Economy

US: Labour market remains resilient as job openings climb, layoffs drop. US job openings unexpectedly rose in April and data for the prior month was revised higher, pointing to persistent strength in the labour market that could compel the Federal Reserve to raise interest rates again in June. The Job Openings and Labour Turnover Survey, from the Labour Department also showed layoffs declined significantly last month. (Reuters)

US: Debt ceiling bill advances toward tight vote in House. A bill to suspend the US government's USD31.4trn debt ceiling and avert a disastrous default cleared a key procedural hurdle in the House of Representatives on Wednesday, setting the stage for a vote on the bipartisan debt deal itself. Republicans control the House by a narrow 222-213 majority. But the deal will need support from both Speaker Kevin McCarthy's Republicans and President Joe Biden's Democrats to pass, as members of both parties object to significant parts of the legislation. (Reuters)

EU: German unemployment rises less than expected. Germany's unemployment increased less than expected in May despite the economy entering a technical recession in the face of high inflation and tight monetary policy. The number of unemployed persons increased 9,000 in May, the Federal Labour Agency reported. This followed an increase of 23,000 in April and 18,000 in March. Economists had forecast unemployment to increase 15,000. The unemployment rate held steady at 5.6% in May, in line with expectations. Despite the weak economy, the labour market is stable overall. Employment growth continues, but it is losing momentum. (RTT)

Indian: Economy expands 6.1%, more than forecast. India's economy grew at a faster than expected pace in the three months to March 2023, preliminary data from the statistics ministry showed. GDP grew 6.1% YoY, following a 4.5% growth in the previous three month period. Economists had forecast growth of 5.0%. In the corresponding period last year, the economy had grown 4.0%. The gross value added increased 7.0% YoY in the first quarter. The ministry said the real GDP growth for year 2022-23 is estimated at 7.2% compared to 9.1% in 2021-22. (RTT)

Australia: Manufacturing PMI improves to 48.4 in May. The manufacturing sector in Australia continued to contract in May, albeit at a slower rate, the latest survey from Judo Bank revealed with a manufacturing PMI score of 48.4. That's up from 48.0, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction. Sales for Australian manufactured goods fell again midway into the second quarter. Tighter global monetary policies and weak underlying demand undermined buying interest, according to panellists. (RTT)

Thailand: Central Bank raises key rate further to 2.00%. Thailand's central bank raised its key interest rate for the sixth straight meeting citing high inflation risks in the near future as the economy continued to expand further on the back of strong inbound tourism. The Monetary Policy Committee of the Bank of Thailand unanimously decided to lift the policy rate by 25 basis points to 2.00%. Moreover, this was the highest rate in eight years. (RTT)

Markets

Duopharma: Another APPL contract extension likely, says Duopharma MD . Duopharma Biotech is likely to get another six month contract extension for the new approved products list (APPL) to supply pharmaceutical or non-pharmaceutical products to government hospitals and clinics, its managing director (MD) Leonard Ariff Abdul Shatar said. The new contract extension will be awarded at the end of June, prior to the expiry of the existing contract, he told reporters after the pharmaceutical company’s annual general meeting. Notably, the APPL contract contributes about 20% to the group's revenue per year. (The Edge)

Kitacon: Subsidiary bags RM80.95m construction job from Boustead Balau . Kumpulan Kitacon’s wholly-owned subsidiary, Kitacon SB, has accepted a contract from Boustead Balau SB for the proposed construction and completion of 274 units of double storey houses and other associated works in Semenyih, Selangor worth RM81.0m. "The contract shall commence on Aug 1, 2023 and is to be completed within 32 months from the commencement date,” Kitacon said. It said the contract would not have any effect on the share capital and shareholding structure of Kitacon but is expected to contribute positively to the earnings and net assets per share for the financial years ending Dec 31, 2023 onwards until the expiry of the contract. (Bernama)

Samchem: In early M&A talks with several parties Samchem Holdings Bhd is in preliminary discussions with several companies to expand its chemical businesses through mergers and acquisitions (M&As), according to CEO Eugene Chong Wee Yip, as a number of small and medium enterprises (SMEs) are looking to leave the industry. (The Edge)

Datasonic: Receives RM9.94m contract extension from Home Ministry. Datasonic Group announced that it has received and accepted the Letter of Extension (LOE) dated May 29, 2023 from the Home Ministry (KDN) for an additional contract value of RM9.94m. The LOE is in regards to the comprehensive maintenance services of card personalisation centres at the National Registration Department for a period of six months commencing from June 1, 2023 to Nov 30, 2023. The original contract was valued at RM39.8m and after including the extension of RM9.9m, it would bring the total contract value to RM49.7m, including a 6% sales and service tax. (The Edge)

YNH Property: Two directors resign from YNH Property . YNH Property independent and non-executive directors Ching Nye Mi @ Chieng Ngie Chay, 75, and Ding Ming Hea, 59, have resigned from the property developer’s board, effective May 31. Ching and Ding have served the company for over 12 years. However, the company did not disclose the reason behind their resignations. Note that both of them are also the independent and non-executive director of YNH’s sister company Rapid Synergy Bhd, its 2021’s annual report showed. (The Edge)

Ageson: Still searching for auditors; aims to submit annual report by Oct. Ageson which is in the midst of finalising the appointment of new auditors, targets to issue its annual report for the financial year ended Dec 31, 2022 (FY2022) by Oct. “The company would make a separate announcement on the appointment of the new auditors upon the appointment is confirmed,” said the builder-cum-property developer. (The Edge)

Market Update

The FBM KLCI might open lower today after US stocks fell on Wednesday as the country’s debt ceiling bill was due to face its first test in Congress, and investors adjusted bets on the Federal Reserve again raising interest rates in light of strong labour market data and comments from policymakers. Wall Street’s benchmark S&P 500 and the tech-heavy Nasdaq Composite each closed 0.6% lower. The moves came after official data once again highlighted the resilience of the US labour market, with the number of job vacancies unexpectedly rising in April. Labour market tightness and stubbornly high recent inflation data have fuelled expectations of further interest rate rises from the US central bank. The likelihood of a June increase, as implied by futures markets, rose from less than zero at the start of May to almost 70% early on Wednesday. European stocks, which were already trading lower following poor economic data from China, extended losses as Wall Street opened. The pan-European Stoxx 600 closed 1.1% lower, Germany’s Dax lost 1.5%, France’s Cac 40 fell 1.5% and London’s FTSE 100 slipped 1%.

Back home, Bursa Malaysia and regional bourses sank into the red on Wednesday, amid uncertainties over whether the US Congress would resolve the debt ceiling impasse later in the day. The FBM KLCI, the domestic barometer index, ended the day 9.79 points or 0.70% lower at 1,387.12, from 1,396.91 at Tuesday’s close. In the region, China’s CSI 300 index fell 1% after the country’s statistics bureau reported a contraction in manufacturing activity in May, defying analysts who had expected an expansion, and further damping traders’ hopes for a swift post-coronavirus pandemic recovery. Hong Kong’s Hang Seng China Enterprises index dropped 1.9%, bringing the benchmark more than 20% lower from its recent peak in January and into bear market territory. Elsewhere, Hang Seng lost 1.94% while Japan's Nikkei 225 gave away 1.41%.

Source: PublicInvest Research - 1 Jun 2023