Economy

US: Fed officials promise rate hikes, push back on recession fears. Federal Reserve policymakers promised further rapid interest-rate hikes to bring down high inflation, but pushed back against growing fears among investors and economists that sharply higher borrowing costs will trigger a steep downturn. "Many are worried that the Fed might be acting too aggressively and maybe tip the economy into recession," San Francisco Fed President Mary Daly said in an interview on LinkedIn. (Reuters)

US: Inflation saps US consumer confidence, house prices remain elevated. U.S. consumer confidence dropped to a 16- month low in June as worries about high inflation left consumers to anticipate that the economy would slow significantly or even slide into recession in the second half of the year. Despite the gloomy outlook, consumers showed little sign of cutting back on spending, with buying plans for motor vehicles and other big ticket items like refrigerators and washing machines increasing, the survey from the Conference Board showed. (Reuters)

EU: Euro zone yields jump, Italian-German spread tightens after ECB remarks. Euro zone government bond yields rose with investors focusing on inflation risks, while spreads between core and periphery countries tightened as the ECB reiterated its anti fragmentation tool should not have limits. The ECB announced in mid-June plans to tackle fragmentation in euro zone bond markets, or an excessive widening of spreads between core and peripheral yields that might hamper monetary policy transmission across the bloc. (Reuters)

EU: France consumer confidence lowest since July 2013. France's consumer confidence weakened for the sixth straight month in June to reach its lowest level in nearly nine years, monthly survey results from the statistical office Insee showed. The consumer confidence index dropped to 82 in June from 85 in May. The sentiment also remained well below its long-term average of 100. Economists had forecast the index to fall marginally to 84. Further, this was the lowest level of consumer confidence since July 2013, when it reached the same reading of 82.0. (RTT)

EU: German GfK consumer sentiment hits new record low. Germany's consumer confidence dropped to a new record low in July as consumers see the risk of the economy slipping to a recession, survey results from the market research group GfK showed. The consumer confidence index fell to -27.4 in July from revised -26.2 in June. The score was forecast to fall to -27.6. (RTT)

South Korea: Consumer sentiment dips in June - survey. South Korean consumers turned pessimistic about overall economic conditions in June for the first time in more than a year, while their inflation expectations hit a decade high, a central bank survey showed on Wednesday. The consumer sentiment index (CSI) dropped to 96.4 in June from 102.6 in May, marking the lowest since January 2021 and the biggest monthly fall since July 2021, according to the Bank of Korea’s survey of consumers. (Reuters)

Markets

AMMB (Neutral, TP: RM3.80): Secures MoF approval for stake sale of AmGeneral Insurance to Liberty Insurance. AMMB Holdings’ 51%-owned subsidiary AmGeneral Holdings (AGHB) has obtained approval from the Minister of Finance (MoF) for the sale of its 100% stake in AmGeneral Insurance (AGIB) to Liberty Insurance (LIB). AGHB had on July 19 last year inked an implementation agreement with LIB for the disposal of AGIB at a price tag of RM2.29bn (subject to adjustment), to be satisfied via cash and a 30% stake in LIB. (The Edge)

Inari (Outperform, TP: RM4.13): Investing RM283m in JV with CFTC to carry out OSAT services in China. Inari Amertron is forming a joint venture (JV) with China Fortune-Tech Capital Co Ltd (CFTC) to carry out outsourced semiconductor assembly and test (OSAT) services in China. Inari has entered into a JV contract with CFTC (Yiwu) Equity Investment Fund Partnership (Limited Partnership) and CFTC Equity Investment Management (Beijing) Co Ltd. (The Edge)

PetDag: Makes final inventory sale in RM133m RPT to eliminate MOPS exposure. Petronas Dagangan (PetDag) has said it is disposing of working inventory and deadstock (un pumpable inventory) in six fuel terminals for RM132.93m. The inventory, totalling 58.51m litres of fuel, is sold as part of PetDag's efforts to eliminate exposure to movement of Means of Platts Singapore (MOPS), it said, thus ensuring its product cost to be reflective of current market prices. (The Edge)

AT Systematization: Terminates MoU to produce ventilators. AT Systematization has called off its memorandum of understanding (MOU) with three joint venture partners to produce medical-grade mechanical air ventilators effective June 28. (The Edge)

Bina Darulaman: To complete Langkawi Premium Outlet phase one in Oct. Bina Darulaman (BDB) is expecting phase one of Langkawi Premium Outlet (LPO) to be ready by the end of Oct. The project is 95% completed. At the same time, phase two of the project is expected to be ready in 2024 covering an overall area of 17.40 hectares. (The Edge)

Mah Sing: Acquires freehold land in Johor for RM39.29m. Mah Sing Group has acquired a new freehold land in Mukim Tebrau, Johor Bahru, measuring 2.81 hectares for RM39.29m. This new acquisition, to be named M Minori, has an estimated gross development value (GDV) of approximately RM469m. (Business Times)

Kim Loong: Earnings soar in first quarter. Kim Loong Resources’s net profit jumped 38% to RM39.23m in the first quarter ended April 30, from RM29.38m in the same period last year, driven by contributions from its plantation operation. The revenue for the quarter surged 63% to RM509.74m against RM312.45m a year ago. (StarBiz)

IPO: Agmo Holdings signs underwriting agreement with Kenanga Investment Bank for IPO. Agmo Holdings has sealed an underwriting agreement with Kenanga Investment Bank (KIBB) for the company's initial public offering (IPO) on the ACE Market of Bursa Malaysia. (Business Times)

Market Update

The FBM KLCI might open lower today after a sharp decline in tech stocks led US equity markets lower on Tuesday, as investors took fright from a report showing that US consumer confidence continues to sour. The tech-heavy Nasdaq Composite index dropped 3%, taking its losses for the year to more than 28% after the weaker-than-expected survey raised concerns about US demand. The S&P 500 index of US blue-chip stocks fell 2%. The confidence survey published by the Conference Board, an economic research organisation, showed that consumers believe prices will continue to rise, even as the Federal Reserve tightens monetary policy to curb inflation. The report also showed that consumers’ outlook on the state of the economy and labour market was the most grim in almost a decade. Expectations of where the US inflation rate will sit in 12 months’ time have hit a record high of 8 per cent. Earlier in the day German consumer sentiment, based on economic and income expectations, also dropped to a record low. Europe’s regional Stoxx 600 index handed back some of its earlier gains to end the day 0.3% higher. The FTSE 100 index rose 0.9% in London.

Back home, Bursa Malaysia closed higher on Tuesday, lifted by buying interest in most heavyweights and in line with improving market sentiment across the region. At the closing bell, the FBM KLCI rose 1.2% or 16.62 points to 1,454.74 from Monday's close of 1,438.12. In the region, indices broadly jumped after the news that China would cut mainland coronavirus quarantine requirements for all arrivals from 21 to 10 days. The CSI 300 index of Shanghai- and Shenzhen-listed stocks closed 1% higher, while Hong Kong’s Hang Seng Index added 1%.

Source: PublicInvest Research - 29 Jun 2022