Economy

US: Weekly jobless claims rise moderately; first-quarter GDP growth revised up. The number of Americans filing new claims for unemployment benefits rose moderately last week and the prior week's data was revised sharply lower, suggesting persistent labor market strength. Initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 229,000 for the week ended May 20. Data for the prior week was revised to show 17,000 fewer applications received than previously reported. (Reuters)

US: Pending home sales unchanged in April. Contracts to buy US previously owned homes were unchanged in April amid tight inventory, which could delay a recovery in the housing market. The unchanged reading of 78.9 in its Pending Home Sales Index, based on signed contracts, last month followed a 5.2% drop in March. Pending home sales decreased 20.3% in April on a YoY basis. A perennial shortage of homes on the market is frustrating would be buyer’s eager to take advantage of dips in mortgage rates. The inventory of existing homes remains 44% below its pre-pandemic levels, resulting in price rises in some parts of country, multiple offers and homes being sold above list price. (Reuters)

EU: Germany slid into recession in Q1. The German economy entered a technical recession in the first quarter, in contrast to the initial estimate, as high inflation damped household consumption. GDP declined a seasonally and calendar adjusted 0.3% from the Q4 of last year, when the economy shrank 0.5%. The initial reading for the Q1 was nil growth. Two consecutive quarters of output contraction is defined as a technical recession. High inflation continued to be a burden on the biggest euro area economy and mainly hurt household spending. (RTT)

UK: Soaring UK borrowing costs force lenders to hike mortgage rates. British lenders including Nationwide scrambled to raise mortgage rates and smaller players temporarily withdrew products, in response to soaring market interest rates following unexpectedly strong inflation data this week. The moves had echoes of a more severe temporary shutdown of the mortgage market in late Sept and early Oct last year. (Reuters)

UK: Retailers expect sales to stabilize in June. After a decline, UK retailers expect sales to stabilize in June on improving consumer sentiment. The retail sales balance fell to -10% in May from +5% in April. However, retailers expect sales to stabilize next month. Around 18% of retailers reported disappointing sales for the time of year. However, only a net 9% expected sales to fall short of seasonal norms to a lesser extent next month. Price growth remained near multi-decade highs in May. The corresponding balance came in at 77% compared to 80% in Feb. (RTT)

Indonesia: Central bank keeps rate unchanged. Indonesia's central bank left its benchmark rate unchanged for the fourth consecutive meeting, as inflation moved closer to the target. The Board of Governors of Bank Indonesia, led by Governor Perry Warjiyo, decided to hold the seven-day reverse repo rate at 5.75%. The deposit facility rate was retained at 5.0% and the lending facility rate at 6.5%. The central bank has hiked the benchmark rate by 225bps in the current tightening cycle that began in Aug 2022. (RTT)

Markets

Focus Point: To continue expanding optical biz domestically, eyes more overseas markets for F&B. Malaysia continues to be the core market for Focus Point Holdings' optical business. While expanding its optical business domestically, the optical retail chain store operator said it is planning to grow its food and beverages (F&B) segment overseas. For optical, the Group has no plan for the next three years. For F&B, the Group has plan as they have operations in Brunei and the Philippines currently. (The Edge)

Sapura Group: Velum Labs launches cyber intelligence solution V-Dark. Sapura Group’s cyber security arm, Velum Labs SB, has launched V-Dark, a cyber intelligence solution to position Malaysia as a global hub for world-class cyber technologies. V Dark, which is designed to counter cyber threats posed by advanced persistent threats groups, organised financial crime syndicates and other adversarial targeting enterprises, can be used by critical players in industries such as commercial banking, defence, insurance, aviation, energy and telecommunications in strengthening their cyber resilience. (The Edge)

Revenue Group: Danny Leong relinquishes CEO role. Danny Leong Kah Chern has relinquished his role as Revenue Group's group CEO, after assuming the position for about five months. He will continue to serve the group as its advisor effective May 24. Kah Chern had submitted his resignation letter in March, but the group announced at that time that its board had asked him to reconsider his decision. Kah Chern is a former CEO of Cuscapi Bhd and GHL Systems Bhd. (The Edge)

I-Berhad: Hopeful about the company's growth prospects. I Berhad, which saw its net profit increase by 61.61 per cent to RM8.33m in the fourth quarter ended Dec 31, 2022, is betting on its property investment, as well as its leisure and hospitality business areas, for rapid growth this year. Chairman Tan Sri Lim Kim Hong said that the reopening of international borders, and China's openness, will benefit the local economy. Lim said that the prospects are better than predicted, and the company is certain that the local economy would improve, attracting more tourists and investment. (BTimes)

MUI Properties: Appoints Leanne Goh as director. MUI Properties has appointed Datuk Leanne Goh as an independent and non-executive director effective May 23. Goh built her career in the Star Media Group (SMG) and became the editor-in-chief in 2015. Currently, Goh has a consultancy company providing content development, branding and marketing services as well as strategic planning for education and other clients. Meanwhile, MUI Properties also appointed Yoong Swie Leong as a member of the remuneration committee. Members of the committee are Goh, Abdul Rashid Ismail and Yoong. (StarBiz)

IPO: Niro Ceramic en route for Main Board listing by 2024. The Niro Ceramic Group plans to launch its IPO in mid-2024 and utilise the proceeds raised for the company's strategic initiatives to the bottom line and accelerate sales growth. Without disclosing the amount the company plans to raise, managing director Ian Kok said the tile maker and distributor is looking forward to being listed on the main board as they foresee valuable long-term value for Niro Ceramic's trajectory. The capital generated from the IPO will primarily be directed towards key areas such as distribution, marketing, and product development. (BTimes)

Market Update

The FBM KLCI might end the week with a positive note after a blowout earnings from chipmaker Nvidia pushed US equities higher on Thursday, overshadowing concerns about a debt-ceiling deal and higher interest rates. Wall Street’s tech-heavy Nasdaq Composite jumped 1.7% while the benchmark S&P 500 rose 0.9%, rebounding from losses earlier in the week. Both were bolstered by Nvidia, which rose 24.4%, lifting the company’s market capitalisation by $184bn. The group’s quarterly earnings on Wednesday far exceeded analysts’ expectations, propelled by soaring demand for chips used in generative artificial intelligence systems. Microsoft and Alphabet, which are heavily involved in AI development, rose 3.8% and 2.2% respectively. European markets ended mostly lower with London’s FTSE 100 gave away 0.7 %, making it the biggest faller in Europe among big markets. Meanwhile, France’s CAC 40 lost 0.33% and Germany's DAX shed 0.31%.

Back home, late selling in plantation counters dragged Bursa Malaysia to end at an intraday low on Thursday in line with the mostly downbeat performance of its regional peers. At the closing bell, the FBM KLCI fell 7.14 points or 0.51% to close at 1,402.48 compared with 1,409.62 at Wednesday's close. In the region, Hong Kong’s Hang Seng index shed 1.9 % while China’s benchmark CSI 300 index fell 0.2 %. Japan’s Topix dipped 0.3 %.

Source: PublicInvest Research - 26 May 2023