Economy

US: 1-month Treasury yields rise from Oct lows as debt ceiling worries grow. One-month Treasury yields rose from their lowest levels since Oct as investors appeared to grow increasingly concerned about a potential standoff over the US debt ceiling. The yield of the one-month Treasury, which started the month near 4.7%, gained 9 basis points to 3.45%. (Reuters)

EU: Eurozone bond yields rise as investors bet on more rate hikes. Euro zone government bond yields rose as investors bet the ECB will raise its main interest rate to above 3.8% and braced for key economic data later in the week. First-quarter GDP data for the euro zone is due to be released on Friday. Inflation will also be in the spotlight on the same day, with German, French and Spanish figures potentially providing clues about the path of monetary policy. Germany’s 2-year bond yield, which is highly sensitive to changes in interest rate expectations, rose 3 basis points (bps) on Monday to 2.947%. (Reuters)

EU: German business sentiment improves slightly in April. German business morale rose slightly in April due to an improvement in companies' expectations, adding to positive signs as Europe's largest economy hopes to have dodged a winter recession, a survey showed. The Ifo institute said its business climate index stood at 93.6 following a revised reading of 93.2 in March. The increase was weaker than expected, with a Reuters poll of analysts pointing to an April reading of 94.0. (Reuters)

UK: House prices show weak rise in April. Asking prices for property being put on sale in Britain over the past month rose less than normal for the time of year, figures from property website Rightmove showed, adding to signs of more subdued momentum in the property market. Rightmove said that average asking prices were up by 0.2% over the month, less than the average 1.2% gain seen at this time of year. (Reuters)

UK: Private sector growth hits 1-year high. The UK private sector expanded for the third successive month in April to the strongest level in a year, driven by a sharp upturn in the services economy, while manufacturing remained in the contraction zone, flash survey results from S&P Global showed. The flash Chartered Institute of Procurement & Supply composite output index climbed to 53.9 in April from 52.2 in March. The expected score was 52.5. (RTT)

China: Talks down already weakening iron ore amid cloudy outlook. The spot price of iron ore tumbled to a four-month low as Beijing once again talked down the key steel raw material, but as usual the question is whether the intervention will lead to sustained lower prices. The spot price for benchmark 62% iron ore for delivery to north China, as assessed by commodity price reporting agency Argus, dropped to USD110.25 a tonne on April 21, the lowest since Dec. 20. The price gave up 7.9% from the close of USD119.75 a tonne on April 19, the day China’s state economic planner, the National Development and Reform Commission, said it would monitor the iron ore market closely and limit what it termed irrational price increases. (Reuters)

Hong Kong: Inflation stable at 1.7%. Hong Kong's consumer price inflation held steady in March after easing to a 9-month low in Feb, data released by the Census and Statistics Department showed. The consumer price index, or CPI, climbed 1.7% YoY in March, the same rate of increase in the previous month. Clothing and footwear prices alone grew 6.3% annually in March, and transport charges were 2.8% more expensive. At the same time, prices for food and non-alcoholic beverages fell at a faster rate of 2.8%. Netting out the effects of all the government's one-off relief measures, the underlying inflation also remained stable at 1.7%. (RTT)

Japan: Ueda looks to avoid fireworks at first BOJ meeting as Governor. New Bank of Japan Governor Kazuo Ueda is widely expected to avoid making a big splash this week at his first meeting in charge as he waits for a further settling of markets from recent financial sector jitters. Ueda and his fellow board members are forecast to keep interest rate and asset purchase settings unchanged at the end of the two-day meeting. While economists aren’t ruling out the chance of a surprise tweak to the central bank’s control of bond yields, they have pushed back their forecasts for a shift following dovish remarks from the governor. (Bloomberg)

South Korea: Economy averts recession thanks to consumer spending boost. South Korea's economy in the first quarter expanded by 0.3% over the previous three-month period, official advance estimates showed, compared with a median 0.2% rise tipped in a Reuters survey. It follows a 0.4% contraction of Asia's fourth-largest economy during the final quarter of 2022, which was the first decline in 2-1/2 years. Economists usually define a recession as two consecutive quarters of contraction. (Reuters)

Singapore: Core inflation slows more than expected. Singapore's core inflation eased more than expected in March due to lower cost for services and food, preliminary data from the Monetary Authority of Singapore and the Ministry of Trade and Industry showed. The MAS core inflation slowed to 5.0% from 5.5% in Feb. Economists had forecast 5.1%. "This was driven by lower inflation for services, food and retail & other goods," the MAS and MTI said in a joint statement. The overall consumer price index rose 5.5% YoY following a 6.3% increase in Feb. Economists had forecast a 5.6% inflation. (Reuters)

Markets

MISC: Inks USD527m sustainable-linked term loan. MISC has entered into a USD527m (RM2.3bn) syndicated loan facility to finance six very large ethane carriers. The 11-year sustainable linked non-recourse term loan is the group’s debut sustainability linked loan and is structured to align with its long-term business strategy and sustainability aspirations. MISC has committed to achieving net-zero greenhouse gas emissions by 2050 and aims to contribute to a carbon-neutral economy by transitioning to low carbon, and eventually zero-carbon, emissions transport solutions. (The Edge)

Advancecon: Bags RM86m PKNS contract. Advancecon Holdings has won a contract worth RM85.99m from Perbadanan Kemajuan Negeri Selangor (PKNS) to undertake infrastructure works for Sierra Alam (Phase 1) in Shah Alam, Selangor. The overall contract period would be 24 months from the date of site possession, or a date to be informed by PKNS. (StarBiz)

Aeon Co: To purchase land in Kelantan for RM165m. Aeon Co had entered into a SPA with Liziz Standaco SB in respect of the acquisition of a piece of land in Kota Bharu, Negeri Kelantan measuring approximately 8.691 ha at a purchase consideration of RM165m. Under the agreement, the vendor has to obtain the State Authority approval to sell and transfer the land to AEON and if applicable obtain the State Authority approval and from the Economic Planning Unit of the Prime Minister’s Department. (Business Today)

Pestech: Bags RM34.86m contract from TNB. Pestech International has secured a contract worth RM34.86m from TNB to conduct asset replacement and refurbishment works at a substation in Cahaya Baru, Johor. The project shall be effective from 19 April 2023 and the time of completion shall be 900 days from the commencement date to be determined later, and in any case, not later than 42 days from 19 April 2023 (StarBiz)

Westports: Gets reprieve from Finance Ministry. The annual lease payment to Port Klang Authority from Westports Holdings will now be treated as allowable expenses. The Finance Ministry has reviewed its appeal letter dated 24 Dec 2021. The review involved the years of assessment from 2013 to 2019 and the disputed assessments amount to RM358.9m. (StarBiz)

OCR: Ex-contractor’s RM31m claim against group is baseless and frivolous. Property developer OCR Group has maintained that there is no operational impact on the group arising from the lawsuit filed by a former contractor over alleged payment default of RM30.93m in relation to projects in Kuantan and Petaling Jaya. The claims by the ex-contractor, Kencana Amanjaya SB, are baseless and frivolous, and it has instructed its solicitors to contest the matter to fully defend its interest. (The Edge)

IPO: MKH’s plantation arm MKH Oil Palm to offer up to 250.7m shares in Main Market IPO. MKH Oil Palm (East Kalimantan) (MKHOP), the plantation arm of property developer MKH, is offering up to 250.7m shares in an IPO as it seeks to raise funds for business expansion via its listing on Main Market. The 250.7m shares, 24.5% of its enlarged issued share capital of 1.023bn, comprise 220m new shares and an offer for sale of 30.7m existing shares. (The Edge)

Market Update

US markets started off the week on mixed footing as investors waited on corporate earnings announcements from several Big Tech companies and consumer discretionary names, amongst which include Alphabet, Microsoft, McDonald’s and PepsiCo, for signs of deterioration in revenues, margins and/or earnings. The coming week will also see new home sales numbers (for March), the S&P/Case-Shiller price index (for February) and consumer confidence numbers (for April) released. On the day, the Dow Jones Industrial Average and S&P 500 inched 0.2% and 0.1% higher respectively though the Nasdaq Composite slipped 0.2%. European markets also ended the day mixed, with outlook clouded by various developments in the day. Dutch firm Philips reported firmer sales and earnings ahead of expectations, but a widening net loss due to its restructuring and a litigation provision. Meanwhile, Credit Suisse posted earnings for what may be the last time in its 167-year history after its emergency sale to UBS, revealing that it suffered net asset outflows of 61.2bn Swiss francs (USD68.6bn) during its first-quarter collapse. The closely-watched Ifo business climate survey showed a slight brightening of German companies’ sentiment for April, with future expectations improving (particularly in manufacturing), though assessments of their current situation was worse. Germany’s DAX slipped 0.1% as UK’s FTSE 100 and France’s CAC 40 ended largely unchanged. Asian markets were mostly lower ahead of a data-heavy week (regionally), though Japan’s Nikkei 225 managed to close fractionally higher to buck regional trends. All eyes are on the Bank of Japan’s (BOJ) monetary policy meeting later this week, the first to be led by new BOJ chief Kazuo Ueda. The Shanghai Composite and Hang Seng indices fell 0.8% and 0.6%. Markets in Malaysia and Indonesia were closed for a holiday.

Source: PublicInvest Research - 25 Apr 2023