Economy

US: Consumer sentiment improves much more than expected in June. US consumer sentiment has improved by much more than expected in the month of June. The University of Michigan said is consumer sentiment index climbed to 63.9 in June from 59.2 in May. Economists had expected in the index to inch up to 60.0. Consumer sentiment lifted 8% in June, reaching its highest level in four months, reflecting greater optimism as inflation eased and policymakers resolved the debt ceiling crisis. As it stands, though, sentiment remains low by historical standards as income expectations softene. A majority of consumers still expect difficult times in the economy over the next year. The bigger than expected increase by the headline index came as the current economic conditions index rose to 68.0 in June from 64.9 in May, while the index of consumer expectations jumped to 61.3 in June from 55.4 in May. (RTT)

US and China: Blinken meets chinese foreign minister Qin Gang on high-stakes diplomatic trip to Beijing. The trip by Blinken makes him the highest-level American official to visit China since Joe Biden became US president and the first US secretary of state to make the trip in nearly five years. Blinken had “candid, substantive, and constructive talks” with Qin. He raised concerns as well as “opportunities to explore cooperation,” and he emphasized the importance of open communication, according to the statement. The Secretary made clear that the United States will always stand up for the interests and values of the American people and work with its allies and partners to advance our vision for a world that is free, open, and upholds the international rules-based order. (CNBC)

Eurozone: Inflation eases as estimated. Eurozone inflation slowed to a 15-month low in May due to the fall in energy prices. The harmonized index of consumer prices increased 6.1% YoY in May, weaker than the 7.0% rise in April. This was the lowest rate since Feb 2022, when inflation was 5.9%. Core inflation that excludes energy, food, alcohol and tobacco prices, fell to 5.3% in May from 5.6% in the previous month. The core rate also matched the estimate published on June 1. The European Central Bank had raised its three key interest rates by a quarter basis points as policymakers assessed that despite some slowing, inflation is likely to remain "too high for too long". The HICP remained flat in May from April. (RTT)

UK: London home asking prices slide as surging rates stretch buyers. Homesellers in London cut prices more than any UK region in June as surging borrowing costs stretched affordability in the country’s most expensive property market. Asking prices in the capital slid 1.6% from May. Nationally, prices were broadly unchanged. Mortgage rates have jumped this month amid bets that the Bank of England will have to keep raising interest rates to bear down on an inflation rate that remains more than four times the 2% target. With markets pricing in the possibility that rates could hit 6%, a level not seen since 2001, experts are warning of the risk of a deepening downturn. (Bloomberg)

China: Shanghai sellers slash prices to lowest since end of 2022. Chinese homeowners are losing conviction in their decades long belief that property is a reliable store of wealth, undermining even coveted markets like Shanghai and adding pressure on authorities to find new sources of economic growth. Asking prices in the financial hub have slumped for three straight months, falling to the lowest level since before China emerged from Covid lockdowns at the end of last year. (Bloomberg)

Japan: BoJ retains ultra-loose monetary policy. Despite rising inflationary pressures, the Bank of Japan continued to maintain its ultra-loose monetary policy in contrast to the stance of its hawkish peers. At the second rate-setting meeting chaired by new Governor Kazuo Ueda on Friday, policymakers unanimously voted to maintain a negative interest rate of 0.1% on current accounts that financial institutions maintain at the central bank. (RTT)

New Zealand: Services sector accelerates in May. The services sector in New Zealand picked up steam in May, with a Performance of Services Index score of 53.3. That's up from the upwardly revised 50.1 reading in April (originally 49.8) and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. Individually, all five sectors expanded, including sales (52.0), employment (52.6), new orders (55.4), stocks (56.8) and supplier deliveries (51.1). (RTT)

Markets

KIP REIT: To acquire KIPmall for RM80m, proposes private placement. KIP Real Estate Investment Trust (REIT) plans to acquire KIPMall Kota Warisan for RM80m, while simultaneously proposing to undertake a private placement to raise gross proceeds of approximately RM10m to partially fund the proposed acquisition. Pacific Trustees Bhd, acted as the trustee for and on behalf of KIP REIT had entered into a conditional sale and purchase agreement with Cahaya Serijaya SB for the proposed acquisition of KIPMall Kota Warisan. As for the private placement, the issue price will be determined later by the board. (Bernama)

UWC: Acquires two companies for expansion. UWC Bhd has agreed to buy MCE Technologies SB MCT Thailand Co Ltd, wholly owned subsidiaries of Meta Health Ltd, for a price which is to be determined. UWC said the purchase will be funded with internal resources. The two proposed subsidiaries are primarily engaged in metal stamping as well as manufacturing of tools and fixtures in Malaysia and Thailand. UWC noted the acquisition will help to ramp up its production capacity while offering geographical diversification in terms of manufacturing sites. (StarBiz)

CMS: Fails to get court order to stop Sesco from terminating power supply to its phosphate complex. Cahaya Mata Sarawak (CMS) has failed to secure a court injunction to restrain Syarikat Sesco Bhd (Sesco) from terminating electricity supply to its phosphate production facility in Sarawak, in its ongoing dispute with Sesco over a power purchase agreement inked between them in 2019 that has been referred to arbitration. CMS' phosphate production is housed under its subsidiary Cahya Mata Phosphates Industries SB (Phosphates). (The Edge)

Bintai Kinden: Calls on profit guarantee from vendor as newly acquired Johnson Medical reports a loss. PN17 group Bintai Kinden Corp, which acquired Johnson Medical International Sdn Bhd for RM50m via a cash and share deal in 2021, has decided to call on the profit guarantee provided by the vendor after the unit reported a loss based on its unaudited results for the financial year ended 31 March 2023. (The Edge)

LKL International: Appointed distributor of Meditop products in Peninsular Malaysia. LKL International Bhd’s unit Medik Gen SB has entered into a distributorship agreement with Meditop Corporation (Malaysia) SB to distribute Meditop’s products within the Peninsular Malaysia region. Medik Gen is to carry out the distribution of “TOP”-branded medical devices, and this shall be effective from 8 June 2023 to 20 Nov 2023. (The Edge)

Jentayu Sustainables: Hospital received nod from MOH to reopen. Jentayu Sustainables Bhd its healthcare operation Ohana Specialist Hospital had received approval from the Ministry of Health (MOH) to reopen, after a little over two months of closure. The paediatrics and obstetrics and gynaecology specialist hospital, which was acquired by Jentayu in September last year, had its licence revoked in April due to non-compliance with mandated operating procedures. “The company has taken substantial steps to revamp its operational procedures, instilling a more robust governance system, and ensuring an unwavering compliance with the country’s highest healthcare standards, in line with the guidance from the MOH,” said Jentayu. Jentayu acquired the hospital’s operator Ultimate Forte SB for RM18m last year. (The Edge)

Market Update

The FBM KLCI might open higher after US stocks recorded their biggest weekly gain since March as investors hoped the Federal Reserve’s aggressive campaign of interest rate rises would soon end. The S&P 500 ended 0.4% lower after oscillating between gains and losses on Friday afternoon, but was up 2.6% over the past five sessions, its biggest weekly gain since late March. The benchmark index had risen for six consecutive sessions by Thursday’s close for its longest winning streak since November 2021. The Nasdaq Composite dipped 0.7%, held back as heavyweight technology stocks Apple and Microsoft retreated from record highs, down 0.6% and 1.7%, respectively. The index gained 3.2% this week, the biggest advance since mid-March. Both indices have climbed this year on hopes that the of an end to the Fed’s historic policy to raise rates to tame inflation, pushing them into bull market territory. A resolution in early June to the weeks-long political stand-off over the US debt ceiling has also played into this month’s relief rally. The Fed this week paused its campaign of interest rate rises for the first time in more than a year, even as it suggested there would be further interest rate increases to come. Weak economic data on Thursday added to investors’ hopes that the central bank might need to make fewer rate increases as the economy cools. Meanwhile, Europe’s region-wide Stoxx 600 ended the day 0.5% higher, while France’s Cac 40 gained 1.3% and London’s FTSE 100 was up 0.2%.

Back home, late buying lifted Bursa Malaysia to end at its intraday high on Friday, in sync with the upbeat performance of regional bourses, as market sentiment turned positive, fuelling investors' risk appetite. At the closing bell, the FBM KLCI had risen 6.88 points, or 0.50%, to end at 1,388.61, from 1,381.73 at Thursday’s close. The regional markets finished broadly higher on Friday with shares in Hong Kong leading the region. The Hang Seng added 1.07% while Japan's Nikkei 225 rose 0.66% and China's Shanghai Composite tacked on 0.63%.

Source: PublicInvest Research - 19 Jun 2023