Economy

US: Homebuilder confidence unexpectedly continues to  improve in May. Homebuilder confidence in the US has  unexpectedly improved in the month of May. The report said the  NAHB/Wells Fargo Housing Market Index jumped to 50 in May from  45 in April. Economists had expected the index to come in  unchanged compared to the previous month. Homebuilder  confidence improved for the fifth straight month, with the housing  market index reaching its highest level since hitting 55 in July 2022.  Limited existing inventory has put a renewed emphasis on new  construction, resulting in the increase in homebuilder confidence  even as the industry continues to face several challenges. The  continued advance by the housing market index came amid  increases by all three component indices. (RTT)

US: Business inventories unexpectedly edge slightly lower in  March. A report released by the Commerce Department  unexpectedly showed a modest decrease in US business  inventories in the month of March. Business inventories edged  down by 0.1% in March following a revised unchanged reading in  February. Economists had expected business inventories to come  in unchanged compared to the 0.2% uptick originally reported for  the previous month. The unexpected dip came as manufacturing  inventories slid by 0.8%, more than offsetting a 0.7% increase in  retail inventories. Wholesale inventories were unchanged. With  sales falling by much more than inventories, the total business  inventories/sales ratio crept up to 1.39 in March from 1.38 in Feb.  (RTT)

US: Industrial production unexpectedly increases as  manufacturing output rebounds. Industrial production climbed by 0.5% in April, while revised data showed production was unchanged  in each of the two previous months. Economists had expected  industrial production to come in unchanged compared to the 0.4% increase originally reported for the previous month. Industrial  production came in stronger than anticipated in April but revisions to  prior month temper enthusiasm. The unexpected growth came as  manufacturing output jumped by 1.0% in April after slumping by  0.8% in March, bolstered by a strong gain in the output of motor  vehicles and parts. Mining output also rose by 0.6% in April after  tumbling by 1.3% in March, while utilities output plunged by 3.1% in  April after spiking by 8.4% in March, as milder temperatures  lowered demand for heating. (RTT)0.5% in April, while revised data showed production was unchanged  in each of the two previous months. Economists had expected  industrial production to come in unchanged compared to the 0.4% increase originally reported for the previous month. Industrial  production came in stronger than anticipated in April but revisions to  prior month temper enthusiasm. The unexpected growth came as  manufacturing output jumped by 1.0% in April after slumping by  0.8% in March, bolstered by a strong gain in the output of motor  vehicles and parts. Mining output also rose by 0.6% in April after  tumbling by 1.3% in March, while utilities output plunged by 3.1% in  April after spiking by 8.4% in March, as milder temperatures  lowered demand for heating. (RTT)

UK: Jobless rate climbs, payroll employment declines. The UK  unemployment rate rose slightly and payroll employment declined  for the first time in more than two years as the economic slowdown  started to bite the labour market. The jobless rate rose to 3.9% in  the three months to March from 3.8% in the preceding month. This  was in contrast to economists' forecast of the rate stagnating at  3.8%. The increase in unemployment was largely driven by people  unemployed for over twelve months. Payroll employees for April  registered a monthly decrease of 136,000 from March to 29.8m.  This was the first decline since Feb 2021. Moreover, the number of  vacancies declined 55,000 sequentially to 1.08m in the three  months to April. Vacancies have been falling for the tenth  consecutive period as firms held back recruitment due to economic  pressures. (RTT)

China: Industrial output, retail sales data miss expectations. China's industrial production and retail sales expanded at faster  rates in April but both missed expectations signalling that monetary  policy easing might be needed to regain the strength experienced  after the scrapping of zero-Covid policy. Industrial production  posted an annual growth of 5.6% in April, faster than the 3.9% increase in March. However, the pace of expansion was weaker  than economists' forecast of 10.9%. At the same time, retail sales  growth accelerated sharply to 18.4% in April from 10.6% in March.  Still, the rate missed expectations for a 21.0% increase. (RTT)

Australia: Consumer confidence plummets on rate hike,  budget. Australia's consumer confidence weakened notably in May  to the lowest level since the pandemic outbreak in 2020 as  consumers expressed deep pessimism after a surprise rate hike  from the Reserve Bank and a mildly disappointing budget. The  Westpac Melbourne Institute Index of Consumer Sentiment fell  7.9% to 79.0 in May from 78.5 in April. Further, this was the lowest  monthly reading since the pandemic outbreak in 2020. (RTT)

Markets

Gamuda (Outperform, TP: RM5.10): Affirms comprehensive  and transparent process for Penang South Island reclamation  project. The Penang South Islands (PSI) land reclamation project  had undergone a comprehensive and transparent due process that  led to the approval of the PSI project. Gamuda, which is the majority  shareholder of the project's developer SRS Consortium SB, said the  approval of the PSI project covers not only the concerns of the  environmentalists and the ‘anti-development’ lobby, but also  balances that with the well-being of the communities in the vicinity  of the project. (StarBiz)

Maybulk: Plans RM275m share capital reduction to offset  accumulated losses. Malaysian Bulk Carriers (Maybulk) has  proposed to undertake an RM275m capital reduction to eliminate its  accumulated losses. The issued share capital of Maybulk was  RM338.8m comprising one billion shares. The proposed capital  reduction will result in its share capital being reduced to RM63.8m from RM338.8m, resulting in a capital reduction of RM275m, which  will be utilised to set off its accumulated losses of RM259.1m at the  company level. (The Edge)

YNH Property: Disposes of Seri Hartamas tract for RM170m.  YNH Property Bhd has via its wholly-owned subsidiary Kar Sin  disposed of a 5.1-acre freehold tract in Desa Seri Hartamas, Kuala  Lumpur, to Sunway Living Space for RM170m cash. The group said  the purchaser will take vacant possession of the property free from  all encumbrances on an "as is where is" basis. YNH Property said  the proposed disposal will provide an opportunity for it to realise and  unlock the value of its investment. (StarBiz)

Foundpac: Sees softening demand as global semiconductor  sales decline. Foundpac Group is seeing softening in demand with  some customers deferring their orders as global semiconductor  sales moving on a downward trend since August 2022. The  precision engineering parts maker said the escalation of the direct  costs is also taking a hit on margins. (StarBiz)

KAB: Inks MoU to drive sustainable energy solutions.  Kejuruteraan Asastera (KAB) said its wholly-owned subsidiary KAB  Energy Holdings SB is exploring a collaboration with a China  National Nuclear Corp unit PT CNEC Engineering Indonesia and  Transcend Global Ltd (TGL) to develop potential sustainable energy  solutions in the region. KAB said the proposed joint effort with PT  CNEC would identify and develop various proposed projects while  TGL will assist in conducting financial feasibility studies for  shortlisted projects and facilitate the M&A of the project SPV. (StarBiz)

Bintai Kinden: MD redesignated to director, replaced by ex-CEO. Bintai Kinden made further announcements on its boardroom  changes on Tuesday, including the return of its former CEO Datuk  Tay Chor Han as its new group MD effective 15 May. Tay replaces  Ku Chong Hong, who was redesignated to executive director cum  CFO. Ku, 34, has only held the MD position since 18 Jan. The latest  leadership changes came after the mechanical and electrical  engineering services provider reported three resignations and three  appointments on Monday. Tay was previously Bintai Kinden’s CEO  for about a year. He was appointed as the group’s CEO on 24 Feb  last year and resigned on 3 March this year to pursue his personal  interest. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today after Wall Street stocks  slipped on Tuesday as traders looked for signs of a breakthrough to  the impasse in Washington over the US debt ceiling. The  benchmark S&P 500 fell 0.6%, reversing its gains from the previous  session. Technology stocks were the only sector that recorded  gains, and the tech-dominated Nasdaq Composite dipped a more  modest 0.2%. Trading on Tuesday was overshadowed by concerns  US President Joe Biden and Republican House Speaker Kevin  McCarthy would fail to arrive at a deal to increase the nation’s  spending limit by the end of Tuesday’s meeting. The meeting ended  after the market close on Tuesday with no deal. The US could  default on its debt as early as next month if lawmakers fail to reach  a compromise. In Europe, the region-wide Stoxx 600 closed down  0.4%, while Germany’s Dax index lost 0.1% and France’s CAC 40  shed 0.2%.

Back home, Bursa Malaysia snapped a five-day losing streak to  close higher on Tuesday, in tandem with the uptrend in regional  bourses, buoyed by bargain hunting for selected heavyweights. At  the closing bell, the FBM KLCI had risen 6.13 points to 1,423.50,  from 1,417.37 at Monday's close. Hong Kong’s Hang Seng was flat,  while Japan’s Topix gained 0.6% and climbed to its highest level in  almost 33 years as improvements in corporate governance make  Tokyo more attractive to foreign investors

Source: PublicInvest Research - 17 May 2023