Economy

US: Dollar hits seven-week high, bolstered by data, debt ceiling hopes. The dollar rose to seven-week peaks as another round of solid economic data further pared back bets on easing by the  Federal Reserve, with the greenback also boosted by expectations of a US debt ceiling deal to avert potential default. The dollar index,  a measure of the greenback's value against six major currencies,  touched a new seven-week high of 103.63, and was last up 0.7% at  103.56. Against the yen, the dollar rose to a six-month peak of  138.74 and was last up 0.7% at 138.715 yen.. (Reuters)

US: Existing home sales unexpectedly plunge 3.4% in April. The National Association of Realtors released a report showing a  steep drop in US existing home sales in the month of April. NAR  said existing home sales plunged by 3.4% to an annual rate of  4.28m in April after tumbling by 2.6% to a revised rate of 4.43m in  March. The extended pullback surprised economists, who had expected existing home sales to inch up by 0.1% compared to the  2.4% slump originally reported for the previous month. Home sales are bouncing back and forth but remain above recent cyclical lows.  (RTT)

US: Leading economic index decreases in line with estimates in April. A report released by the Conference Board showed a  continued decrease by the group's reading on leading US economic indicators in the month of April. The Conference Board said its leading economic index slid by 0.6% in April after tumbling by 1.2%  in March. The decrease, which matched economist estimates,  marked the thirteenth consecutive decline by the index.  Weaknesses among underlying components were widespread—but less so than in March's reading, which resulted in a smaller decline.  (RTT)

Hong Kong: Jobless rate falls to 3.0%. Hong Kong's unemployment rate decreased further to the lowest level in 3.5  years as the labour market strengthened on the back of revived domestic economic activities and a strong rebound in visitor arrivals. The seasonally adjusted unemployment rate fell slightly to  3.0% in the Feb-April period from 3.1% in the Jan-March period.  Further, this was the lowest unemployment rate since the Aug to  Oct period in 2019, when it was also 3.0%. (RTT)

Japan: Has JPY432.4bn trade deficit in April. Japan posted a  merchandise trade deficit of JPY432.4bn yen in April. That beat expectations for a shortfall of JPY613.8bn following the JPY755.1bn deficit in March. Exports were up 2.6% on year, shy of forecasts for an increase of 3.0% and slowing from 4.3% in the previous month.  Imports were down an annual 2.3% versus expectations for a fall of  0.3% after climbing 7.3% a month earlier. (RTT)

New Zealand: Budget pushes back return to surplus by a year.  The New Zealand government pushed back its estimated return to a  budget surplus by one year as the recent flooding and cyclone added to uncertainty and ramped up costs. The budget will return to surplus in 2025/26, only one year later than previously forecast and the economy will avoid a recession. (RTT)

Markets

BHIC: Wins RM140m submarine contracts. Boustead Heavy  Industries Corp (BHIC) has secured two contracts worth a total of RM140m from the Defence Ministry. BHIC said its wholly owned subsidiary, BHIC Submarine Engineering Services SB (BSES) was awarded a contract for the interim in-service support for the Royal  Malaysian Navy Prime Minister’s Class Submarines at a contract value of RM99.8m. The contract is for a period of eleven months from 15 March 2023 until 14 Feb 2024. BSES also accepted a letter of award dated 5 May for an extension to the submarine facilities upkeep contract for the navy at a contract value of RM40.3m.  (StarBiz)

Pesona Metro: Bags RM242.2m construction job. Pesona Metro has accepted a RM242.2m contract from KL Wellness City (H) SB  for the construction of the main building and external works for a  mixed development project in Petaling, Kuala Lumpur. The project is for a duration of 27 months from 1 June 2023 to 30 Sept 2025. It said the project is expected to contribute positively to the earnings and enhance the net assets of the group during the duration of the project. (StarBiz)

MMAG: Plans 10-to-1 share consolidation, proposes 6-for-1  rights shares with free warrants to raise up to RM145m. MMAG  Holdings Bhd is planning to consolidate every 10 existing ordinary shares in the ACE Market-listed company into one new share. As of  16 May, MMAG, which is involved in the logistics business, had a  total of 2.42bn issued shares. The counter was last traded at 1.5  sen per share. Upon the completion of the consolidation, MMAG will see its number of issued shares stand at 242.24m, the company said. (StarBiz)

MPI: Registers first quarterly loss in a decade; declares 25 sen dividend. Malaysian Pacific Industries (MPI) sank into the red,  reporting a net loss of RM17.8m, or 8.97 sen loss per share, for  3QFY2023 ended 31 March 2023 compared with a net profit of  RM81.4m, or 40.98 sen per share, a year earlier. This is MPI's first quarterly loss since 2QFY2013, when the company posted a  RM1.79m net loss at the time. “As economic headwinds persist, weak-end electronics demand is spreading from consumers to commercial. (The Edge)

Pharmaniaga: Logs RM2.6m net profit in 1QFY2023, sharply lower than pre-pandemic levels. Pharmaniaga’s net profit plunged to RM2.6 m in 1QFY2023 ended 31 March 2023, barely 10% of the  RM27.7m it made a year earlier. The latest figures were also a far cry from its pre-pandemic levels. Pharmaniaga posted a net profit of  RM19.6m in 1QFY2019 on revenue of RM786.1m. The public hospitals’ generic drug supplier attributed the big earnings contraction to lower customer demand in both its concession and  Indonesia operations. On top of that, it incurred higher financial cost as a result of the increase in the OPR. (The Edge)

MFM: 1QFY23 net profit down, hit by weak ringgit and rising commodity prices. Malayan Flour Mills (MFM) net profit shrank  48.6% to RM10.44 million in 1QFY23 ended 31 March 2023, from  RM20.3m a year ago due to higher input costs from rising commodity prices paired with a weak ringgit. The drop in net profit occurred despite a 30% increase in MFM’s revenue of RM826.7m in  1QFY23, from RM634.9m posted the corresponding quarter a year earlier, as the group saw higher sales in the flour and grain trading segment. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today as Wall Street stocks rose on Thursday after policymakers in Washington said that a bill to  raise the US debt ceiling may be put to a vote next week, raising the possibility of a deal to avoid a government default. Both the blue-chip S&P 500 index and the Nasdaq Composite reached their highest levels since August 2022, up 0.9% and 1.5%, respectively.  Meanwhile, data from the US labour department showed applications for new unemployment aid fell to 242,000 claims last week, from 264,000 in the previous seven days. The figure landed below analysts’ expectations, raising concerns that a tight labour  market could make it harder for the Federal Reserve to bring inflation levels back to target. Corporate results have added to investors’ confusion around consumer spending. In Europe, the region-wide Stoxx 600 rose 0.4%, recovering from two consecutive down days. France’s CAC 40 was up 0.6%, while Germany’s Dax rose 1.3%.

Back home, Bursa Malaysia recouped earlier losses to close higher on Thursday, in sync with the upbeat performance in regional bourses as market sentiment turned positive, fuelling investors' risk appetite. At the closing, the FBM KLCI rose 3.7 points to end at its intraday high of 1,428.04 compared with 1,424.34 at Wednesday's close. Regional stocks were also higher, propelled by the momentum from Wall Street. Hong Kong’s Hang Seng index added  0.9% and Japan’s Topix rose 1.1%. China’s CSI 300 was the  outlier, falling 0.1%, and extended its losses from earlier in the week  when official data pointed to a slowdown in the country’s post-coronavirus pandemic recovery

Source: PublicInvest Research - 19 May 2023