Economy

US: Wholesale inventories jump less than expected in May. Wholesale inventories in the U.S. increased by less than expected in the month of May. The report showed wholesale inventories jumped by 1.8% in May after surging by an upwardly revised 2.3% in April. Economists had expected wholesale inventories to shoot up by 2.0% compared to the 2.2% spike originally reported for the previous month. Inventories of both durable and non-durable goods advanced by 1.8% during the month. The report also showed wholesale sales rose by 0.5% in May after climbing by 0.8% in April. A 1.6% jump in sale of non-durable goods was partly offset by a 0.7% drop in sales of durable goods. (RTT)

US: Employment jumps by 372,000 jobs in June, more than expected. US job growth exceeded estimates in the month of June. Non-farm payroll employment jumped by 372,000 jobs in June after surging by a revised 384,000 jobs in May. Economists had expected employment to increase by 268,000 jobs compared to the addition of 390,000 jobs originally reported for the previous month. The stronger than expected job growth reflected notable job gains in professional and business services, leisure and hospitality, and healthcare. Meanwhile, the report showed the unemployment remained at 3.6%for the fourth month in a row. While that is close to a 50-year low, the stabilization echoes other measures of slack in suggesting that worker shortages are no longer quite as severe as they were a few months ago. The unemployment remained unchanged as the labor force shrank by 353,000, while the household survey measure of employment slumped by 315,000. The report also showed average hourly earnings rose by USD0.10 or 0.3% to USD32.08 in June. (RTT)

China: Bank lending rises more than expected. China bank lending grew more-than-expected in June on borrowing demand from corporates after the easing of pandemic-related restrictions. Banks extended RMB2.8trn in new yuan loans in June. Economists had forecast lending to rise to RMB2.4trn from RMB1.89trn in May. Total social financing, a broad measure of credit and liquidity in the economy, rose to RMB5.2trn from RMB2.8trn. Outstanding loans grew 11.2% on a yearly basis in June, following an 11.0% rise in May. (RTT)

China: Shanghai reopening is big relief to supply chain. Shanghai’s reopening in June appears to have greatly alleviated supply chain snarls -- for both China and the world -- our monthly dashboard shows. Measures of delivery times have shown vast improvement since Shanghai resumed factory and logistics operations. The delivery sub-index in China’s official PMI in June surged to 51.3 from 44.1 in May, the strongest reading since the pandemic began in early 2020. A higher reading indicates speedier deliveries. For global supply chains, delivery times also improved by a large margin. The PMI gauges of delivery times in the global electronics and auto industries both jumped to the highest since late 2020 -- although they stayed below 50, meaning that bottlenecks remain. China’s manufacturing output is set to further recover now that virus curbs have been loosened in Shanghai. (Bloomberg)

Japan: Overall bank lending climbs 1.3% on year in June. The value of overall bank lending in Japan was up 1.3% on year in June - standing at JPY585.1trn. That follows the 0.7% increase in May. Excluding trusts, bank lending jumped an annual 1.5% at JPY508.9trn, up from 0.9% in the previous month. Lending from trusts eased 0.2% on year to JPY76.2trn, down from 0.4% a month earlier. Lending from foreign banks was down 1.3% on year at JPY3.5trn after rising 1.4% in May. (RTT)

Japan: Core machine orders sink 5.6% in May. The value of core machine orders in Japan was down a seasonally adjusted 5.6% on month in May - coming in at JPY908.8bn. That just missed expectations for a decline of 5.5% following the 10.8% spike in April. On a yearly basis, core machine orders climbed 7.4% - beating forecasts for 5.8% and down from 19.0% in the previous month. For the second quarter of 2022, core machine orders are seen lower by 8.1% on quarter and 5.6% on year at 2,370.6 billion yen. Overall machine orders were down 10.1% on month and up 17.9% on year to 3,027.3 billion yen. (RTT)

Australia: Consumers still spending, but higher rates to curb enthusiasm. Australian consumers are still spending strongly in areas such as transport and education, but sectors of the economy sensitive to higher interest rates such as retail and home buying are starting to soften quickly as the policy screws are tightened. The Commonwealth Bank of Australia's household spending intentions index rose by a modest 0.9% in June from May, taking the index back to an equal record high of 117.3. (Bloomberg)

Markets

G Capital: Bags RM7.05m NRW contract in Langkawi. G Capital’s 51%-owned subsidiary bagged a contract worth RM7.05m to reduce non-revenue water (NRW) in Pulau Langkawi. The Letter of Award is from Pembinaan Limpah Bersatu SB, relating to an NRW project, which is managed and funded by the Ministry of Environment and Water of Malaysia. With the contract, its orderbook stands at RM9.78m. (BTimes).

Harn Len: To buy land in Tebrau for RM4.5m. Harn Len Corp has proposed to acquire 3.8445 hectares of freehold land in Tebrau, Johor for RM4.5m cash. It had entered into a sale and purchase agreement with Sunitrend SB for the acquisition. The purchase consideration was arrived at after taking into consideration of market value determined by a professional valuer. (StarBiz)

Duopharma: Partners The Live Green Co to collaborate on plant-based products. Duopharma Biotech will be partnering US-based foodtech company The Live Green Co in developing and manufacturing plant-based products and ingredients. These will be used to replace the synthetic or animal-based ingredients utilised in some of Duopharma’s products. The partnership is also to optimise its manufacturing processes. (The Edge)

Atrium REIT: To raise RM85m via private placement, special unit issuance to major unitholder. Atrium Real Estate Investment Trust (REIT) has proposed to raise up to RM85.3m via a private placement and a special issuance of units to major unitholder Chan Kam Tuck, at an indicative issue price of RM1.40 per unit. (The Edge)

Multi Mould Industries: Buys property in Perak to expand production capacity. Multi Mould Industries is buying an industrial land measuring 40,054 sqm with buildings in Pusing, Perak for RM11.5m to expand its production capacity as its current facility is running at full capacity. The property is located close to its current facility and has readily available factory buildings to house new machinery and storage. (The Edge)

Industronics: Proposes rights issue to raise up to RM70m to expand watch trading business. Industronics has proposed a 2-for-1 rights issue at an indicative price of 8 sen per share to raise up to RM70m, an amount that is more than double of its market capitalisation of RM30.94m. The rights issue entails up to 875.06m rights shares and 656.3m 5-year warrants. (The Edge)

Malaysian Genomics: To raise RM9.9m via private placement to fund future investments. Malaysian Genomics Resource Centre has proposed to raise RM9.88m via a private placement of up to 10% of its issued shares at an issue price to be determined later. The funds raised will be used for the group’s future investments, which are still being explored, as well as for the purchase of equipment. (The Edge)

Minetech: RM30m school construction job mutually terminated. Minetech Resources’s RM30.4m subcontract it secured from Mutual Premium SB to build a secondary school in Perak has been mutually terminated. The project was no longer achievable due to the prevailing unfavourable economic and market conditions. (The Edge)

Market Update

The FBM KLCI might open lower today after the dollar surged and government bonds rallied on Monday, while stock markets tumbled, as traders considered the prospect of further aggressive interest rate rises in the US and intensifying recession risk in Europe. The dollar index, which tracks the US currency against six others and has a large euro weighting, rose 1.2% to a fresh 20- year high. In equity markets, Wall Street’s S&P 500 index, which rose last week following its worst first half of the year for more than five decades, fell 1.2%. The technology-heavy Nasdaq Composite was 2.3% lower. Europe’s Stoxx 600 closed down 0.5%, following sharp falls in China driven by new Covid-19 restrictions.

Most major regional benchmarks declined. Chinese stocks dropped after Shanghai on Sunday reported its first local case of the BA.5 Omicron subvariant, and the country recorded more than 2,300 locally transmitted Covid-19 cases nationwide over the past seven days. The Shanghai Composite Index slipped 1.3% and Hong Kong’s Hang Seng Index fell 2.8%. Officials in Macau set a weeklong shutdown of casinos and other businesses to combat the surge in cases, sending gambling stocks downward. In Japan, the Nikkei 225 index rose 1.1% on Monday after current Prime Minister Fumio Kishida’s ruling coalition won the majority of parliamentary seats in an election on Sunday. The Japanese yen dropped to a 24-year low of more than 137 against the dollar.

Source: PublicInvest Research - 12 Jul 2022