Economy

US: Weekly jobless claims hit fresh 8-month high. The number of Americans filing new claims for unemployment benefits rose for a third straight week last week to the highest in eight months, suggesting some cooling in the labor market amid tighter monetary policy and financial conditions. Initial claims for state unemployment benefits rose 7,000 to a seasonally adjusted 251,000 for the week ended July 16 from a unrevised 244,000 a week earlier. (Reuters)

US: Leading economic index slumps more than expected in June. Suggesting US economic growth is likely to slow further in the near-term, the Conference Board released a report showing its index of leading economic indicators decreased for the fourth straight month in June. The Conference Board said its leading economic index slumped by 0.8% in June after falling by a revised 0.6% in May. Economists had expected the leading economic index to decline by 0.5% compared to the 0.4% drop originally reported for the previous month. (RTT)

US: Philly Fed index unexpectedly slumps further into negative territory in July. A report released by the Federal Reserve Bank of Philadelphia showed regional manufacturing activity unexpectedly contracted at a faster rate in the month of July. The Philly Fed said its current general activity index slumped to a negative 12.3 in July from a negative 3.3 in June, with a negative reading indicating a contraction in regional manufacturing activity. The continued decrease by the Philly Fed index came as a surprise to economists, who had expected the index to rebound to a positive 0.4. While a majority of firms reported no change in activity, 24% reported decreases in activity compared to the 12% that reported increases. (RTT)

EU: ECB delivers bigger than expected 50 bps hike, unveils crisis tool. The ECB raised its interest rates for the first time in over a decade, by a bigger-than-expected 50 basis points, and unveiled an anti-fragmentation tool called the Transmission Protection Instrument, or TPI. ECB President Christine Lagarde had said in June that the bank would hike interest rates by 25 basis points in July and follow up with a similar, or bigger, move in Sept if the macroeconomic outlook deteriorated. "The Governing Council judged that it is appropriate to take a larger first step on its policy rate normalization path than signaled at its previous meeting," the ECB said in a statement. (RTT)

EU: French manufacturing confidence weakens as expected. Confidence among the French manufacturers decreased as expected in July, as they were less confident about past changes in production and order books, survey data from the statistical office INSEE showed. The business climate index for the manufacturing sector fell to 106 in July from 108 in June. That was in line with economists' forecast. The past production index weakened notably to 10 in July from 16 in June, while the index measuring manufacturers' general production outlook for the near term remained stable at -5. (RTT)

UK: Budget logs second biggest June deficit on record. The UK budget logged its second biggest deficit for the month of June on record, as high inflation pushed up the debt servicing cost of government, the Office for National Statistics said. Public sector net borrowing excluding public sector banks increased by GBP4.1bn to GBP22.9bn in June, which was the second-highest June borrowing since monthly records began in 1993. This was GBP0.6bn more borrowing than the Office for Budget Responsibility had forecast. (RTT)

Japan: Posts USD10bn trade gap in June as energy imports surge. Japan ran a trade deficit for the 11th straight month in June as high energy and other commodity costs pushed up imports, highlighting growing economic pressures from a sharply declining yen and global inflation. Imports surged 46.1% in the year to June, Ministry of Finance data showed, slightly above a median market forecast for a 45.7% gain in a Reuters poll. That outpaced a 19.4% YoY rise in exports in the same month, resulting in a JPY1.3838trn (USD9.99bn) trade deficit, the 11th straight month of shortfalls. (Reuters)

Japan: BOJ leaves monetary policy unchanged. The BOJ kept its ultra-loose monetary policy stance unchanged and raised its inflation outlook. The policy board, governed by Haruhiko Kuroda, voted 8-1 to maintain a negative interest rate of -0.1% on current accounts that financial institutions maintain at the central bank. The bank will also continue to purchase a necessary amount of Japanese government bonds without setting an upper limit so that 10-year JGB yields will remain at around zero percent. The bank will purchase 10-year JGBs at 0.25% every business day through fixed-rate purchase operations, unless it is highly likely that no bids will be submitted. (RTT)

South Korea: Producer prices jump 0.5% on month in June. Producer prices in South Korea were up 0.5% on month in June - easing from 0.7%. Individually, agricultural and manufacturing products both were up 0.7% on month, while services and utilities both rose 0.2%. On a yearly basis, producer prices spiked 9.9% - unchanged from the May reading. Individually, agricultural products rose 1.7% on year, manufacturing products jumped 15.1%, utilities spiked 16.2% and services added 3.3%. (RTT)

Indonesia: Central bank keeps rate on hold. Indonesia's central bank left its benchmark interest rate unchanged to support economic recovery. The board of governors of Bank Indonesia decided to hold the the BI 7-Day reverse repo rate at 3.50%. The outcome of the meeting came in line with expectations. The interest rate has been at the current level since Feb 2021, when the rate was cut by a quarter-point. The deposit facility rate was maintained at 2.75% and the lending facility rate at 4.25%. The central bank expects consumer price inflation to increase on the back of global energy and food prices. (RTT)

Markets

TM (Outperform, TP: RM6.40): Aims for 58% fibre coverage in Sabah by 2025. Telekom Malaysia (TM) is aiming to achieve 58% fibre coverage in Sabah over the next three years, targeting to connect at least 145,000 premises as the group accelerates its fibre deployment through 2025. The company connected close to 282,000 premises in Sabah with a total of 32,000km of fibre optic cables statewide and has invested RM1.1 bn for capex since 2012 towards improving connectivity and fiberisation in the State. (The Edge)

IJM Corp (Neutral, TP: RM1.92): Partners with RHB for SWITCH scheme. IJM Land formed a partnership with RHB Bank to bring forth its SWITCH scheme, a buy-back scheme for homebuyers and homeowners. The scheme allows homeowners to return their property to the developer due to involuntary unemployment during the coverage period, which is from the date of the sale and purchase agreement and up to a 12-month period from the date of the certificate of completion and compliance. (The Edge)

Gabungan AQRS: BDO voluntarily resigns as auditor. Gabungan AQRS announced that it has received a notice in writing from Messrs BDO PLT on their resignation as auditors of the construction firm. BDO’s term of office will end after 21 days from July 21. The company is of the view that a change of auditors who has served for more than 12 years will be a matter of good corporate governance, and the resignation of BDO is on a voluntary basis. (The Edge)

Scomi Energy: Proposes equity disposals worth RM21m. Scomi Energy Services (SESB) is proposing to dispose of its 48% stake in Scomi KMC SB and 100% equity interest in Scomi Oilfield Ltd (SOL) to Cahya Mata Sarawak. The group is also planning to dispose of its 25% interest in Scomi Oiltools Gulf W.L.L. and its 25% interest in Continental Wire Cloth (M) SB, as well as its Dataran Prima property and its inventories and equipment to the same party. The proposed disposals would result in a one-off pro forma gain of RM134m to the company. (The Edge)

Cahya Mata: Sues ex-executive director, five others for alleged breaches of fiduciary duty. Cahya Mata Sarawak is suing its former executive director and five others for alleged breaches of fiduciary duties in respect of the construction of an integrated phosphate additives plant in Samalaju, Sarawak. Due to a lack of due diligence undertaken, CMS incurred RM67.6m in losses (as at Sept 26, 2021). The group is claiming special damages of RM52.7m, general damages, and any other relief the court deems fit. (The Edge)

Widad: Proposes RM86.9m private placement. Widad Group plans to raise fresh capital of RM86.9m via a private placement exercise at an indicative issue price of 33.5 sen per share. The placement exercise entails issuance of up to 259.3m new shares — representing about 9.42% of its share base. Widad intends to earmark RM46.4m of the proceeds for potential acquisitions. (The Edge)

Unitrade: Declares maiden dividend. Unitrade Industries has proposed a first and final single-tier dividend of 0.82 sen per share for its financial year ended March 31, 2022. The maiden post-listing dividend, amounting to RM12.8m is aligned with the company’s dividend policy to distribute up to 30% of its profit after tax and minority interest. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today as US stocks climbed Thursday, with investors picking up beaten-down growth shares after another batch of earnings reports from bellwether companies including Tesla. The S&P 500 added 39.05 points, or 1%, to close at 3,998.95, near its high of the day. The technology-focused Nasdaq Composite Index rose 161.96 points, or 1.4%, to 12,059.61. After flipping between small gains and losses for much of the session, the Dow Jones Industrial Average advanced 162.06 points, or 0.5%, to 32,036.90. The benchmarks opened mostly lower and briefly stumbled after the White House said President Joe Biden, who is 79 years old, tested positive for Covid-19 and has “very mild symptoms.” Europe’s regional Stoxx Europe 600 index finished up 0.4% after a volatile session.

Back home, Bursa Malaysia closed higher on Thursday, driven by buying mainly in industrial products and services, as well as technology and plantations counters, amid mixed sentiments in the regional markets. At closing, the FBM KLCI rose 13.34 points, or 0.93%, to 1,450.32 from Wednesday’s close of 1,436.98. Regional markets finished mixed with the Nikkei 225 gained 0.44%, while the Hang Seng led the Shanghai Composite lower. They fell 1.51% and 0.99% respectively

Source: PublicInvest Research - 22 Jul 2022