Economy

US: Construction spending unexpectedly increases in March. The Commerce Department released a report showing an unexpected increase in U.S construction spending in the month of March. The report said construction spending rose by 0.3% to an annual rate of USD1.835trn in March after falling by 0.3% to a revised rate of USD1.830trn in Feb. Economists had expected construction spending to edge down by 0.1%, matching the dip originally reported for the previous month. The unexpected increase in construction spending came as spending on private construction rose by 0.3% to an annual rate of USD1.435trn. Spending on non residential construction jumped by 1.0% to a rate of USD607.4m, more than offsetting a 0.2% drop in spending on residential construction to a rate of USD827.7bn. The report said spending on public construction also crept up by 0.2% to an annual rate of USD399.6bn in March. Spending on educational construction climbed by 0.7% to a rate of USD86.9bn, while spending on highway construction slipped by 0.1% to a rate of USD121.7bn. (RTT)

US: Manufacturing activity contracts slower than expected in April. US manufacturing activity contracted for the sixth consecutive month in April although the pace of contraction slowed by more than expected. The ISM manufacturing PMI rose to 47.1 in April from 46.3 in March, with a reading below 50 indicating a contraction. Economists had expected the index to inch up to 46.6. The April composite index reading reflects companies continuing to manage outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period. The increase by the headline index partly reflected slower paces of contraction in both new orders and production. The new orders index climbed to 45.7 in April from 44.3 in March, while the production index advanced to 48.9 in April from 47.8 in March. The report also said the employment index jumped to 50.2 in April from 46.9 in March, indicating job growth in the manufacturing sector following two months of contraction. (RTT)

China: Exports log unexpected growth; imports fall. China exports posted a surprise growth in March, while imports continued to fall, albeit slowly, as foreign trade gained strength following the relaxation of the zero Covid policy. Exports expanded 14.8% on a yearly basis in March. This was the first growth in six months. Moreover, the annual growth was more than double the 6.8% increase logged in the first two months of the year. The gain also confounded forecasts for a 7.0% decline. Meanwhile, imports logged an annual fall of 1.4%. Nonetheless, the drop was slower than economists' forecast of 5.0% decrease as well as the 10.2% contraction seen in the Jan to Feb period. Consequently, the trade surplus totalled USD88.2bn, which was well above the expected USD39.2bn. (RTT)

Japan: Consumer confidence rises to 35.4, highest in 14 months. Japan's consumer sentiment improved for the second straight month in April to the highest level in more than a yearly. The seasonally adjusted consumer confidence index climbed to 35.4 in April from 33.9 in March. The index was forecast to rise to 34.7. Further, the latest reading was the highest since Feb 2022, when it was 35.5. All four sub-indexes registered increases in April. The indicator measuring the overall livelihood rose by 1.9 points to 32.2, and that for income growth gained 0.7 points to 38.1. The index reflecting households' willingness to buy durable consumer goods climbed to 29.2, and the index for employment strengthened to 42.0. The latest survey was conducted on April 15 among 8,400 households. (RTT)

India: Manufacturing growth strongest in 4 months. India's manufacturing activity expanded at the fastest pace in four months amid faster rises in new orders and output along with a lack of pressure on supplier capacity. The manufacturing PMI, rose to 57.2 in April from 56.4 in Feb. A reading above 50 indicates expansion in the sector. Both output and new orders grew at the quickest pace this year so far. The upturn in new business was supported by favourable market conditions, demand strength and publicity. A relatively mild price pressure, improved international sales, as well as improved supply-chain conditions also benefited companies. In April, manufacturers added to their input inventories due to robust new business growth and increasing production requirements. The rate of stock accumulation climbed to a survey peak. (RTT)

South Korea: Exports fall for seventh straight month. South Korea's exports declined for the seventh consecutive month in April due to the weak demand for semiconductors and a continuing fall in shipments to China. Exports decreased 14.2% on a yearly basis in April, bigger than March's 13.6% decrease. Shipments were forecast to drop 13.5%. Likewise, imports declined at a faster pace of 13.3% annually after falling 6.4% in the previous month. This was also larger than economists' forecast for 10.6% fall. As a result, the trade balance posted a deficit for the 14th month in a row. Nonetheless, the shortfall decreased for the third straight month. The trade deficit totalled USD2.62bn compared to USD4.63bn in March. In the same period last year, the shortfall was USD2.37bn. (RTT)

Australia: Commodity price index plunges 19.2%. The commodity price index in Australia declined further and at a faster pace in April, led by lower coking coal, iron ore, liquefied natural gas, and rural commodity prices. The commodity price index fell 19.2% YoY in SDR terms, faster than the 6.9% drop in March. The expected decrease was 20.7%. In Australian dollar terms, the index decreased 11.8% from a year ago. On a monthly basis, the index slid 5.2% in April after a 2.5% decline in the prior month. In Australian dollar terms, it dropped 4.3%. Sub-indexes for non-rural, and base metals decreased monthly in April. (RTT)

Markets

Eco World International: Plans RM1.5bn share capital reduction. Eco World International Bhd (EWI) is proposing to reduce its share capital by RM1.5bn to eliminate the group's accumulated losses, which stood at RM144.5m as of FY2022, with the balance RM900m to be credited to the group's retained earnings. The proposed exercise is based on the group's intention to distribute its estimated excess cash of up to RM900m in 2023 to shareholders after setting aside funds for working capital and funding necessary to meet its sales targets and to provide additional headroom for further declaration of dividends by the group in the future from the sales of its remaining properties in the UK. (The Edge)

AirAsia X: Carried 49% more passengers in 1Q23 compared with 4Q22. Post-Covid-19, AirAsia X (AAX), the medium-haul low cost affiliate of Capital A, continued to see a sustained increase in passenger traffic in the 1Q23. The airline carried 504,476 passengers in the January-March quarter, up 49% from 337,638 passengers in the 4Q22, driven by the New Year holidays and spring season travel demand. (The Edge)

Tropicana: To issue new shares to founder-cum-vice-chairman to settle RM180m debt. Tropicana Corp is issuing 137.7m new shares to pay off RM180m that the company owes its founder and group executive vice-chairman Tan Sri Tan Chee Sing. The shares will be issued to a company wholly-owned by Tan at RM1.30 per share. The property developer said it had entered into a settlement and subscription agreement with Tan through his wholly-owned T Shares 1 SB (TSSB), to settle the amount owed. (The Edge)

Teladan Setia: Proposes transfer to Main Market. Melaka-based property developer Teladan Setia Group is eyeing a move to the Main Market of Bursa Malaysia, after being listed on the ACE Market for two years. The group said it has satisfied the requirements for the transfer, based on the equity guidelines issued by the SC and the Main Market Listing Requirements of Bursa Securities. (The Edge)

Samaiden: Ink MOU to explore RE projects in Cambodia. Samaiden Group’s indirect wholly owned subsidiary, Samaiden Energy (Cambodia) Co Ltd has signed a MoU with Royal Group Co Ltd, Management Venture Asia (Cambodia) Ltd (MVA), and Panna Energy SB to develop land alongside railway tracks operated by Royal Railway PLC for renewable energy (RE) and other sustainable economic activities. (SunBiz)

Lebtech: Auditor raises going concern uncertainty as revenue came from related parties. Lebtech’s external auditor has raised a material uncertainty on the construction group's ability to continue as a going concern, with regards to its business activities during the FYE2022, mainly with related parties. Auditor Al Jafree Salihin Kuzaimi PLT noted that the group derived all of its revenue in FY22 from related parties, while 98% of its trade and other receivables were due from related parties. (The Edge)

IPO: DXN targets RM122m from Bursa relisting. DXN Holdings aims to raise RM121.6m through its upcoming IPO on Bursa Malaysia’s Main Market, scheduled for May 19, 2023. The relisting of the health and wellness products maker’s IPO will involve the sale of 932.7m ordinary shares in DXN, comprising 772.7m existing shares and a public issue of 160m new shares. (Malaysian Reserve)

Market Update

The FBM KLCI might open lower today as shares of US regional banks fell on Monday after regulators mobilised a deal for JPMorgan Chase to buy struggling lender First Republic. The KBW index of regional banking stocks closed 2.6% lower after regulators announced that they were closing down First Republic and selling off all $93.5bn of its deposits and most assets to JPMorgan. The deal wipes out all of First Republic’s shareholders and marks the second-biggest bank failure in US history. JPMorgan’s stock rose 2.2%. More broadly, Wall Street stocks were muted on a day when most markets in Europe and Asia were closed for a holiday. The S&P 500 stock index closed flat, while the technology-heavy Nasdaq Composite slipped 0.1%. The Fed is expected to deliver a quarter-point rate rise after its meeting on Wednesday, taking its target range to 5-5.25%, as policymakers continue to tackle rapid consumer price rises. Later in the week, a monthly US jobs report will be scrutinised for clues on whether the Fed’s efforts have started to slow the labour market and wage gains..

Source: PublicInvest Research - 2 May 2023