PublicInvest Research

PublicInvest Research Headlines - 28 Jun 2023

PublicInvest
Publish date: Wed, 28 Jun 2023, 09:39 AM
PublicInvest
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

All materials published here are prepared by Public Investment Bank Berhad. For latest offers on Public Invest trading products and news, please refer to: https://www.publicinvestbank.com.my/pbswecos/default.asp

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Economy

US: New home sales jump in May; median house price falls. Sales of new US single-family homes surged to the highest level in nearly 1-1/2 years in May, benefiting from a dearth of previously owned homes available for sale. New home sales jumped 12.2% to a seasonally adjusted annual rate of 763,000 units last month, the highest level since Feb 2022. April’s sales pace was revised down to 680,000 units from the previously reported 683,000. (Reuters)

US: Consumer confidence races to 17-month high; housing market regaining strength. US consumer confidence increased in June to the highest level in nearly 1-1/2 years amid renewed labor market optimism, while business spending appeared to hold up in May, indicating the economy remained on solid footing despite fears of a recession. Hopes that the economy could avoid a downturn in the near-term were also bolstered by signalling a housing market revival was likely underway, with new home sales racing to a 15- month high in May and monthly house prices rising again in April. (Reuters)

US: Core capital goods orders unexpectedly rise in May. New orders for key US manufactured capital goods unexpectedly rose in May, but the prior month’s data was revised down, indicating that businesses remained cautious about new capital investment because of higher borrowing costs and an uncertain economic outlook. (Reuters)

EU: Italy consumer confidence at 16-month high; business confidence falls. Italy's consumer confidence strengthened in June to its strongest level in nearly one-and-a-half years. The consumer sentiment index rose to 108.6 in June from 105.1 in the previous month. Economists had expected the index to increase to 105.5. This was the highest reading since Feb 2022, when it was 112.4. Among components, the economic sentiment of consumers improved the most in June, rising to 127.6 from 119.8 in April. (RTT)

UK: BRC shop price inflation decelerates in June. UK shop price inflation decelerated in June due to the slowdown in food price growth and falling clothing and electrical goods prices. The shop price index posted an annual growth of 8.4% in June, following an increase of 9.0% in May. The rate was also below the three-month average of 8.7%. Food prices logged a double-digit growth of 14.6% in June. (RTT)

UK: BoE set to push UK into recession. The BoE will push the UK into recession by the end of the year in its battle to curb inflation. A year-long recession will hit Britain in the final three months of the year assuming the BoE raises interest rates to 5.75% by Nov. This would be a shallow recession, wiping out just over 1% of economic output, in the run-up to the next election. The risk is the data continues to prove unresponsive to the BoE’s actions and interest rates rise further than our baseline. (Bloomberg)

UK: Supermarket bosses reject profiteering charge. British supermarket bosses rejected allegations they were profiteering through a cost of living crisis, telling lawmakers they were not passing on cost rises in full to customers in order to remain competitive. Soaring food inflation has contributed to the biggest squeeze on living standards in Britain since records began in the 1950s, and has prompted questions about who is responsible for record jumps in grocery bills. (Reuters)

China: Tightens grip on markets after selloff in currency, stocks. The central bank stepped up support for China’s slumping currency by setting the daily reference rate far stronger than estimates. The move came a day after a prominent finance writer and two of his peers were suspended from a social media platform for spreading negative and harmful information about the nation’s faltering stock market. (Bloomberg)

Hong Kong: Trade gap narrows to HKD26.4bn. Hong Kong's trade deficit decreased in May from a year ago, as imports fell faster than exports. The visible trade deficit fell notably to HKD26.4bn from HKD36.7bn in the same month last year. This was also well below April's shortfall of HKD36.6bn. The visible trade gap of HKD26.4bn was equivalent to 7.5% of the value of imports. (RTT)

Taiwan: Jobless rate drops in May. Taiwan's unemployment dropped slightly in May. The unemployment rate fell to a seasonally adjusted 3.50% from 3.56% a month ago. In the same period last year, the rate was 3.72%. On an unadjusted basis, the jobless rate was 3.46% compared to 3.50% in the previous month. Unemployment decreased by 5,000 on month to 412,000. (RTT)

Markets

Al-‘Aqar Healthcare REIT: To renew five lease agreements with KPJ Healthcare’s units. Al-‘Aqar Healthcare REIT (Al-‘Aqar REIT) plans to renew five lease agreements between three- and 15 years with the subsidiaries and associated company of KPJ Healthcare. The rental rate was negotiated between the parties, with total gross rental for the first year of the contractual term amounting to RM14.1m. For the rental rate for the subsequent terms, with each term comprising three years, there will be an incremental increase of 2% for the second and third year of the rental term. (The Edge)

CSH Alliance: To buy Hong Seng MD’s company for RM45.3m to offset debt owed. CSH Alliance has inked the share sale agreement on June 27 and is buying Hong Seng Frontier SB at a discount of 24% to its total adjusted net asset value of RM59.2m as of May 31, 2023, in view of the fact that the acquisition will settle the RM32.5m that HSF owes its wholly owned CSH Network Capital SB, a licensed moneylender. (The Edge)

Power Root: Buys JB land for RM25m. Power Root is buying 116 parcels of freehold residential land, totalling about 771,949 sqft in Johor Baru for RM25m in cash. The proposed acquisition will provide a better generation of potential returns, either by a subsequent disposal or development of the land. (The Edge)

Pestech: Fights to keep performance bond after being terminated from Gemas-JB double-track rail project. Syarikat Pembenaan Yeoh Tiong Lay SB (SPYTL) attempted to call on the performance bond placed by PTech for the project with Maybank Islamic. Pestech has obtained an ex-parte injunction from the High Court to restrain SPYTL from trespassing, using and/or otherwise tampering with machinery belonging to one of its units that had been used for the project previously. (The Edge)

Fajarbaru: Inked MOU with Penang Development Corp to develop medical city in Batu Kawan. The proposed development is on approximately 93 ha of land, and the project has been tentatively named Medi-City Bandar Cassia. Fajarbaru would work with professional consultants and industry experts to conduct a market research and feasibility study and develop a proposal on the technical and financial aspects of the entire development. (The Edge)

Cahya Mata: Unit appeals to COA to stop Sesco from cutting off phosphate plant power supply. Cahya Mata Sarawak has filed an appeal at the Court of Appeal to stop state utilities firm Syarikat Sesco from cutting off the supply of electricity to its phosphate production plant. This follows the dismissal by the Kuching High Court of Phosphates’ application for an interim injunction on June 16. Case management has been fixed for Aug 8. (The Edge)

MyNews: Aims to raise RM29.3m via placement to fund working capital. MyNews Holdings has proposed a placement to raise RM29.3m, with 78% of the proceeds to be used to fund working capital. The proposed placement would involve an issuance of up to 68.2m new shares — representing not more than 10% of the total number of issued shares — to third-party investors to be identified and at an issue price to be determined later. (The Edge)

Market Update

US markets rallied overnight as investors continued to assess economic numbers which showed surprising strength in the economy despite fresh concerns of a looming recession. Durable goods orders rose unexpectedly in May, consumer confidence improved in June while new home sales also beat expectations. Technology-based shares registered the largest gains on the day, helping drive the Nasdaq Composite 1.7% higher. The S&P 500 rose 1.2% while the Dow Jones Industrial Average was 0.6% higher. European markets ended the day marginally higher after spending most of the day in the red. Investors were also keeping an eye on central bankers’ comments at a European Central Bank forum, with “higher for longer” reportedly being the central theme. UK’s FTSE 100 and Germany’s DAX inched 0.1% and 0.2% higher respectively. France’s CAC 40 rose 0.4%. Over in Asia, the Hang Seng Index snapped a 4-day losing streak to end the day about 2.0% higher. Sentiment was lifted by comments from China’s Premier Li Qiang who said Beijing would be putting forward more effective policies to expand domestic demand and open markets. The Shanghai Composite Index gained 1.2%. Japan’s Nikkei 225 slipped 0.5% however. The FBM KLCI slipped 0.2% though Singapore’s Straits Times Index gained 0.5%

Source: PublicInvest Research - 28 Jun 2023

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