Economy

US: Leading economic index declines for fourteenth straight month in May. A reading on leading US economic indicators decreased in line with economist estimates in the month of May. The leading economic index slid by 0.7% in May after falling by 0.6%. The continued slump matched expectations. The US LEI continued to fall in May as a result of deterioration in the gauges of consumer expectations for business conditions, ISM® New Orders Index, a negative yield spread, and worsening credit conditions. (RTT)

US: Weekly jobless claims remain at highest level since Oct 2021. First-time claims for US unemployment benefits were unchanged in the week ended June 17th. The report said initial jobless claims came in at 264,000, unchanged from the previous week's revised level. Economists had expected jobless claims to edge down to 260,000 from the 262,000 originally reported for the previous week. (RTT)

UK: BoE surprises with 50bps rate hike. Persistence of inflation convinced Bank of England policymakers to act more aggressively and signalled more tightening even as higher interest rates hit mortgage holders hard and the surprise move raised market expectations regarding the level at which the UK bank rate would peak. The Monetary Policy Committee, led by Governor Andrew Bailey, decided to increase the bank rate by a bigger-than-expected 50bps. Markets had forecast only a quarter point hike. (RTT)

EU: French manufacturing confidence strengthens in June. French manufacturers' confidence unexpectedly improved in June underpinned by the strength in the past and future production as well as the increase in order books. The manufacturing sentiment index rose to 101 in June from a 26-month low of 99 in May. The reading was forecast to remain unchanged at 99. The score also stayed above its long-term average of 100. (RTT)

Japan: Overall inflation climbs 3.2% on year in May. Overall consumer prices in Japan were up 3.2% on year in May. That was well shy of estimates for 4.1% and down from 3.5% in April. On a monthly basis, consumer prices rose 0.1% - slowing from 0.6% a month earlier. Core CPI, which excludes the volatile prices of food, also rose an annual 3% - exceeding expectations for an increase of 3.2% and down from 3.4% in the previous month. (RTT)

Australia: Manufacturing PMI improves to 48.6 in June - Judo Bank. The manufacturing sector in Australia continued to contract in June, albeit at a slower pace with a manufacturing PMI score of 48.6. That's up from 48.4 in May, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction. Production shrank at the slowest pace since Feb amid improvements in supply conditions. Better vendor performance enabled Australian goods producers to clear their backlogs at the fastest rate in just over three years. (RTT)

Markets

Genting Malaysia (Outperform, TP: RM3.10): Miami land deal called off, open to new bids (Bursa)

Comment: Following the announcement made in April on its proposed land sale to Smart City Miami that was valued at USD1.23bn, Genting Malaysia notified that the purchaser has ended its bid. The purchaser has requested for extension of the exclusivity period and sought amendments to the commercial terms of the sale and purchase agreement but was not granted. The group said it will review other opportunities to close the sale of the Miami land. No change to our core earnings forecast as the proceeds were intended to be utilized for general corporate and investment purposes, which we have yet to factor into our projection .

Pharmaniaga: Private placement part of fund-raising exercise, not regularisation plan. Pharmaniaga today explained that the proposed private placement announced last week is part of an interim fund-raising exercise and not part of the proposed regularisation plan to be submitted to Bursa Malaysia Securities. (Bernama)

TT Vision: Subsidiary to supply solar cell inspection and sorting equipment for RM26.6m. TT Vision Holdings Bhd’s wholly owned subsidiary, TT Vision Technologies SB, has accepted purchase orders for its solar cell inspection and sorting equipment from a global leader in solar innovation for approximately RM26.6m. It said the contract is expected to be fulfilled within six to 10 months and is expected to contribute positively towards the future earnings and net assets of the group for the financial year ending 31 Dec, 2023 and 2024. (Bernama)

AHB: Plans to venture into building materials, machineries after property development. After recently diversifying into property development, office furniture maker AHB Holdings has proposed to also diversify into the trading of building materials, machineries and equipment in view of rising costs in the increasingly competitive furniture business. (The Edge)

Aneka Jaringan: Bags RM168m substructure jobs for service apartment, mall project in Taman OUG. Aneka Jaringan Holdings has secured two contracts with a combined value of RM168m to undertake substructure works for a service apartment and mall project in Taman Overseas Union, KL. Aneka Jaringan said its wholly-owned subsidiary Aneka Jaringan SB has accepted two letter of awards from Overseas Union Garden SB (OUGSB) on June 20 and 22. (The Edge)

Glomac: Anticipates continuing challenges in FY24. Sunsuria’s unit is acquiring 80% equity interest in property developer Mayer Land SB (MLSB) for RM800,000 that will enable it to participate in two Rumah Selangorku projects and a mixed development in Penang that have been awarded to MLSB. The group’s wholly owned subsidiary Sunsuria Symphony SB (SSSB) will be acquiring MLSB’s shares through internally-generated funds from Ong Thuan Bok and Kho Weng Kooi — 640,000 shares (64%) from Ong and 160,000 shares (16%) from Kho. Ong will be left with 16% in MLSB following Sunsuria's entrance, while Kho will have 4%. (The Edge)

Market Update

The FBM KLCI might open flat today after US government bonds came under selling pressure on Thursday, as the Federal Reserve chair warned interest rates will need to rise further for inflation to slow to its 2% target. The two-year Treasury yield, which is sensitive to changes in interest rate expectations, rose as much as 0.1 percentage point to top 4.8% — its highest point since early March. It was later trading up 0.08 percentage points on the day. The 10-year yield rose 0.07 percentage points to 3.8%. US Department of Labour data on Thursday showed the number of new applications for unemployment aid last week remained unchanged from the previous seven days, offering the central bank more leeway to take rates higher. In equity markets, Wall Street’s technology-heavy Nasdaq Composite closed up 1%, recovering after three successive days of losses. The benchmark S&P 500 was up 0.4%. European stocks traded lower after several central banks lifted interest rates in the region more than investors had expected. The region-wide Stoxx Europe 600 gauge ended the day 0.5% lower, while France’s CAC 40 and London’s FTSE 100 both dipped 0.8%. The moves came after the Bank of England lifted its rate by a more than expected 0.5 percentage points to 5%, a day after official data pointed to UK inflation remaining higher than forecast.

Back home, Bursa Malaysia extended gains for the third consecutive day on Thursday with the key index putting on 0.09%, supported by bargain hunting in selected heavyweights led by financial services and telecommunications stocks. At the closing bell, the FBM KLCI pared most of its earlier gains to close at 1,394.67, up 1.22 points, from 1,393.45 at Wednesday’s close. Trading was muted in Asia as stock exchanges in China and Hong Kong are closed on Thursday and Friday for the Dragon Boat Festival.

Source: PublicInvest Research - 23 Jun 2023