Economy

US: Treasury yields inch lower as investors look ahead to economic reports, Fed speaker comments. Treasury yields moved slightly lower as Wall Street kicked off a light week for economic data and awaited commentary from Fed speakers. The on the 10-year Treasury lost about 2bps to trade at 3.715%. The 2- year Treasury was trading 2bps lower at 4.729%. Yields and prices move in opposite directions. (CNBC)

US: Amid falling inflation, recent signs show fewer Americans are living paycheck to paycheck. After leaning heavily on their paychecks as prices spiked over the last year, households are finally feeling some relief. As of May, 57% of consumers said they were living paycheck to paycheck, down from 61% the month earlier, according to a new LendingClub report. Workers last month saw their buying power improve for the first time in two years, as inflation eased off the pandemic-era peak. (CNBC)

EU: Poland registers historic low unemployment rate in May 2023. Poland’s government has declared a record-breaking low unemployment rate for May 2023. Announced by government spokesman Piotr Müller in response to the data revealed by the Central Statistical Office (GUS), Poland’s unemployment dipped by 0.1 ppts from the previous month, hitting a historic low of 5.1%. (TVPWorld)

UK: Supermarket Sainsbury's invests 15 mln stg in price cuts. British supermarket Sainsbury’s would invest GBP15m (USD19.1m) in cutting prices on basic items, to stay competitive and keep cost conscious shoppers onside during the country’s cost-of-living crisis. Prime Minister Rishi Sunak has pledged to halve inflation this year but his efforts are being hampered by persistently high food inflation, which was running at 17% in May. (Reuters)

Japan: Leading index revised down. Japan's leading index remained stable in April, revised from an improvement estimated initially. The leading index, which measures future economic activity, came in at 96.8 in April, the same reading as in March. In the flash report, the score for April was 97.6, and the March score was revised down from 96.9. The coincident index that measures the current economic situation improved somewhat to 97.3 in April from 97.2 in the previous month. (RTT)

Taiwan: Industrial production down again in May. Taiwan's industrial production index recorded a 12th consecutive month of year-on-year decline in May, dipping by 15.73%, according to the Ministry of Economic Affairs (MOEA). The index measuring industrial production in Taiwan fell to 85.03 in May, but a drop in inventories, rise in end-user demand, and the launch of new electronics products were expected to bring improvement in the fourth quarter of the year, according to the MOEA. (Focus Taiwan)

Singapore: Faces higher risk of technical recession as factory output slumps again. Singapore’s manufacturing output contracted for an eighth straight month in May. The slump was deeper than expected, putting the economy at higher risk of a technical recession. Factory output last month fell 10.8% from a year ago, the first double-digit contraction since Nov 2019 when it dropped 12.3%. (The Straits Times)

Markets

Malakoff (Outperform, TP: RM0.95): Algeria-based associate loses appeal against RM130m penalty. Malakoff Corporation (MCB) said today that its Algeria-based associate company Almiyah Attilemcania SPA's (AAS) appeal against the Court of Appeal of Tlemcen's decision to impose a penalty of DZD3.9bn (RM130m), for alleged breach of foreign exchange regulations, has been dismissed by the Supreme Court of the land. MCB is seeking legal advice from its solicitors in Algeria on the implications, if any, of the judgment for MCB. MCB holds an indirect effective interest of 35.7 per cent in AAS, via Tlemcen Desalination Investment Company SAS, a 70% owned indirect subsidiary of Malakoff International Limited, which in turn is wholly owned by MCB. (BTimes)

SCIB: Three directors resign ahead of EGM to vote on their removal. Three directors of civil engineering group Sarawak Consolidated Industries (SCIB) resigned on June 26, all citing “personal reason and other commitments” as the reason for their exit. The departure of independent and non-executive directors Mohd Shakir Shahimi, Nuraiman Shaiful Annuar and Noor Azri Noor Azerai was announced by SCIB two days prior to the EGM on June 28, which is convened to vote on the removal of the three board members. (The Edge)

Fitters Diversified: Secures RM21.5m contract in Kapar. Fitters Diversified has won a fire protection services construction contract worth RM21.5m in Kapar, Klang. The group was awarded the contract by Syarikat Pembenaan Yeoh Tiong Lay SB. The project which is expected to be completed by May 13, 2024, will contribute positively to its future earnings. Fitters Diversified is involved in fire services, property development and construction, as well as renewable energy and waste-to-energy. (The Edge)

Rapid Synergy: To sell property in Ipoh for RM25m. Rapid Synergy is disposing of a property in Ipoh for RM25m to fund its working capital and repay bank borrowings. The property, which is located at Giant Hypermarket Bercham, has a net book value of RM23.09m, said the precision tools maker and property investor, adding that it expects to incur a gain of about RM2.3m from the disposal. The sale to Intra Megamas SB is conditional upon the approval of the Perak state authority. (The Edge)

DGB Asia: Plans private placement to raise up to RM5.9m for hotel business. DGB Asia plans to raise up to RM5.94m through a private placement, after undertaking a consolidation of every 10 shares into one share. The placement shares are intended to be offered to independent third party investors who will be identified. DGB Asia is looking at raising gross proceeds of up to 35.06% of its issued shares, or 66m shares. The proceeds of the placement will be mainly used for working capital for Kimpton Da An Hotel in Taiwan, a premium boutique hotel held through its 87.2%-owned subsidiary CLI Investment Ltd. (The Edge)

VSTECS: Inks deal to distribute Qualcomm's laptops and tablets in Malaysia. VSTECS has signed an agreement with Qualcomm Technologies Inc to distribute Qualcomm's "Windows on Snapdragon" laptops and tablets in Malaysia. The company will leverage its network of 4,600 channel partners across the country to provide vast accessibility, and drive the successful distribution and marketing of the products. (The Edge)

Market Update

The FBM KLCI might open lower today after global markets took on a tentative tone on Monday as investors struggled to gauge the impact of the weekend’s shortlived armed revolt in Russia and continued to contemplate a general weakening economic outlook. Wall Street’s benchmark S&P 500 closed 0.4% lower, while the tech-heavy Nasdaq Composite ceded 1.2%. The moves echoed declines elsewhere, with the pan-European Stoxx 600 falling 0.1%, dragged down by a defence sector sell-off. Germany’s Dax ended 0.1% lower on Monday after a closely watched survey showed that business confidence in Europe’s largest economy declined for the second successive month in June, hitting its lowest level since the end of 2022.

Back home, Bursa Malaysia gave up earlier gains to end marginally lower on Monday, weighed down by persistent selling in heavyweights, particularly financial services stocks, in tandem with the weakness in most regional peers. At the closing bell, the FBM KLCI fell 1.01 points or 0.07% to 1,389.88 from 1,390.89 at last Friday’s close. Equity markets in the reigon kicked off the weak mood, with Japan’s Topix closing down 0.2%, Hong Kong’s Hang Seng off 0.5% and China’s CSI 300 shedding 1.4%. Australia’s S&P/ASX 200 index fell 0.3% after analysts at Goldman Sachs downgraded the country’s equities to underweight because of dimming prospects for Chinese economic growth.

Source: PublicInvest Research - 27 Jun 2023