PublicInvest Research

PublicInvest Research Headlines - 3 Jun 2022

PublicInvest
Publish date: Fri, 03 Jun 2022, 09:00 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: Private payrolls miss expectations in May – ADP. US private payrolls increased far less than expected in May, which would suggest demand for labour was starting to slow amid higher interest rates and tightening financial conditions, though job openings remain extremely high. Private payrolls rose by 128,000 jobs last month, the ADP National Employment Report showed. Data for April was revised down to show 202,000 jobs added instead of the initially reported 247,000. Economists polled by Reuters had forecast private payrolls increasing by 300,000 jobs. The ADP report is jointly developed with Moody’s Analytics and was published ahead of the Labour Department’s more comprehensive and closely watched employment report for May. (Reuters)

US: Jobless claims drop, layoffs fall in May. The number of Americans filing new claims for unemployment benefits unexpectedly fell last week as demand for labour remained strong, helping to underpin the economy amid rising interest rates and tightening financial conditions. Initial claims for state unemployment benefits fell 11,000 to a seasonally adjusted 200,000 for the week ended May 28, the Labour Department said. Economists polled by Reuters had forecast 210,000 applications for the latest week. Claims have been largely treading water since hitting more than a 53-year low of 166,000 in March. Demand for labour remains strong, though some signs of cooling are emerging. The Fed’s Beige Book showed “one district explicitly reported that the pace of job growth had slowed,” and that “some firms in most of the coastal districts noted hiring freezes or other signs that market tightness had begun to ease.” But the government reported on Wednesday that there were 11.4m job openings at the end of April. (Reuters)

US: Factory orders rise modestly in April. New orders for US manufactured goods increased less than expected in April, but demand for products remains strong, which should help to keep factories humming. The Commerce Department said that factory orders rose 0.3% in April after advancing 1.8% in March. Economists polled by Reuters had forecast factory orders would rise 0.7%. Manufacturing, which accounts for 12% of the US economy, is being pinned by still strong demand for goods even as spending shifts back to services. A survey showed the Institute for Supply Management’s national factory activity index rebounded in May after two straight monthly declines. But China’s zero COVID-19 policy and Russia’s dragging war against Ukraine could slow the improvement in supply chains. In April, there were increases in orders for machinery motor vehicles and primary metals. (Reuters)

EU: Eurozone producer price inflation at record high. Eurozone producer price inflation accelerated further to a new record high in April, data released by Eurostat showed. Producer prices advanced 37.2% on a yearly basis in April, faster than the 36.9% rise in March. Nonetheless, this was slower than the expected rate of 38.5%. The 99.2% increase in energy prices and 25.1% rise in intermediate goods prices pushed producer price inflation to a new record. Producer prices of capital goods and durable consumer goods gained 7.2% and 8.5%, respectively. At the same time, non durable consumer goods prices moved up 11.2% annually. Excluding energy, producer price inflation increased to 15.6% in April from 13.7% in the previous month. MoM, producer prices grew at a slower pace of 1.2%, slower than the 5.3% increase in March. Economists had forecast a monthly rate of 2.3%. Producer prices in the EU27 gained 1.3% on month in April, taking the annual growth to 37.0%. (Reuters)

Indonesia: Inflation rises in May. Indonesia's consumer price inflation rose at a faster rate in May, data from statistics bureau showed. The consumer price index increased 3.55% YoY in May, following a 3.47% rise in April. Economists had expected inflation to accelerate to 3.60%. Core inflation eased to 2.58% in May, which was below economists' forecast of 2.7%, from 2.60% in the previous month. On a monthly basis, consumer prices rose 0.40% in May, after a 0.95% increase in the previous month. The expected monthly inflation was 0.41%. The monthly inflation slowed for the first time in three months. Prices for food, beverages and tobacco grew the most, by 0.78% annually, in May and transportation costs increased 0.65% from the previous month. Prices for household equipment, equipment and routine maintenance, and recreation, sports, and culture grew by 0.43% and 0.30%, respectively. (RTT)

Singapore: Manufacturing growth improves slightly. Singapore's manufacturing expansion improved only modestly in May as the growth in the electronics industry moderated, results of the latest purchasing managers' survey by the Singapore Institute of Purchasing and Materials Management showed. The purchasing managers' index for the factory sector edged up 0.1 point to 50.4, thus expanding for the twenty-third month in a row. The reading was the highest in four months. A reading above 50 suggests growth in the sector. Meanwhile, the electronics sector PMI dropped 0.2 points to 50.5. The sector marked 22 consecutive months of expansion. The slowdown in the electronic industry could be a result of the prolonged uncertainties arising from the Russia Ukraine conflict and rising supply costs, Sophia Poh, vice president for industry engagement & development at SIPMM, said. Global demand had also weakened due to the massive lockdowns in China and a slowing growth in the EU, the official added. (Reuters)

Markets

TNB (Outperform, RM12.42): Issues RM1.5bn sustainability sukuk to fund hydroelectric power plant. Tenaga Nasional Bhd (TNB) has issued RM1.5bn worth of sustainability Sukuk Wakalah to fund its Nenggiri Hydroelectric Power Plant project in Kelantan. (The Edge)

SKP Resources (Outperform, RM2.04): Says no systemic forced labour found at firm. Electronics manufacturing service (EMS) provider SKP Resources said an independent consultant has found out that the company’s practices do not amount to systemic forced labour after it took steps to address allegations of such practices. (The Edge)

Serba Dinamik: Banks reach settlement with Serba Dinamik on scheme of arrangement. Six lenders are said to have arrived at a settlement with Serba Dinamik Holdings and four of its subsidiaries with regards to the scheme of arrangement and restraining order sought by the oil and gas related companies. It is understood that the parties have agreed that the lenders would hold their applications for a winding up petition against the Serba Dinamik companies, provided that the companies do not default on the payment of debts as agreed in the proposed scheme of arrangement. (The Edge)

Awantec: Inks MoU to create online halal skills repository and platform. Awanbiru Technology (Awantec) inked a Memorandum of Understanding (MoU) for the collaboration to create an online halal skills repository and platform. (The Edge)

Key Alliance: Ink MoU to collaborate on increasing rice yield. Key Alliance Group (KAG) announced had entered into a memorandum of understanding (MoU) with Koperasi Peserta Peserta Rancangan Felcra Seberang Perak (Koperasi Felcra) to collaborate on the development and implementation of the Rice Information System at the estate of Felcra Bhd Seberang Perak in Kg Gajah, Perak. The proposed collaboration aims to increase the yield of rice cultivation through the Internet of things technology and decision support system via the Rice Information System. (The Edge)

MAHB: At "very end" of finalising operating agreement with government. Malaysia Airports Holdings (MAHB) is at the "very end" of finalising its new operating agreement (OA) with the government. The OA sets out the terms and conditions of MAHB's concession to operate 39 of Malaysia's airports. The current OA was signed in 2009 and was drafted to compensate MAHB as an airport operator but not as an airport infrastructure developer. (Business Times)

Supermax: Completes workers' dorm upgrade to meet international compliance standards. Supermax Corporation has recently completed refurbishment work to upgrade facilities at its dormitories. (Business Times)

IPO: Unitrade: RM100m public issue fully subscribed. Unitrade Industries, which is slated to be listed on the Ace Market of Bursa Malaysia on June 14, said the public portion of its initial public offering (IPO) has been oversubscribed by 2.35 times. (StarBiz)

Market Update

The FBM KLCI might open higher after US stocks rose on Thursday, brushing off the latest bleak corporate earnings forecast from Microsoft as well as comments from Federal Reserve vice chair Lael Brainard suggesting the central bank may pursue aggressive rate raises into September. The S&P 500 gained 1.8% on Thursday after a rocky start to trading, while the technology heavy Nasdaq Composite rose 2.7%. Both indices closed Wednesday’s session 0.7% lower. Microsoft early on Thursday cut its quarterly revenue forecasts on the back of unfavourable exchange rates. The dollar has risen sharply since the start of the year, which reduces the value of the revenue American companies earn abroad when translated back to the US currency. After dropping early in the session, Microsoft’s stock recouped those losses, ending the day 0.8% higher. The prospect of higher interest rates, which can eat into companies’ future earnings, also did little to dim US stocks. US jobs data due out on Friday will offer further clues about how far the central bank may tighten policy to curb price rises, with a hotter labour market potentially indicating the need for more aggressive action. Economists polled by Reuters are expecting employers in the world’s largest economy to have added 325,000 new jobs in May, compared with 428,000 in April. Elsewhere, Europe’s regional Stoxx 600 index added 0.6%, even as data released earlier in the day showed that eurozone producer prices climbed at a record annual pace of 37.2% in April, up from 36.9% a month earlier, in the latest sign of persistent inflationary pressures. UK markets were closed for a public holiday.

Back home, Bursa Malaysia closed marginally lower after a lacklustre trading session as investors seemed reluctant to make more significant moves in the absence of buying catalysts. At 5pm, the benchmark FBM KLCI declined 3.51 points to 1,549.9 from 1,553.41 at Wednesday’s close. The index, which was 1.31 points firmer at 1,554.72, moved between 1,546.29 and 1,555.54 throughout the day. Major indices in the region closed lower, with South Korea’s Kospi and Hong Kong’s Hang Seng each falling 1%. Japan’s Nikkei 225 edged down 0.2%, while China’s Shanghai Composite bucked the trend to add 0.4%.

Source: PublicInvest Research - 3 Jun 2022

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