Economy

US: Consumer confidence dips to six-month low, labour market views soften. US consumer confidence slipped to a six month low in May as Americans' assessment of the labour market softened, but more households planned to purchase motor vehicles and other big-ticket items over the next six months, which could support economic growth this quarter. The ebb in confidence reported by the Conference Board was concentrated among consumers aged 55 years and older, as well as among households with annual incomes in the USD50,000-USD99,000 range. Consumers expected inflation to stabilize at higher levels over the next year. (Reuters)

US: Monthly home prices increase in March, surveys show. US single-family home prices increased solidly on a monthly basis in March, boosted by a persistent shortage of properties on the market, though the overall trend continued to point to a slowdown in house price inflation. The S&P CoreLogic Case-Shiller national home price index, covering all nine US census divisions, climbed 0.4% in March after adjusting for seasonal fluctuations. That followed a 0.3% rise in Feb. (Reuters)

US: Fed funds futures see rate hike likely in June. Fed funds futures traders now see the Federal Reserve as more likely to hike interest rates next month than leave them unchanged, as economic data beats expectations and lawmakers appear to have reached a deal to raise the debt ceiling. The market is now pricing for a 63% chance of a 25 basis point increase at the Fed’s June 13-14 meeting. Traders have also almost priced out all the rate cuts they had previously expected in the second half of this year, with only 10 basis points in cuts now priced in for Dec. (Reuters)

EU: Eurozone economic confidence hits 6-month low. Adding to concerns over growth prospects, euro area economic sentiment deteriorated to the lowest in six months in May reflecting lower confidence in industry, services and retail trade. The economic sentiment index fell to 96.5 from 99.0 in April, survey results from the European Commission showed. This was the lowest reading since Nov and also below economists' forecast of 98.9. The overall fall in the economic confidence was due to the deterioration in confidence in industry, construction, services and, particularly, retail trade. Meanwhile, the consumer confidence continued to recover, albeit at a slower pace. (RTT)

UK: Business confidence dips in May, inflation pressures persist. Sentiment among British businesses fell for the first time in three months in May as firms were less optimistic about the economy and their trading prospects despite some signs of resilience in the economy. The Lloyds Bank Business Barometer fell to 28% in May from 33% in April, its first decline since Feb, but in line with the survey’s long-term average. (Reuters)

Japan: Factory output drops on hit from global slowdown. Japan’s factory output declined for the first time in three months in April amid a global slowdown, likely weighing on the country’s recovering economy. Industrial production fell 0.4% from the previous month after two consecutive months of increases, according to the industry ministry. Economists had forecast a 1.4% rise. Results likely reflected impact from the global slowdown, overshadowing the positive effects from improving supply chains. The weakness in domestic production is a potential drag for the Japanese economy, which has recently shown some signs of recovery. (Bloomberg)

South Korea: Industrial production slumps in April. Industrial production in South Korea was down a seasonally adjusted 1.2% on month in April. That missed expectations for a decline of 0.9% following the upwardly revised 5.3% increase in March (originally 5.1%). On a yearly basis, industrial production sank 8.9%, again missing forecasts for a fall of 7.3% after dropping 7.6% in the previous month. The bureau also said that retail sales in South Korea were down 2.3% on month versus expectations for a gain of 0.8% following the downwardly revised 0.1% increase a month earlier (originally 0.4%). (RTT)

Australia: RBA is in ‘data-dependent mode’ on interest rates, Governor Says. Australia’s central bank is in “data-dependent mode” when it comes to the prospects for further interest-rate increases, Governor Philip Lowe said, reiterating his determination to do whatever is necessary to bring down inflation. Lowe, speaking to a panel of senators at Parliament House in Canberra, said that further rate hikes from the current 3.85% cash rate will depend on unit labour costs, the global economic outlook, inflation expectations and consumer spending. (Bloomberg)

Markets

Propel Global: Exits PN17 status . Propel Global will no longer be classified as a PN17 company from May 31. Propel said that after the completion of the implementation of its regularisation plan in Oct 2022, it had regularised its financial condition and level of operations, and no longer triggers any of the criteria under PN17 of Bursa's Main Market listing requirements. (The Edge)

Apollo Food: Sells Johor vacant land for RM34m . Apollo Food Holdings’ unit has proposed to dispose of three vacant freehold parcels of land in Johor Bahru, Johor for RM33.9m to Ha Teng Holdings SB. Apollo Food said that it is expected to generate a net gain of RM18.3m through the disposal, some of which it intends to utilise for working capital, the group wrote in its bourse filing. “However, the company has yet to determine the proportion of the proceeds to be used for the working capital at this juncture and the net proceeds from the proposed disposal will be placed in interest bearing accounts with financial institutions in the interim period,” it said. (The Edge)

Pestech: JV bags USD81.8m substation contract in Iraq . Pestech International, through its joint venture with China Energy Engineering Group Tianjin Electric Power Construction Co Ltd (TEPC), has won a contract worth USD81.8m (RM372.8m) from the Iraqi government to build 132kV substations in Baghdad. It said in a bourse filing that the JV had, received consent for the announcement of the contract agreement that was executed between the JV and Iraq's Ministry of Electricity in relation to the acceptance of the JV's bid for the project. (The Edge)

Vestland: Unit bags RM170m design, build contract . Vestland Bhd’s wholly-owned unit, Vestland Resources SB has bagged a RM170.0m design and build contract from Tafi Home & Office SB, bringing the group's total outstanding order book to about RM1.7bn. The construction services provider said the contract is related to a design and build project for small office, home office (SOHO) and retail units in Bandar Subang Jaya, Selangor, and the construction work shall be completed in 34 months. Group MD Datuk Liew Foo Heen said the new contract has boosted the company's outstanding order book to RM1.7bn and added to its year-to-date job wins of RM552.6m, thus providing strong earnings visibility for the group over the next four to five years. (Bernama)

Axis REIT: Sees slew of board changes . Axis Real Estate Investment Trust (Axis REIT) has made a slew of board changes as part of the trust's succession plan. Axis REIT said its executive deputy chairman Datuk Abas Carl Gunnar Abdullah, 64, was promoted to executive chairman effective immediately, while its non-independent director Stephen Tew Peng Hwee@Teoh Peng Hwee, 62, will take over the role of deputy chairman. Axis REIT's 2022 annual report showed that Abas Carl Gunnar, a Norwegian, was appointed to the board on March 15, 2005. Tew joined the board on Oct 25, 2004. (The Edge)

IPO: Edelteq public portion of IPO oversubscribed . Edelteq Holdings Bhd’s public issue of 26.6m shares under its initial public offering (IPO) exercise involving 100 million new shares have been oversubscribed by 152.03 times. Edelteq, which is a provider of engineering support to the chip industry, said 35,292 applications for 4.08bn issue shares were received from the public, representing an overall oversubscription rate of 152.03 times. (StarBiz)

Market Update

The FBM KLCI might open flat today after US stocks crept higher in a choppy Tuesday trading session, as strength in the technology sector was offset by uncertainty about whether lawmakers would pass the debt ceiling bill ahead of the looming June deadline. Following a long weekend, the tech-heavy Nasdaq Composite added 0.3%, finishing higher for the third session in a row. Wall Street’s benchmark S&P 500 swung between gains and losses, ultimately finishing flat. In Europe, the region-wide Stoxx 600 was down 0.9%, the CAC 40 lost 1.3% and the FTSE 100 dropped 1.4%.

Back home, Bursa Malaysia ended at its intraday low on Tuesday amid mounting caution ahead of the US debt ceiling bill vote as early as Wednesday. At the closing bell, the FBM KLCI fell 8.02 points to 1,396.91 from 1,404.93 at Monday’s close. The regional markets finished mostly higher with shares in Japan leading the region. The Nikkei 225 added 0.30% while Hong Kong's Hang Seng rose 0.24% and China's Shanghai Composite tacked on 0.09%.

Source: PublicInvest Research - 31 May 2023