PublicInvest Research

PublicInvest Research Headlines - 23 May 2022

PublicInvest
Publish date: Mon, 23 May 2022, 09:58 AM
PublicInvest
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

All materials published here are prepared by Public Investment Bank Berhad. For latest offers on Public Invest trading products and news, please refer to: https://www.publicinvestbank.com.my/pbswecos/default.asp

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Economy

US: Growth seen outpacing China’s for first time since 1976. China’s coronavirus lockdowns mean its economic growth may undershoot the US for the first time since 1976, in a role reversal with potential political reverberations in both Beijing and Washington. The world’s second-largest economy will grow just 2% this year, Bloomberg Economics wrote in a report. By comparison, US gross domestic product will increase 2.8% this year, Bloomberg Economics predicts. While Beijing is applying fiscal, monetary and regulatory stimulus measures, the impact is being blunted by President Xi Jinping’s Covid Zero policy, which requires strict curbs on activity when virus outbreaks occur. (Bloomberg)

EU: Money markets price in 50-50 chance of 50 bps July ECB hike. Euro zone money markets ramped up their bets on a 50 basis-point interest rate hike from the ECB in July that would bring the bank's policy rate to 0%. Dutch central bank governor and ECB policymaker Klaas Knot said that the bank should keep the door open to a 50 bps hike if upcoming data suggested inflation was "broadening further or accumulating". Knot's speech shifted market expectations, and traders priced in as much as 36 bps of hikes by July. That suggested a 25 bps hike is fully priced in, and about a 50% probability of an additional 25 bps move. (Reuters)

EU: German producer price inflation sets new record. Germany's producer price inflation accelerated further in April to set a fresh record high and soaring energy prices continued to drive prices higher amid the war in Ukraine, preliminary figures from the statistical office Destatis showed. The producer price index climbed 33.5% YoY following a 30.9% increase in March. Economists had forecast a 31.5% rise. Destatis said it was the highest increase ever compared to the corresponding month of the preceding year and that these results also contain implications deriving from Russia's attack on Ukraine. Producer prices rose 2.8% from the previous month. Economists had forecast a 1.4% increase. Energy prices surged 87.3% annually and increased 2.5% from the previous month. (RTT)

UK: Retail sales jump unexpectedly, but big picture bleak. British retail sales jumped unexpectedly in April as shoppers loaded up on alcohol and tobacco, likely a blip in an otherwise bleak trend that has driven consumer confidence to all-time lows amid a worsening cost-of-living crunch. Retail sales volumes rose 1.4% month on month after a 1.2% drop in March, the Office for National Statistics said. Economists polled by Reuters had expected a 0.2% monthly fall. The wider picture remains disconcerting. Retail sales in the three months to April fell 0.3%, after a 0.7% drop in March. Compared with a year ago, sales volumes were 4.9% lower, marking the biggest annual drop since Jan 2021. (Reuters)

China: Cuts lending rates to cushion property market. China's central bank unexpectedly lowered its lending rates for long-term loans, a move that is set to prop up lending to the property market. The five-year loan prime rate, or LPR, the benchmark for mortgage rates, was lowered by a record 15 basis points to 4.45% from 4.60%, the People's Bank of China said. This was the second reduction this year. At the same time, the one-year LPR was retained at 3.70%. The previous change in this rate was a five basis points cut in Jan. The reduction in the five-year LPR was unexpected as the medium-term lending facility rate, the forerunner of LPR, was kept unchanged earlier this month. (RTT)

China: Shanghai economy hit on all sides in April by COVID lockdown. China's commercial hub of Shanghai reported a broad decline in its economy last month when a city-wide COVID lockdown shut factories and kept residents at home, sparking concerns among foreign firms over their presence in the country. Output of Shanghai's industries, located at the heart of manufacturing in the Yangtze River Delta, shrank 61.5% in April from a year earlier, the local statistics bureau said. That was worse than the 7.5% drop in March and was the biggest monthly decline since at least 2011. (Reuters)

Taiwan: Export orders fall for first time in 2 years, hurt by China lockdowns, global weakness. Taiwan's export orders -- a bellwether for global technology demand -- fell for the first time in 25 months in April, taking a larger-than-expected hit from COVID lockdowns in China and broader global supply chain disruptions. Export orders unexpectedly fell 5.5% from a year earlier to USD51.9bn last month, data from the Ministry of Economic Affairs showed. The decline was the first in more than two years, since the COVID-19 pandemic began sweeping the world in 2020, and up ended analysts' forecasts for 8.3% growth. Orders for telecommunications products dropped 21.5% on year, mainly due to government measures to control the spread of COVID-19 in China, the ministry said. (Reuters)

Markets

ManagePay Systems: Gets BNM's nod to cross-sell financial services by QuicKash. ManagePay Systems (MPay) said Bank Negara Malaysia (BNM) has no objection for its wholly-owned subsidiary ManagePay Services SB (MPSB) to cross-sell financial services offered by QuicKash Malaysia SB on MPay's e-money platform. In a bourse filing on May 20, MPay said it had on Jan 7 received a letter of consent from BNM for the purpose. (The Edge)

SC Estate Builder: Receives EGM requisition to remove 11 directors. SC Estate Builder (SCBuild) has received a requisition from 3 shareholders, who collectively hold at least 10% of the company's shares, to call for an extraordinary general meeting (EGM) to remove 11 existing directors. In a bourse filing on May 20, SCBuild had received the notice of requisition for the EGM to remove the company's chairman, managing director and chief executive officer and any director appointed between May 13 and the EGM. At the same time, they are seeking to appoint 6 new directors on SCBuild's board. (The Edge)

Supermax: UK govt sued for using Supermax gloves on forced labour allegations. The UK High Court had on May 18 allowed a case against the UK government to proceed for its continued use of gloves manufactured by Supermax Corp due to forced labour allegations against the Malaysian company. In December 2021, the UK awarded a contract to Supermax to supply the National Health Service with disposable gloves. All the citizens, represented by UK law firm, Wilson Solicitors, is suing the government for continuing its relationship with the Malaysian company, despite an investigation uncovering allegations of forced labour in Supermax’s factories. (The Edge)

CSH Alliance: Acquires industrial land in PJ for RM10m. CSH Alliance (CAB) has acquired a plot of 1.07 acres of industrial land in Petaling Jaya for RM10m from the vendor, M Xpress SB. The acquisition was made through CAB's wholly owned subsidiary and electric vehicle (EV) business arm, Alliance EV SB. The land, located at Jalan Tandang, is intended for EV businesses to set up a 4S (sales, service, spare parts, and body & paint) services centre and showroom to provide the related after-sales services to EV consumers as well as to showcase EV models. (BTimes)

MSM Malaysia: Wants govt to review price of sugar. MSM Malaysia Holdings (MSM Malaysia) has requested the government to review the price of sugar amidst ongoing cost pressure issues. MSM Malaysia group chief executive officer said there was no timeline for the matter and leaves it to the government to decide, however, the review should be done accordingly. The Group is in talks with the government so they understand the cost pressure from freight shipping, gas energy and foreign exchange movement. (BTimes)

KPS: Gets money lending license. KPS Consortium has received the Money Lending License issued by the Registrar of Moneylenders of Housing and Local Government Ministry. In a filing with Bursa Malaysia, KPS said the approval allows HMMSB to undertake any business of those relating to the money lending activities. (StarBiz)

Market Update

The FBM KLCI might open flat today after Wall Street stocks briefly entered bear market territory on Friday, as mounting concerns over economic growth and inflation sent investors searching for havens. The S&P 500 fell as much as 2.3%, temporarily dragging the index down more than 20% from its recent high, the common definition of a bear market. It has been the first time the index declined by such a large amount since the sell-off sparked by the start of the coronavirus pandemic in March 2020. The index pared losses later on Friday afternoon, however, closing up 0.01% and down 18.7% from its record peak in early January. Stocks have tumbled this year as central banks, led by the Federal Reserve, rapidly unwind stimulus measures in an attempt to bring down inflation from multi decade highs, while the Ukraine war has disrupted supply chains and hit commodity prices. At the same time, there are indications that economic growth may be faltering across major global economies. Friday’s fall also left the S&P 500 nursing its seventh straight week of declines, down 3% from where it ended the prior week. The index has not sustained such a prolonged fall since 2001. The technology-heavy Nasdaq Composite closed down 0.3%, adding to losses from the previous two days and ending the week more than 3.8% lower. In Europe, the Stoxx Europe 600 added 0.7%.

Back home, Bursa Malaysia bucked the regional trend to end the week marginally lower, with the key index falling 0.02%, dragged down by selling in selected heavyweights led by Petronas Gas Bhd and Public Bank Bhd. Petronas Gas shed 56 sen to RM16.80 and Public Bank dipped five sen to RM4.52. Both stocks contributed a combined 3.596 points to the loss in the composite index. At 5pm, the FBM KLCI eased 0.29 of-a-point to 1,549.12, to mark its intraday low, from Thursday’s close of 1,549.41. The regional stocks mostly rose, with the Shanghai Composite climbing 1.6% and Hong Kong’s Hang Seng jumping 3%.

Source: PublicInvest Research - 23 May 2022

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