Economy

US: Existing home sales unexpectedly plunge 3.4% in April.  The National Association of Realtors (NAR) released a report on  Thurs unexpectedly 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. (RTT)

US: Inflation set to stay firm in challenge for the Fed. The latest marker of underlying US price pressures will offer little hope of  settling the debate among Fed officials about whether they’ve made enough progress on inflation to step off the monetary-policy brakes.  The Fed’s preferred price metrics are projected to show inflation remained elevated in April, running more than double the central bank’s goal. Minutes of its early May meeting on Wednesday may help shed some light on officials’ appetite for standing pat next month. (Bloomberg)

US: Biden and McCarthy to meet at White House on Monday to  try and avoid looming debt default. As a possible debt default looms just 11 days away, President Joe Biden and House Speaker  Kevin McCarthy, R-Calif., will meet in person at the White House on  Monday to resume negotiations around the debt ceiling, NBC News reports. McCarthy told reporters that he had a productive call with  Biden on Sunday, and that staff members for both parties will  resume talks later that same day. (CNBC)

EU: Italy construction output rises slightly. Italy's construction output increased for the second successive month in March, though marginally. Construction production expanded a seasonally adjusted 0.1% MoM in March, following a 0.3% gain in the previous month. On a yearly basis, construction output contracted 3.4% in  March, much faster than the marginal fall of 0.1% in Feb. On an unadjusted basis, the annual decline in construction production was  3.5% versus 0.2% in the prior month. During the first quarter, total  construction production advanced 1.1% compared to the previous quarter. (RTT)

EU: Spain trade gap narrows sharply on exports surge. Spain's foreign trade deficit decreased notably in March from a year ago as exports grew more rapidly than imports. The trade deficit dropped to  EUR0.16bn in March from EUR4.64bn in the corresponding month last year. In Feb, there was a shortfall of EUR2.46bn. Data showed that the energy deficit also narrowed to EUR2.32bn from  EUR4.07bn a year ago. Exports logged double-digit growth of  17.7% YoY in March to EUR38.93bn. Imports grew at a  comparatively slower rate of 3.6% to EUR39.0bn. (RTT)

UK: Consumer confidence strengthens in May. UK consumer confidence continued to strengthen in May. The consumer sentiment index posted -27 in May compared to -30 in April. The index improved for the fourth straight month. Among sub-indices,  expectations regarding the general economic situation gained four points and the outlook for personal finances climbed five points.  (RTT)

China: Soybean imports from Brazil fall further in April. China’s soybean imports from Brazil fell 16% in April compared with the same month a year ago, keeping supplies from the South American nation well behind last year’s level after delays to its harvest. The world’s top buyer of soybeans imported 5.3m tonnes of the oilseed from Brazil, its largest supplier, versus 6.3m tonnes a year earlier.  Chinese buyers took advantage of this year’s record Brazilian soy crop and cheap prices to step up purchases earlier this year.  (Reuters)

Japan: Tertiary activity falls unexpectedly in March. Japan's tertiary activity index declined for the first time in three months in  March, according to data from the Ministry of Economy, Trade, and  Industry. The seasonally adjusted tertiary activity index dropped  1.7% MoM in March, reversing a 1.7% rise in Feb. Meanwhile,  economists had expected a 0.3% gain for the month. Among the individual components, transport and postal activities, finance and insurance, goods rental and leasing, information and communications, medical health care and welfare, living and amusement-related services, real estate, electricity, gas, heat supply and water, goods rental and leasing decreased in March.  (RTT)

Australia: Minimum wage gain must match inflation. Australian  Employment Minister Tony Burke strongly backed an increase in the minimum wage that matches inflation, arguing the lowest-paid workers couldn’t afford a further erosion of their living standards while dismissing the risk of a wage-price spiral. The government doesn’t want these employees to go backward, when pressed on whether he specifically supported a 7% pay rise in line with inflation.  (Bloomberg)

New Zealand: Finance chief denies pandering to voters' cost-of-living concerns. New Zealand's finance minister has denied the country's new budget is aimed at placating voters ahead of the country's next general election in October. The country on Thursday forecast a deficit of NZD7bn (USD4.37bn) for the year ending June  2023, compared to a forecast last Dec for a deficit of NZD3.6bn.  New Zealand is also not projected to return to surplus until 2025- 2026, a year later than previously forecast. The Treasury sees inflation slowing to 3.3% by mid-2024, from the current blistering  6.7% pace. (CNBC)

Markets

Ho Wah Genting: Proposes 4-to-1 share consolidation, private  placement. The proposed share consolidation is expected to  enhance the company's share capital structure by consolidating its existing shares, which will result in a reduction in the number of shares available in the market. The purpose of the private placement is for general working capital, repayment of interest-bearing advances, acquisitions and/or investments in complementary businesses and/or assets. (The Edge)

EcoFirst: Inks project financing facilities with AmBank for  KL48. Ecofirst Consolidated inked financing facilities with AmBank group for the construction of KL48. The high-rise integrated project located on 1.69 ha of freehold land in the Jalan Chan Sow Lin area has a GDV of RM1bn. It is due for completion in the 2Q2027. The project comprises two 47-storey towers with nine retail units and  1,700 serviced apartment units with built-up areas ranging between  650 sqft and 850 sqft. (StarBiz)

MSC: To decommission Butterworth Smelting Plant for improved efficiency. Malaysia Smelting Corp (MSC) expects to  fully de-commission its Butterworth smelting plant by mid-2024. The group’s Butterworth smelting facility was being utilised for the smelting of tin intermediates. We expect to fully de-commission the  Butterworth plant by mid-2024. Until then, we will incur a duplicate of expenses with the running of both plants. (StarBiz)

Borneo Oil: Buys 22% stake in Sabah-based cement maker for  RM40m, raising stake to 51.27%. Borneo Oil (BOB) is acquiring a  22% stake, or 27.74m shares, in Sabah-based clinker and cement products manufacturer Makin Teguh SB (MTSB) for RM40m cash to expand its revenue stream. This will increase BOB’s stake in MTSB  to 51.27%. The group bought a 29.27% stake in MTSB in May last year for RM73.56m cash. The proposed acquisition represents a  strategic opportunity for BOB group to expand its product offerings.  (The Edge)

Minda Global: Receives takeover offer at less than two-thirds of its market price from major shareholder. Minda Global (MGB)  has received a notice of conditional mandatory takeover offer  (MTO) at 7.12 sen from a company controlled by Tan Sri Dr  Palaniappan Ramanathan Chettiar, Special Flagship Holdings SB  (SFHSB). SFHSB has emerged as the new controlling shareholder of MGB’s largest shareholder SMR Education SB (SMRE) on May  19, following the disposal of the company by SMRT Holdings to  SFHSB for RM49.46m. (The Edge)

IPO: Edelteq delays ACE Market listing to June 7 amid CEO's legal tussle with Mi Technovation. UOB Kay Hian Securities (M)  SB said investors who wish to withdraw their applications for the  IPO shares may submit their applications to do so from May 20 to  5pm on May 26. The litigation between Mi Technovation and  Edelteq CEO is viewed to be a personal matter which has nothing to do with the Edelteq Group. (The Edge)

MARKET UPDATE

The FBM KLCI might retreat today after Wall Street stocks fell as  US policymakers paused negotiations over the debt ceiling deal and nerves over the health of the US regional banking sector returned.  Investors on Friday bought short-dated US Treasuries and lowered their expectations that the Federal Reserve would raise interest rates in June after chair Jay Powell warned tighter credit conditions  — the result of the turmoil at US banks — may mean the Fed will not have to raise interest rates as high to reach their 2% inflation target. The benchmark S&P 500 closed 0.1% lower on Friday, but gained 1.7% in the week. The tech-heavy Nasdaq Composite fell  0.2%, but chalked up its fourth straight week of gains with a 3%  advance. Germany’s Dax rose 0.7% to close at a record high of  16,275 although it gave up further advances as markets turned.  Europe’s region-wide Stoxx 600 rose 0.7% while France’s CAC 40  added 0.6%, extending gains from the previous session.

Back home, Bursa Malaysia closed marginally higher on Friday, as last-minute bargain-hunting activities emerged amid mixed market sentiment. At the closing bell, the FBM KLCI added 0.5 of-a-point to end the day at an intraday high of 1,428.54, compared with  1,428.04 at Thursday's close. Regional stocks mostly fell, as pessimism over the tech sector stopped the US rally from spreading to the region. Hong Kong’s Hang Seng index retreated 1.4%, while  China’s benchmark CSI 300 stock dropped 0.3% after weak third-quarter results from tech giant Alibaba damped investor sentiment.

Source: PublicInvest Research - 22 May 2023