Economy

US: Import prices rise less than expected in June. US import prices increased less than expected in June, likely as a strong dollar helped to curb gains in the costs of goods excluding petroleum products, offering some hopeful sign for an economy struggling with soaring inflation. Import prices rose 0.2% last month after climbing 0.5% in May. (Reuters)

US: Manufacturing production falls for second straight month. Production at US factories dropped for a second straight month in June as output of motor vehicles and a range of other goods declined, suggesting that higher interest rates were hurting the manufacturing sector. Manufacturing output fell 0.5% last month, matching the decline in May. Output increased 3.6% compared to June 2021. Production at auto plants fell 1.5% last month. Output of long-long lasting manufactured goods decreased 1.0%, while that of nondurable consumer goods dropped 0.7%. (Reuters)

US: Consumer sentiment unexpectedly shows modest improvement in July. Preliminary data released by the University of Michigan unexpectedly showed a modest improvement in US consumer sentiment in the month of July. The report showed the consumer sentiment index inched up to 51.1 in July from a record low 50.0 in June. The uptick surprised economists, who had expected the index to edge down to 49.9. The unexpected increase by the headline index came as the current economic conditions index climbed to 57.1 in July from 53.8 in June. (RTT)

US: Business inventories jump more than expected in May. Business inventories in the US increased by more than expected in the month of May, according to a report released by the Commerce Department. The report showed business inventories shot up by 1.4% in May after surging by an upwardly revised 1.3% in April. Economists had expected business inventories to jump by 1.2%, matching the advance originally reported for the previous month. Wholesale inventories spiked by 1.8% during the month, while manufacturing and retail inventories shot up by 1.3% and 1.1%, respectively. (RTT)

EU: Trade deficit narrows in May. The euro area trade deficit decreased in May from a record-high in April, as exports grew faster than imports. The seasonally adjusted trade deficit narrowed to EUR26.0bn in May from a revised EUR31.8bn in April, which was the biggest shortfall since 1999. The trade balance also remained negative for the eighth successive month in May. Exports climbed 4.8% MoM in May, while imports registered a slower growth of 2.0%. (RTT)

EU: Italy inflation accelerates as estimated. Italy's consumer price inflation accelerated as initially estimated in June. Consumer price inflation rose to 8.0% in June from 6.8% in May. The annual price growth was largely impacted by a 48.7% jump in energy products, of which regulated energy products grew significantly by 64.3%. Utility costs alone grew 28.1% annually in June and transport charges increased 13.1%. (RTT)

China: Economy logs weak growth in Q2. China's economy expanded at a weaker pace in the second quarter hit hard by the strict zero-COVID policy, casting doubt over Beijing's ability to achieve its growth target of around 5.5%. GDP grew only 0.4% on a yearly basis in the second quarter, following the first quarter's 4.8% expansion. GDP was expected to climb 1.0%. S (RTT)

Japan: Tertiary activity growth slows in May. Japan's tertiary activity increased for the third straight month in May, but at a softer pace, data from the Ministry of Economy, Trade and Industry showed. The seasonally adjusted tertiary activity index rose 0.8% MoM in June, after a 1.2% growth in April. Among the individual components, the indexes for living and amusement-related services, transport and postal activities, medical, health care and welfare, business-related services, goods rental and leasing, retail trade, and electricity, gas, heat supply and water increased in May. (RTT)

Markets

MRCB: Appointed by Selangor govt to redevelop Shah Alam Stadium. Malaysian Resources Corp (MRCB) has been appointed by the Selangor government to redevelop the Shah Alam Stadium. The construction group received a letter of intent from the state government on July 15. Quoting Selangor Menteri Besar Datuk Seri Amirudin Shari, it was reported that MRCB was selected after taking into account its financial position, as well as its experience in repairing the Bukit Jalil National Stadium in 2017. (The Edge)

CTOS: To buy Creador's stake in RAM, raising ownership to 39.1%. CTOS Digital has proposed to buy a 19.9% stake in RAM Holdings from Creador’s Oscar Matrix SB for RM51.3m or RM25.80 per share. The acquisition, which is expected to be completed by the third quarter of this year, will raise CTOS’ shareholding in RAM to 39.1% or 3.91m shares. Oscar Matrix’s original cost of investment in RAM was RM29.6m, or RM14.88 a share, between May and Aug 2019. (The Edge)

YB Ventures: Appoints Datuk Sri Tajudin Md Isa as chairman. YB Ventures has appointed Datuk Sri Tajudin Md Isa as the new non-executive chairman. Tajudin retired as the director of the logistics and technology department. Before that, he was the director of the crime prevention and community safety department for the Royal Malaysia Police (PDRM) and served in the PDRM for 33 years until his retirement on 24 December 2019. (BTimes)

Artroniq: Proposes diversification into precision engineering business. Point-of-sales solutions provider Artroniq has proposed to diversify its business to include precision engineering and machinery parts manufacturing by acquiring a 60% stake in Penang-based Fujim Digital SB (FDSB) for RM12m from the latter’s sole shareholder Teoh Boon Thiam. (The Edge)

Hextar Technologies: Controlling stakeholder buys over company's stake in Classic Scenic. Datuk Eddie Ong Choo Meng, has bought over the company's entire stake of 14.94% in Classic Scenic. Ong purchased the stake, comprising 36m Classic Scenic shares, via direct business transactions on July 14. (The Edge)

Favelle Favco: Bags tower crane orders worth RM42.7m. Favelle Favco has secured a total of RM42.7m new purchase orders to supply tower cranes. The contracts were secured by its subsidiaries from G A Caelli Holdings Trust and Daewoo Shipbuilding & Marine Engineering Co Ltd, for deliveries by the end of this year and mid next year, respectively. (The Edge)

LYC Healthcare: Acquires two firms in Negeri Sembilan to expand nutraceutical business. LYC Healthcare is acquiring two firms in Negeri Sembilan — Nutrogreen Health Industries SB (NHISB) and Kitta Enterprise — to strengthen its position in the nutraceutical business. In a statement, the group on July 15 entered into an agreement with Lim Lee Ping, Tan Sook Yong and Goh Kok Neng to buy a 75% stake in NHISB for RM0.5m. (The Edge)

Nextgreen Global: To form JV to develop palm oil waste collection and processing centres. Nextgreen Global is forming a joint venture company to develop 20 palm oil waste collection and processing centres throughout Malaysia. The group on July 15, inked a Memorandum of Agreement with Greentech Malaysia Alliances SB, Koperasi Sahabat Amanah Ikhtiar Malaysia and Koperasi Perkhidmatan Setia to form the joint venture through a special purpose company known as GTC Biomass. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks rose on Friday, bringing an upbeat end to a disappointing week, as strong retail sales data and a survey hinting at easing inflation expectations tempered concerns over the economic outlook. The S&P 500 share index ended the day 1.9% higher, but remained down roughly 1% for the week. The technology-focused Nasdaq Composite gained 1.8%, but was 1.6% lower on the week. Europe’s Stoxx 600 equity index closed 1.8% higher. International oil benchmark Brent crude, which on Thursday fell to levels last seen before Russia’s invasion of Ukraine, added 2.1% to settle at USD101.16 a barrel. There was little reaction in late-afternoon trade to US president Joe Biden’s speech during his trip to Saudi Arabia. Data on Friday showed US retail sales rose 1% month on month in June, exceeding economists’ forecasts for a 0.8% gain. Separately, the University of Michigan’s closely watched consumer sentiment index indicated that medium-term inflation expectations had dropped to a one-year low of 2.8%. Markets in recent months have been gripped by debate over whether the US economy is strong enough to withstand aggressive rate rises by the Federal Reserve in response to red-hot inflation, after downbeat business surveys cast a pall over the outlook.

Back home, Bursa Malaysia ended the week marginally lower on Friday, with the index declining 0.11% due to lack of buying catalyst amid a lacklustre trading day with the FBM KLCI slipped 1.62 points to 1,418.44 from Thursday's close of 1,420.06. In the region, China’s Shanghai Composite fell 1.6%, and Hong Kong’s Hang Seng declined 2.2%. China recorded its weakest growth rate in more than two years, a measure of the costs imposed on the world’s second-largest economy by Beijing’s zero-tolerance approach to Covid-19.

Source: PublicInvest Research - 18 Jul 2022