Economy

US: Employment surges much more than expected in July. Employment in the US jumped by much more than expected in the month of July. The report showed non-farm payroll employment spiked by 528,000 jobs in July after surging by an upwardly revised 398,000 jobs in June. Job growth was widespread, led by gains in the leisure and hospitality, professional and business services, and healthcare sectors. (RTT)

US: Job growth far exceeds expectations in July. First-time claims for US unemployment benefits unexpectedly inched higher in the week ended July 9th. The report showed initial jobless claims crept up to 244,000, an increase of 9,000 from the previous week's unrevised level of 235,000. The uptick surprised economists, who had expected jobless claims to come in unchanged. (RTT)

EU: Germany industrial production unexpectedly rises. Germany industrial output grew unexpectedly in June underpinned by higher production of capital and consumer goods. Industrial production grew 0.4% from May, revering a drop of 0.1%. Output was forecast to fall 0.3%. Excluding energy and construction, industrial output was up 0.7%. Energy production remained flat, while construction output dropped 0.8% in June. (RTT)

UK: Hiring activity growth slows in July. UK recruiters reported a slowdown in hiring activity in July due to increased uncertainty around the outlook. Both permanent staff appointment and temp billings grew at the weakest pace in 17 months as firms said greater uncertainty towards the outlook as well as rising costs has led some clients to be more cautious around hiring decisions. Meanwhile, the vacancy growth eased to a 16-month low in July. (RTT)

UK: House price inflation eases in July. UK house price inflation eased slightly in July after accelerating sharply in the previous month, and prices fell on a monthly basis for the first time since June last year, as rising interest rates and high cost of living hurt activity. The house price index climbed 11.8% YoY in July, slower than the 12.5% rise in June. On a monthly basis, house prices dropped 0.1% in July, reversing a 1.4% significant increase in June. (RTT)

Japan: Leading index weakens further. Japan's leading index weakened for the second straight month in June. The leading index, which measures future economic activity, dropped to 100.6 in June from 101.2 in May. The coincident index that measures the current economic situation improved to 99.0 in June from 94.9 in the previous month. (RTT)

Singapore: Retail sales growth eases in June. Singapore's retail sales continued to expand strongly in June, though the rate of growth eased from the previous month. Retail sales climbed 14.8% YoY in June, slower than May's 17.8% surge. The overall annual increase in June was mainly attributed to the low base in June 2021 when measures such as international travel restrictions were in place. (RTT)

Markets

IOI Corp (Neutral, TP: RM4.49): Sells 10% stake in Bunge Loders Croklaan for RM466m. IOI Corp has disposed of a 10% stake in sustainable plant-based products firm Bunge Loders Croklaan Hogeweg (BLC) for about RM466m. The sale price consists of USD84.42m (RM376.25m) and EUR19.72m (RM89.91m). The buyer of the stake is Bunge Ltd’s wholly-owned subsidiary Koninklijke Bunge BV (KBBV). The estimated loss arising from the share sale is about RM50m, mostly relating to fair value loss from derecognition of the terminated put and call options. (The Edge)

Green Packet: To buy 20% stake in eMedAsia for RM20m. Green Packet has entered into a shares sale agreement with HS Bio SB to purchase a 20% equity stake in eMedAsia SB for RM20m. eMedAsia is an 80% owned subsidiary of HS Bio in partnership with Koperasi Persatuan Perubatan Malaysia Bhd (KOOP MMA). KOOP MMA is an investment vehicle of the Malaysian Medical Association (MMA). eMedAsia operates a digital healthcare platform that aims to digitalise private healthcare via technology solutions. (StarBiz)

Cycle & Carriage Bintang: To withdraw listing status as Jardine CCL raises stake to 91%. Singapore-based Jardine Cycle & Carriage Ltd (Jardine CCL) has raised its stake in Cycle & Carriage Bintang Bhd (CCB) to 91% under its third attempt to take over the auto distributor. Jardine CCL will procure CCB to take the requisite steps to withdraw its listing status from Bursa Malaysia, having raised its stake from 89.994% just before the offer was made on July 14. Jardine CCL made the latest offer at RM2.70 per share. Shares of CCB settled at RM2.69 on Aug 5. (The Edge)

EA Technique: To sell vessels for RM60m. EA Technique has sought shareholder approval to dispose of three marine vessels for RM60.12m. The company said Nautica Kota Tinggi will be sold to Petroleum Gulf Energy Trading LLC for USD4.65m (RM20.69m) following their memorandum of agreement in June. Meanwhile, Nautica Maharani and Nautica Muar will be sold to non-related third parties to be identified later for at least USD4m (RM17.8m) and USD4.86m (RM21.64m), respectively. (StarBiz)

D’nonce: Unit buys land in Kulai to build factory. D’nonce Technology’s unit is acquiring 32,375 sq metres of vacant industrial land in Kulai, Johor for RM12.2m to build a new factory. The group said 82%-owned Attractive Venture (JB) SB is buying the land from ACL Group SB, which is 60% owned by Tang Mei Yean and 40% by Chia Swee Beng. Attractive Venture, which is involved in the design and conversion of advanced packaging materials and distribution of electronic products, will build a factory building with 120,000 sq feet of floor space that will house its production floor, stores and office. (The Edge)

KNM: Eyes more cash calls after Borsig disposal. Debt-laden KNM Group said it may be undertaking more fundraising exercises after its proposed disposal of its crown jewel, German-based process equipment manufacturer Borsig GmbH. “The group will continue to consider other fundraising corporate exercises such as a private placement exercise to obtain additional funding to further improve the cash flow position of the group,” KNM said in a circular to shareholders on the Borsig sale. (The Edge)

Market Update

The FBM KLCI might open with a cautious note as US government bonds tumbled and stocks slipped after employment data showed red-hot labour conditions, leading traders to boost their expectations for Federal Reserve interest rate increases. Treasury yields shot higher after the closely watched US jobs report showed employers added 528,000 jobs in July, more than double the 250,000 expected by economists and up sharply from 398,000 in June. The two-year Treasury yield, which is sensitive to monetary policy expectations, surged 0.21 percentage points to 3.25%— a sharp jump for a market that typically moves in small increments. Longer-dated bonds came under more subdued pressure. The S&P 500 equity index closed 0.2% lower as traders weighed the prospect of further hawkish rate rises from the Fed. The tech heavy Nasdaq Composite, the components of which are particularly sensitive to interest rates, fell 0.5%. Both indices had recovered from declines of more than 1% earlier in the day. For the week, the S&P 500 gained 0.4%, while the Nasdaq added 2.2%. It is the first time since the start of April that both indices have strung together three consecutive weekly gains. European stocks fell, with the regional Stoxx 600 closing down 0.8%.

Back home, Bursa Malaysia bucked the regional trend to end lower on Friday on persistent profit-taking in most heavyweights led by Malayan Banking Bhd (Maybank), Public Bank Bhd and Petronas Chemicals Group Bhd. At the closing bell, the FBM KLCI fell 6.16 points to 1,501.55 from 1,507.71 on Thursday, managing to stay just a whisker above the psychological 1,500-point level. In the region, major indices closed with gains. Japan’s Nikkei 225 added 0.9%, South Korea’s Kospi rose 0.7% and China’s Shanghai Composite gained 1.2%.

Source: PublicInvest Research - 8 Aug 2022