze on disposable household income is starting to have an impact on the high street. Against a backdrop of falling consumer confidence, the retail sector has a bumpy time ahead as they face spiraling cost pressures from all directions, Martin noted. (RTT)

Japan: Household spending jumps 4.1% in March. The average of household spending in Japan was up a seasonally adjusted 4.1% on month in March, the Ministry of Internal Affairs and Communications said - coming in at JPY307,261. That beat expectations for an increase of 2.6% following the 2.8% decline in Feb. On a yearly basis, household spending fell 2.3% - again topping forecasts for a decline of 2.8% following the 1.1% increase in the previous month. The average of monthly income per household stood at JPY503,128, up 2.3% on year. (RTT)

South Korea: USD6.73bn current account surplus. South Korea had a current account surplus of USD6.73bn in March, the BOK said - up from USD6.42bn in Feb. The goods account surplus decreased to USD5.31bn, compared to the USD7.85bn figure in March 2021. The services account recorded a USD0.36bn surplus, up from the USD1.10bon deficit seen one year earlier, owing to a large surplus in the transport account. The primary income account surplus decreased from USD1.29bn the year previously to USD1.15bn in March. The secondary income account saw a USD0.09bn deficit. Looking at the financial account, net assets increased by USD5.37bn during March. For the 1Q of 2022, the current account surplus was USD15.06bn. (RTT)

Australia: Retail sales climb 1.6% in March. The total value of retail sales in Australia was up a seasonally adjusted 1.6% on month in March, the Australian Bureau of Statistics said - coming in at AUD33.626bn. Individually, sales were up for food, household goods, clothing, department stores, other retailing and cafes and restaurants. Retail sales were up 9.4% on year. For the 1Q of 2022, retail sales rose 1.2% on quarter to AUD93.186bn after jumping 7.9% in the three months prior. (RTT)

Markets

Mesiniaga: Inks RM59.6m deal with Telekom Malaysia. Mesiniaga has bagged a contract worth RM59.63m from Telekom Malaysia to provide maintenance and support services for telecommunication cloud core data centre. T he contract period is from April 1 this year to Nov 16, 2024 and there is no automatic renewal clause in the contract. The contract is expected to contribute positively to the group's earnings from the financial year ending Dec 31, 2022 until the expiry of the contract. (The Edge)

EA Technique: Sells tanker to Korean company for RM21.39m. EA Technique (M) said it has sold off its vessel Nautica Renggam (NRG) to a Korean company for a cash consideration of USD5.05m, equivalent to RM21.39m. EA Technique had executed an agreement for the sale of NRG to Korea-based C&M Co Ltd on May 10 after obtaining the best offer through the former’s independent broker Braemar ACM (Singapore) on April 15. (The Edge)

Xin Hwa: To diversify into precision machining business by acquiring 79% stake in Micron. Xin Hwa Holdings plans to diversify into the precision machining business after acquiring a 79% stake in Micron Metal Engineering SB (Micron) for RM19.75m in a cash plus shares deal. The SSA also entails a put option which enables the vendors to sell the remaining 94,500 shares or 21% equity interest in Micron for RM5.25m in cash. (The Edge)

Willowglen MSC: Bags RM23.97m telecom tower infrastructure contract in Sabah. Willowglen MSC has been awarded a RM23.97m contract by Majubina Resources SB. The contract is for the design, build and transfer of infrastructures capable of supporting 20 telecommunication towers at various sites in Sabah. The contract, which commenced on May 9, 2022, will be completed by Feb 8, 2023. (The Edge)

Scomi: Inks MOU for RE generation programme in Johor. Scomi Group Bhd 51%-owned joint venture company Scomi SGSB SB had executed a memorandum of understanding (MOU) with Skill Johor SB (SJSB) to develop a Renewable Energy (RE) generation programme in the latter's TVET Campus in Johor. (The Edge)

CSH: EV unit buys land for EV business expansion plan. CSH Alliance (CSH), through its wholly owned subsidiary and electric vehicle (EV) business arm Alliance EV SB (AEV), is acquiring three pieces of adjacent land measuring 55 acres in Tanjung Malim, Perak for RM12m, which is intended for a local complete knocked down (CKD) assembly plant for its EV business. (SunBiz)

Serba Dinamik: To seek leave from High Court for resolution of payment obligation. Serba Dinamik Holdings is taking steps to seek leave from the High Court to allow the company to convene one or more court-convened creditors meeting to present one or more scheme(s) of arrangement to seek a constructive resolution to the company and its subsidiaries’ payment obligation. The company is responding to the queries from the creditors and its trading partners regarding the winding-up petitions on SDHB and its group of companies. (The Edge)

Market Update

The FBM KLCI might open flat today after US stocks eked out a marginal advance after a volatile trading day on Tuesday, as investors attempted to navigate an increasingly complex outlook for monetary policy and the global economy. The broad S&P 500 gauge, which closed 3.2% lower on Monday, swung between gains and losses but was 0.2% higher by late afternoon. The technology focused Nasdaq Composite, which fell more than 4% the previous session, gained 1%. Europe’s regional Stoxx 600 added 0.7% — tracing back some of the previous day’s 2.9% decline. Global equities had on Monday posted their worst day since June 2020. Tuesday’s swings reflected the tension between investors keen to buy the market dip and rising caution over the outlook. The Federal Reserve last week raised its interest rate by half a percentage point for the first time since 2000, while the UK, Australia and India also lifted borrowing costs.

Back home, Bursa Malaysia ended mixed on Tuesday with the FBM KLCI snapping three consecutive days of losses to rise by 0.35%, as bargain hunting emerged in telecommunications and banking heavyweights. In the region, Japan’s Nikkei 225 closed 0.6% lower, the Shanghai Composite rose 1.1% and Hong Kong’s Hang Seng Index dropped 1.8%.

Source: PublicInvest Research - 11 May 2022