Economy

US: Consumer sentiment slumps to six-month low in May. Citing renewed concerns about the trajectory of the economy, US consumer sentiment deteriorated by much more than anticipated in the month of May. The consumer sentiment index tumbled to 57.7 in May from 63.5 in April, while economists had expected the index to edge down to 63.0. With the much bigger than expected decrease, the consumer sentiment index slumped to its lowest level since hitting 56.8 last Nov. (RTT)

US: Import prices climb 0.4% in April due to rebound in fuel prices. Reflecting a significant rebound in prices for fuel imports, US import prices increased by slightly more than expected in the month of April. Import prices climbed by 0.4% in April after falling by a revised 0.8% in March. Economists had expected import prices to rise by 0.3% compared to the 0.6% decrease originally reported for the previous month. The slightly bigger than expected rebound in import prices came as prices for fuel imports spiked by 4.5% in April after plunging by 3.9% in March. (RTT)

US: Consumer long-term inflation expectations hit 12-year high. US long-term inflation expectations unexpectedly accelerated in early May to a 12-year high and consumer sentiment soured, reflecting growing concerns about the economic outlook. Consumers see prices climbing at an annual rate of 3.2% over the next five to 10 years, according to the preliminary May reading from the University of Michigan. They anticipate costs rising 4.5% over the next year, compared to last month’s 4.6%. The consumer sentiment index slid to 57.7, the lowest since Nov and weaker than all forecasts, from 63.5 last month. (Bloomberg)

China: Strong data likely to mask weakening recovery. Key economic data this week may suggest China’s recovery is doing a lot better than it is in reality. Official figures on Tuesday are expected to show rapid YoY growth in industrial output and retail sales for April, with both of those key datasets likely accelerating from March. Fixed-asset investment through the first four months of 2023 is also projected to have gathered pace. (Bloomberg)

Hong Kong: Mortgage frenzy sees banks go big on cash handouts. Fierce competition for new mortgage customers is driving banks in Hong Kong to offer the highest cash rebates in nearly two decades. The deals — offered as a percentage of the principal loan amount — ramped up from about 1.3% last year to as much as 2.6% currently, the highest in over 17 years. Banks such as HSBC and Bank of China are using the incentive as a way to draw in clients, while property transactions remain subdued in the city’s real estate market that’s still reeling from an exodus of residents last year amid its zero Covid policy. (Bloomberg)

India: Inflation hits 18-month low of 4.7%; industrial production growth slows. India's CPI eased more-than-expected in April to its lowest level in 1.5 years and remained below the Reserve Bank of India's upper threshold amid a slowdown in food prices, and industrial production expanded at a slower pace in March. CPI climbed 4.70% YoY in April, which was slower than the 5.66% rise in March. Economists had forecast the inflation rate to drop to 4.80%. In the same period last year, inflation was 7.79%. Inflation returned within the RBI's tolerance band of 2-6% for the second straight month. Nonetheless, the inflation rate was above the central bank's medium-term target of 4.0%. (RTT)

Markets

Revenue Group: Proposes to acquire 51% equity interest in Innov8tif Holdings . Revenue Group, a leading provider of cashless payment solutions, has proposed to acquire 51% equity interest in Innov8tif Holdings SB, comprising 717,570 ordinary shares for RM36m. Innov8tif Holdings is an investment holding company that owns Innov8tif Solutions Group and Xendity SB, together referred to as Innov8tif group. In a filing with Bursa Malaysia, Revenue said it has entered into a conditional share sale agreement (SSA) with Hong Seng Consolidated Bhd for the proposed acquisition. (StarBiz)

Star Media Group: Seeks stake in plantation company. The Star Media Group (SMG) is seeking approval from its shareholders at an extraordinary general meeting to take a 13% substantial stake in plantation company Matang Bhd. The move by SMG will see the media company selling property assets for RM33m to Matang, which will see an allotment and issuance of its shares to the media company. The move, if completed, will see 357m new shares in Matang issued to SMG at an issue price of 8.09 sen per share, as well as a cash payment of RM4.12m. SMG is expected to hold 13% of the total enlarged number of shares in Matang after such issuance. (StarBiz)

Ageson: Kobena mutually abort MOUs for land deal, smart vending machine biz. Ageson’s subsidiaries and Koperasi Belia Nasional Bhd (Kobena) have mutually agreed to terminate three MOUs in relation to a vending machine business and the sale and development of a parcel of land in Gombak. Ageson said two MOUs entered into by its indirect units Ageson Retails SB (ARSB) and Ageson Net SB (ANSB) with Kobena concerning the sale of 4,000 Internet-of-Things-enabled vending machines and/or retail fridges by ARSB to Kobena for RM120m, and the appointment of ANSB as the operator of Kobena's vending machine business, were ended. (The Edge)

Hap Seng: In talks with Mercedes-Benz for agency distribution model shift. Hap Seng Consolidated announced it is in discussions with Mercedes-Benz Malaysia (MBM) to shift from its present dealership distribution model to an agency model. This came after Hap Seng’s wholly-owned unit Hap Seng Star SB (HSS) and MBM inked a MOU to commence negotiations over the proposed business model change. (The Edge)

Southern Cable: Bags RM90.4m contract from Tenaga. Southern Cable Group has secured a RM90.4mil contract to supply underground cables and conductors to TNB. The new win by the group’s wholly-owned subsidiary, Southern Cable SB, follows the addendum contract of more than RM30m secured in April 2023, and boosts the group’s total contract value to TNB to RM422.5m from RM332.1m earlier. (StarBiz)

Econpile: Gets RM20.8m foundation and basement job in Bangsar. Econpile Holdings Bhd has won a contract worth RM20.8 million from Bangsar Hill Park Development SB (BHPD) to undertake foundation and basement works for two blocks of apartments on Lorong Maarof, Bangsar. The project is to undertake earthworks, piling, pile cap, basement slab and reinforced concrete ramp works for two blocks of apartments, namely Phase 1B1 (Block B) of a 62-storey apartment block, comprising 410 units, and Phase 1B2 (Block C) of a 49-storey apartment block with 392 units at Lot 365, Lorong Maarof, Seksyen 96 in Kuala Lumpur. It said that the overall duration of the project shall be 10½ months from May 6, 2023.

Market Update

The FBM KLCI might open lower today after US stocks and bonds fell on Friday as investors assessed fresh data that showed that consumers’ concerns about long-term inflation rose. Wall Street’s benchmark S&P 500 reversed earlier gains to trade 0.2% lower, ending the week down 0.3%. The tech-heavy Nasdaq Composite was down 0.4%, but advanced 0.4% over the week. In Europe, the region-wide Stoxx 600 share benchmark rose 0.4%, aided by strong corporate earnings from Switzerland’s Richemont, which boosted luxury goods makers. France’s CAC 40 added 0.5%, led by strong earnings from French reinsurer Scor. The gains came despite hawkish signalling from the European policymakers, with the head of Germany’s central bank Joachim Nagel saying Eurozone interest rates could still rise in September because of sticky underlying inflation measures. The European Central Bank last week raised its deposit rate to 3.25%. Most economists expect it to pause at 3.75% in July. London’s FTSE 100 gained 0.3% as official data showed the economy expanding 0.1% between the last quarter of 2022 and the first three months of this year, unchanged from the previous quarter and in line with analysts’ expectations.

Back home, Bursa Malaysia gave up earlier gains to slip lower for a fourth straight day, as investors brushed off the country’s stronger than-expected growth in gross domestic product of 5.6% YoY in the first quarter of 2023. At the closing bell, the FBM KLCI had eased by 0.16%, or 2.26 points, to close at its intraday low of 1,422.92, from Thursday’s close at 1,425.18. Equities declined in the region, with Hong Kong’s Hang Seng index falling 0.6% and China’s CSI 300 shedding 1.3%. Japan’s Topix was the exception, adding 0.6%. It was buoyed by positive earnings forecasts from some of the country’s biggest companies in recent days.

Source: PublicInvest Research - 15 May 2023