Economy

US: Consumer confidence hits nine-month low. US consumer confidence dropped to a nine-month low in April as worries about the future mounted, further heightening the risk that the economy could fall into recession this year. The consumer confidence survey from the Conference Board also suggested that Americans were getting ready to hunker down as dark clouds gather, with the share of them planning to buy major household appliances over the next six months falling to the lowest level since 2011. (Reuters)

US: New home sales unexpectedly spike to one-year high in March. A report released by the Commerce Department showed an unexpected spike in US new home sales in the month of March. The Commerce Department said new home sales surged 9.6% to an annual rate of 683,000 in March from a revised rate of 623,000 in Feb. Economists had expected new home sales to dip to a rate of 634,000 from the 640,000 originally reported for the previous month. With the unexpected jump, new home sales reached their highest annual rate since hitting 707,000 in March 2022. (RTT)

US: Fed to publish review of Silicon Valley Bank supervision April 28. The Federal Reserve will publish its internal review of its supervision of Silicon Valley Bank on Friday, April 28 at 11 a.m. ET (1500 GMT), the central bank said. The review, which is being led by Fed Vice Chairman for Supervision Michael Barr, follows the regional bank's abrupt failure last month. It will include policy recommendations and confidential supervisory information that the Fed typically does not disclose to the public, Barr has said. (Reuters)

EU: Eurozone yields extend fall, investors twitchy about ECB moves. Eurozone government bond yields extended their fall, tracking moves in US Treasuries, with investors on edge about the state of the euro area economy ahead of the ECB’s interest rate decision next week. Germany’s 10-year bond yield, the euro zone benchmark, was last down 12 basis points (bps) at 2.37%. Yields move inversely to prices. The yield was 40 bps lower than the almost 12-year high of 2.77% hit in early March and roughly 40 bps higher than the low reached during the banking jitters in the middle of last month. (Reuters)

EU: Spain producer prices fall for first time since late 2020. Spain's producer prices declined in March for the first time since late 2020 due to a notable decline in energy prices, the statistical office INE reported. Producer prices decreased unexpectedly by 1.0% on a yearly comparison after rising 8.0% in Feb. This was the first decline since Dec 2020, when prices slid 1.4%. Economists had forecast prices to climb 2.8%. (RTT)

EU: Hungary holds base rate steady at 13%, slashes lending rate by 450 Bps. The Hungarian central bank left its key interest rate unchanged, but slashed the overnight lending rate, which was raised significantly in Oct last year amid the financial market turbulence, as policymakers assessed that the inflation risks are manageable and the financial market concerns have subsided. The Monetary Council of the Magyar Nemzeti Bank, led by Governor Gyorgy Matolcsy, left the base rate unchanged at 13.00%, in line with economists' expectations. The overnight deposit rate was held at 12.50%. (RTT)

UK: Budget logs second biggest March shortfall. The UK budget deficit widened sharply to the second highest level for the month of March taking the overall borrowing for the financial year ending March 2023 to the fourth biggest on record, official data revealed. Excluding banks, public sector net borrowing increased by GBP16.3bn from the previous year to GBP21.5bn in March, the Office for National Statistics reported. This was the second highest March borrowing since monthly records began in 1993. Data showed that government received GBP81.0bn in taxes and other income. This was only GBP1.6bn more than in March 2022. (RTT)

Hong Kong: Exports fall at slower pace in March. Hong Kong's exports continued to decline in March albeit at a slower pace, data from the Census and Statistics Department showed. Exports of goods slid 1.5% on a yearly basis, following an 8.8% decline in Feb. Although exports decreased for the tenth consecutive month, this was the slowest drop in the current sequence of contraction. At the same time, imports registered an annual fall of 0.6% after easing 4.1% in Feb. MoM, exports and imports were up 28.3% and 23.0%, respectively. (RTT)

Thailand: Car production rises 4% YoY in March, exports also up. Car production in Thailand rose 4.16% in March from a year earlier to 179,848 units, as a shortage of microchips eased, the Federation of Thai Industries (FTI) said. Exports of cars increased 4.84% in March from a year earlier, after February's 11.42% rise, Surapong Paisitpattanapong, a spokesperson for FTI's automotive industry division, told a news conference. However, domestic car sales dropped 8.37% in March from a year earlier, after February's 3.94% fall, due to tighter loans for trucks as interest rates rose. (Reuters)

Markets

Bumi Armada (Outperform, TP: RM0.75): Sells Armada Claire FPSO for USD20m, recognises USD12m gain. Bumi Armada has sold one of its floating production storage offloading (FPSO) vessels, Armada Claire, for USD20m (RM88.9m), pocketing a divestment gain of USD12m in financial results for the second quarter ending June 30, 2023 (2QFY23). The sale proceeds were received by its wholly-owned subsidiary Armada Balnaves Pte Ltd last week, and will be applied towards a reduction of its corporate debt. The divestment came after Bumi Armada lost a six-year legal battle in Australia last year against former client Woodside Energy Julimar Pty Ltd (WEJ), which terminated a charter contract worth RM1.46bn for Armada Claire in 2016. (The Edge)

Comment: This is not a surprise as Bumi Armada has actively been looking for a buyer. The asset has been fully depreciated since 2022. Intention of the sale proceeds is to reduce debt, which will lower its net gearing ratio from 0.92 to 0.90. Overall, we are positive with the divestment and retain our Outperform rating with an unchanged TP of RM0.75.

Ranhill: Secures RM210m contract from Italy-based Saipem SpA. Ranhill Utilities's subsidiary, Ranhill Worley SB, has secured a RM210m (USD50m) contract from a wholly-owned subsidiary of Saipem SpA of Italy for the Qatar North Field project. (New Straits Times)

Rsawit: Auditor raises material uncertainty related to going concern. Rimbunan Sawit’s auditor Messrs Crowe Malaysia PLT has raised a material uncertainty related to the going concern of the Main Market-listed plantation group in respect of the financial statement for the fiscal year ended 31 Dec 2022 (FY22). (The Edge)

Fitters: PDZ executive director ceases to be substantial shareholder of Fitters Diversified. PDZ Holdings executive director Ho Jien Shiung has ceased to be a substantial shareholder of Fitters Diversified after offloading 40m shares. Ho sold the block of Fitters Diversified shares on 19 April. (The Edge)

Advancecon: Gets RM11.54m station depot sub-contract. Advancecon Holdings has secured a sub contract worth RM11.54m from China Communications Construction (ECRL) SB (CCCSB) for the construction of a depot station. In a filing with Bursa Malaysia, Advancecon said its 51%-owned indirect subsidiary, Spring Energy SB, had accepted a letter of acceptance from CCCSB. (StarBiz)

Star: Tong Kooi Ong emerges as Star Media Group’s substantial shareholder. The Edge Communications SB and its owner Tan Sri Tong Kooi Ong have emerged as substantial shareholders of Star Media Group (SMG). According to filings with Bursa Malaysia, Tong has a direct stake of 0.254%, or 1.84m shares. (The Edge)

PetChem: Sabah state-owned SMJ acquires 25% stake in PetChem unit for RM1.2bn. Petronas Chemicals Group (PetChem) has entered into an agreement to sell a 25% stake in Petronas Chemicals Fertiliser Sabah SB (PCFS) to SMJ SB for RM1.2bn. SMJ is wholly-owned by the Sabah government and oversees the state’s overall interest in oil and gas (O&G) developments in Sabah. (The Edge)

Market Update

US markets slumped overnight as investors assessed the general economic outlook while remaining on edge over a slew of numbers due out during the week. Durable goods and mortgage purchase data will be out on Wednesday morning, before the latest GDP update on Thursday and the key Personal Consumption Expenditures Price Index (the US Federal Reserve’s favored inflation gauge) on Friday – all US time. Stock futures are higher however after strong earnings reports from the likes of Alphabet and Microsoft which beat expectations, post-market close. On the day, the Dow Jones Industrial Average and S&P 500 fell 1.0% and 1.6% as the Nasdaq Composite slumped 2.0%. European markets were hampered by mixed earnings reports however, notably from banks. Swiss banking giant UBS reported a 52% net profit decline. Nestle reported higher revenue, though lifted by price hikes as sales volume declined. France’s CAC 40 and UK’s FTSE 100 slipped 0.6% and 0.3% though Germany’s DAX managed to inch 0.1% higher. Asian markets were led lower by Hong Kong’s Hang Seng Index which tumbled 1.7% as investors waited on earnings of the “Big Tech” firms (Alphabet, Microsoft, Amazon, Meta). The Shanghai Composite Index fell 0.3%. South Korea’s KOSPI fell 1.4% after the country’s central bank announced that its GDP only grew 0.8% YoY in 1Q 2023.

Source: PublicInvest Research - 26 Apr 2023