Economy

US: Housing market cooling as building permits tumble, starts fall. Permits for future US homebuilding tumbled to a five-month low in April, suggesting the housing market was slowing as rising mortgage rates contribute to reduced affordability for entry-level and first-time buyers. Building permits dropped 3.2% to a seasonally adjusted annual rate of 1.8m units in April, the lowest level since last Nov. They rose 3.1% on a YoY basis. The decline was concentrated in the single-family housing segment, where permits plunged 4.6% to a rate of 1.1m units, the lowest level since last Oct. Permits for buildings with five units or more fell only 0.6% to a rate  of 656,000 units. The 30-year fixed-rate mortgage averaged 5.30% during the week ended May 12, the highest since July 2009. (Reuters)

EU: Inflation remains stable in April. Eurozone inflation remained unchanged in April. Consumer prices gained by 7.4% on a yearly basis, the same as in March, but less than the initial estimate of 7.5% increase. Despite the downward revision, inflation was the highest on record. On a monthly basis, the HICP was up 0.6%, in line with the estimate published on April 29. Core inflation that excludes energy, food, alcohol and tobacco, accelerated sharply to 3.5% from 3.0% in March. Energy continued to have the highest annual rate, 37.5% in April versus 44.3% in March. (RTT)

EU: New car registrations fall further in April. European new car registrations declined for the 10th successive month in April, as supply chain issues continued to hurt production. Registrations of new passenger cars dropped 20.6% YoY in April, after falling 20.5% in the previous month. With the exception of the pandemic year in 2020, this was the weakest April result in terms of volumes sold since record began. The number of vehicles registered across the EU region totalled 684,506 units in April compared to 862,443 units produced in the corresponding month last year. All four major EU markets recorded losses in April. (RTT)

UK: Inflation at 40-year high. UK inflation jumped in April to surpass previous records, largely on food and fuel prices, signaling the high cost of living that is set to squeeze household incomes, and validating expectations for further tightening from the Bank of England this year. Inflation accelerated sharply to 9.0% in April from 7.0% in March. Inflation hit the highest since the historical series began in Jan 1989 and would last have been higher sometime around 1982. (RTT)

Japan: GDP slips less than expected in Q1. Japan's gross domestic product contracted an annualized 1.0% in the first quarter of 2022. That exceeded expectations for a decline of 1.8% following the downwardly revised 3.8% increase in the previous three months (originally 5.4%). On a seasonally adjusted quarterly basis, GDP slipped 0.2% - but that also beat forecasts for a fall of 0.4% following the downwardly revised 0.9% gain in the three months prior. Capital expenditure rose 0.5% on quarter, missing forecasts for an increase of 0.7% but still up from 0.4% in the previous quarter. External demand was down 0.4% on quarter. (RTT)

Australia: Unemployment data on tap for Thursday. Australia will on April 19 release April jobless figures. The jobless rate is expected to dip to 3.9% from 4.0% in March, with the addition of 30,000 jobs following the gain of 17,900 jobs in the previous month. Japan will release March figures for core machine orders and April data for imports, exports and trade balance. Machine orders are expected to rise 3.7% both on month and on year after sinking 9.8% on month and rising 4.3% on year in Feb. The central bank in the Philippines will wrap up its monetary policy meeting and then announce its decision on interest rates; the bank is expected to hike its benchmark lending rate by 25 basis points, from 2.00% to 2.25%. Hong Kong will release April figures for unemployment; in March, the jobless rate was 5.0%. New Zealand will see Q1 results for producer prices; in the previous three months, input prices were up 1.1% on quarter and output prices rose 1.4%. (RTT)

Markets

MPHB Capital: To sell remaining 51% stake in MPI Generali for more than RM508m cash . MPHB Capital’s unit Multi Purpose Capital Holdings (MPCHB) has agreed to sell its 51% equity interest in MPI Generali Insurans Bhd for RM485m to Generali Asia. Generali Asia and MPCHB have agreed that the purchase price will be adjusted if completion of the deal occurrs during the extended period (being the period commencing on Jan 1, 2022, and expiring on June 30, 2022, and subject to a further extension up till Aug 31, 2022). (The Edge)

SIAB: KPFB, SIAB ink MoU for JV project with GDV of RM389m . Koperasi Peserta-Peserta Felcra Malaysia (KPFB) has inked a MoU with Siab Development SB to undertake a joint development with a GDV of RM389m on lands in Gombak, Selangor owned by KPFB. KPFB chairman Datuk Sabari Misran said the proposed land development measures about 7.9 hectares and the project will be fully completed in 2025. "KPFB’s involvement in the real estate field with the signing of this agreement involves housing projects, namely KPFB PR1MA and KPFB Felcra Residency, which will be given priority sales to Felcra employees and the B40 group. (Bernama)

E.A. Technique: Auditor flags doubt about ability to continue as going concern. E.A. Technique’s external auditor Messrs Ernst & Young PLT (EY) has expressed a disclaimer of opinion in its audited financial statements for the financial year ended Dec 31, 2021 (FY21). EY had pointed to the group’s and the company’s reported net loss of RM150.6m and RM161.2m respectively for FY21, as well as at end-December 2021, and that the group’s and the company’s current liabilities exceeded their current assets by RM405.3m and RM416.9m respectively. (The Edge)

Zelan: External auditor flags going concern over FY21 financial statements . Zelan’s external auditor Messrs Afrizan Tarmili Khairul Azhar PLT has expressed an unqualified opinion with material uncertainty related to going concern in its audited financial statements for the financial year ended Dec 31, 2021 (FY21). The auditor drew attention to the engineering and construction group’s net loss of RM3.04m in FY21, noting that the group’s and the company’s current liabilities exceeded its current assets by RM186.89m and RM21.67m respectively. (The Edge)

UMW: Automotive sales down to 32,600 units in April due to supply chain issues . UMW Holdings’s automotive sales dropped to 32,600 units last month from 35,246 units sold in March due to the disruption in production caused by supply chain issues affecting the automotive industry. However, in April, strong sales momentum continued as UMW Toyota Motor registered improved sales. (Business Times)

Lion Posim: Forms JV with Selangor government for mixed residential development in Shah Alam. Lion Posim is forming an unincorporated JV to undertake a mixed residential and commercial development in Shah Alam, with a GDV of RM867m. The group has entered into a conditional development agreement with a unit of Selangor Menteri Besar Inc, Landasan Lumayan SB. (The Edge)

Market Update

The FBM KLCI might open lower today after US stocks on Wednesday suffered their sharpest fall since the early months of the coronavirus pandemic as weak results from consumer bellwethers stoked concerns about the impact of inflation and choked-up supply chains on corporate earnings. The benchmark S&P 500 share index fell 4%, its biggest loss since June 2020, with 98% of stocks in the index declining on Wednesday. Target, the retailer, led the declines, plunging 25% after it said higher freight, wage and fuel costs and disrupted logistics would hit its profit margins. The warning came a day after Walmart, the world’s largest bricks-and-mortar retailer, cut its earnings guidance and said it had also been wrongfooted by broad inflationary trends. The lacklustre quarterly reports sparked selling across US exchanges as investors, fearing an economic slowdown, cut positions across their portfolios. Tech giants including Apple, Nvidia and Amazon all dropped more than 5%, with the tech-dominated Nasdaq Composite down 4.7%. Europe’s regional Stoxx 600 share index fell 1.1%.

Back home, Bursa Malaysia ended higher for the third consecutive trading session on Wednesday on continuous nibbling in selected heavyweights including financial services, consumer, and oil and gas stocks. At 5pm, the FBM KLCI rose 6.31 points to 1,554.91 from Tuesday's close of 1,548.6. In the region, Hong Kong’s Hang Seng index added 0.2%, while Tokyo’s Nikkei 225 closed 0.9% higher.

Source: PublicInvest Research - 19 May 2022