PublicInvest Research

PublicInvest Research Headlines - 23 Jun 2022

PublicInvest
Publish date: Thu, 23 Jun 2022, 09:09 AM
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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: Fed 'strongly committed' to bring down inflation 'expeditiously,' Powell says. The Federal Reserve is “strongly committed” to bringing down inflation that is running at a 40-year high and policymakers are acting “expeditiously to do so,” US central bank chief Jerome Powell said. “It is essential that we bring inflation down if we are to have a sustained period of strong labor market conditions that benefit all,” Powell said in a prepared remarks for a hearing before the US Senate Banking Committee. Inflation continues to run well above the Fed’s targeted level of 2%, though there are some indications that a gauge of price increases that excludes volatile food and energy costs may have flattened out or eased somewhat last month, Powell said. (Reuters)

US: An early look at June US jobs data suggests pickup, not slump. An early look at the state of the US job market in June from payroll provider UKG suggests some strengthening, even as the Federal Reserve lifts interest rates sharply and economists raise alarms over the likelihood of a recession. Workforce activity increased slightly in the first two weeks of the month, according to the firm which tracks shift work in real time. It mostly declined during the prior three months. Particularly notable, the firm said, was an increase in demand for workers in retail, the first such increase since the start of the year. (Reuters)

EU: Consumer confidence weakens unexpectedly. Euro area consumer confidence unexpectedly eroded in June, after a modest improvement in the previous month, preliminary survey data from the European Commission showed. The flash consumer confidence dropped to -23.6 from -21.1 in May. Economists had forecast a score of -20.5. The reading was the lowest since April 2020, when it was 24.4. The corresponding index for the EU also dropped in June, to -24.0 from -22.2 in May. Both indicators are well below their long-term averages of -11.0 and -10.6, respectively, and closer to the record low recorded in April 2020, at the beginning of the COVID-19 pandemic, the commission said. (RTT)

UK: House prices log double-digit growth in April. UK house prices registered a double-digit growth in April, the Office for National Statistics said. House price inflation rose to 12.4% in April from 9.7% in March. This was the strongest increase since June 2021. The average house prices increase by GBP31,000 from the last year to GBP281,000. The lowest annual house price growth was in London, where average prices increased by 7.9%. On a monthly basis, house prices gained by a seasonally adjusted 0.4% from March, when prices were up 0.7%, data showed. (RTT)

UK: Inflation strongest since 1982. UK consumer price inflation rose further in May at the fastest pace in 40 years on rising energy and food prices, deepening the cost of living crisis. Consumer price inflation rose to 9.1% in May, in line with expectations, from 9.0% in April, data from the Office for National Statistics revealed. The ONS said the consumer price index would last have been higher around 1982. Commenting on today's inflation figures for May, ONS Chief Economist Grant Fitzner said, "Though still at historically high levels, the annual inflation rate was little changed in May." (RTT)

India: RBI focused on withdrawal of accommodation, minutes show. The RBI remained focused on the withdrawal of monetary accommodation, to ensure that inflation remains with the target, without disrupting economic recovery, the minutes of the June meeting showed. At the meeting held on June 6-8, the monetary policy committee unanimously voted to increase the policy repo rate by 50 basis points to 4.90%. The members also unanimously decided to remain focused on withdrawal of accommodation to ensure that inflation remains within the target going forward, while supporting growth. Governor Shaktikanta Das said while high inflation continues to be the major concern, revival of economic activity remains steady and is gaining traction. (RTT)

Japan: BOJ minutes, Japan economy continues to improve. Members of the BOJ’s Monetary Policy Board said that the country's economy is headed in the right direction, minutes from the board's April 27 and 28 policy meeting revealed - although the upside continues to be limited by lingering COVID-19 cases. Exports and industrial production continue to strengthen, the minutes said, although employment and overall income remain weak. The members also noted that inflation expectations have risen, mainly due to recent spikes in commodity prices. The board agreed that it would maintain accommodative policy as long as necessary to achieve the 2% inflation target. (RTT)

South Korea: Producer prices rise 0.5% in May. Producer prices in South Korea were up 0.5% on month in May, the BOK said - slowing from 1.6% in April. Individually, prices for agricultural, forestry and marine products climbed 1.5%, manufacturing products were up 0.8%, utilities fell 1.1% and services rose 0.4%. On a yearly basis, producer prices jumped 9.7% - unchanged from the previous month. Agricultural prices rose 1.3% on year, while manufacturing products jumped 14.8%, utilities spiked 16.7% and services gained 3.2%. (RTT)

Australia: Leading index growth slows in May. Australia's leading index growth slowed in May largely due to the deterioration in consumer sentiment, data released by Westpac showed. Nonetheless, the index signaled above trend growth for this year. The six-month annualized growth rate in the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, fell to 0.58% in May from 1.09% in April. Despite the fall, the overall growth rate in the leading Index is still indicating above trend growth momentum heading into the three to nine month 'window'. (RTT)

Markets

Axiata (Neutral, TP: 3.60): Completes 66% stake buy in Link Net for RM2.6bn. Axiata Group and PT XL Axiata Tbk (XL Axiata) has completed the acquisition of 66.03% of PT Link Net Tbk (Link Net) for Rp8.7trn (RM2.6bn). With the completion, Axiata now hold 46% and 20% respectively in Link Net and will be obligated to undertake a proposed mandatory tender offeras per the regulations of the Indonesian Financial Services Authority, which is expected to be completed by 3Q22. (The Edge)

LCTitan: Awards RM303m contracts under LINE project to related parties. Lotte Chemical Titan Holding (LCTitan) has awarded contracts worth USD39.79m and Rp432.1bn (around RM303.41m combined) for the development of an automatic warehouse, as well as bagging area as part of its USD3.95bn Lotte Chemical Indonesia New Ethylyene (LINE) project in Indonesia. (The Edge)

Bioalpha: Forms JV with Suzhou Medicalsystems to supply supplements in China market. Bioalpha Holdings formed a joint venture (JV) with Shanghai-listed Suzhou Medicalsystems Technology Co Ltd to supply health supplement products in the China market. Suzhou Medicalsystems has agreed to invest RMB6m (RM3.9m) into the JV for working capital. The JV will utilise its four key proprietary formulations to produce supplements that boost immunity, general well-being and anti ageing. (The Edge)

Reservoir Link Energy: To transfer listing to Main Market on June 27. Reservoir Link Energy will transfer its listing status to the Main Market from the ACE Market effective June 27 according to Bursa Securities. In an announcement on June 22, the company would be categorised under the 'Energy' sector, and the stock short names and stock numbers for the company’s securities would remain unchanged. (The Edge)

Omesti: Bags three-year computer leasing contract for TNB worth RM25m. Omesti has secured a three-year contract for the leasing of personal computers for Tenaga Nasional Bhd (TNB), amounting to RM25.31m. The company accepted the award from TNB on June 21. The contract will also commence on June 21. (The Edge)

Mestron: Secures RM17.5m worth of jobs from telecom infrastructure companies. Mestron Holdings has secured a total of RM17.5m worth of orders since the start of the year, in line with the accelerated implementation of the National Digital Network (JENDELA). The recent job wins were a part of JENDELA Phase 1, and are expected to be delivered by August 2022. The group is aiming to secure another RM20m worth of contracts over the next six months. (The Edge)

IPO: Kulim seeks to raise RM1bn. Johor Corp (JCorp)’s plantation unit Kulim (M) plans to raise approximately RM1bn in an initial public offering on the local bourse as early as next year. JCorp is mulling the IPO to ride on strong crude palm oil prices, with RHB Investment Bank roped in for the listing. Johor Corp is asking bankers for pitches for the potential listing of Kulim, and is targeting a valuation of around USD1bn (approximately RM4.41bn) for the plantation unit. (The Edge)

Market Update

The FBM KLCI might open flat today after a nascent rally in US stocks faded late on Wednesday, with a slide in oil prices weighing on energy shares that dragged down equity indices. The S&P 500 index gave up early gains to turn negative in the final 30 minutes of trading in New York, ending 0.1% lower for the day. Energy companies including Marathon Oil and ConocoPhillips moved sharply lower as Brent crude oil dropped 2.5% to settle at $111.74 a barrel. The technology-heavy Nasdaq Composite share index also fell 0.1% and remains nearly 30% lower for the year. The declines ended a two-day rally for the S&P, which has dropped into a bear market this year on concerns that the Federal Reserve’s push to raise interest rates will cause an economic slowdown. Jay Powell, the Fed chair, on Wednesday told the US Senate banking committee that “the American economy is very strong and well positioned to handle tighter monetary policy”. But he also warned of further surprises from inflationary trends. He said a recession was “certainly a possibility”. In Europe, the Stoxx 600 share index fell 0.7%.

Back home, heavy selling of plantation, energy and healthcare stocks dragged Bursa Malaysia to finish at its lowest level in 25 months. At the closing bell, the barometer index closed 26.78 points or 1.8% lower at 1,431.10 from Tuesday's close at 1,457.88.

In the region, major indices closed with losses. South Korea’s Kospi declined 2.7%, China’s Shanghai Composite fell 1.2% and Japan’s Nikkei 225 edged down 0.4%.

Source: PublicInvest Research - 23 Jun 2022

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