Economy

US: Powell says likely need two or more hikes to cool inflation. Fed Chair Jerome Powell said at least two interest rate increases are likely necessary this year to bring the inflation rate down to the US central bank’s 2% target and that acting at consecutive policy   meetings isn’t off the table. A strong majority of committee participants expect that it will be appropriate to raise interest rates two or more times by the end of the year, referencing the policy setting FOMC. Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go. (Bloomberg)

US: First quarter GDP revised up to 2% on exports, consumers. US GDP was revised up notably to a 2% annualized advance in the first quarter. The government’s third estimate of GDP for the period reflected upward revisions to exports and consumer spending. Household spending, the engine of the US economy, rose at a 4.2% pace, the strongest in nearly two years, as services outlays were adjusted higher. (Bloomberg)

US: Jobless claims drop by most since 2021 in holiday week. US unemployment benefits applications fell last week by the most since Oct 2021 in a week that included the Juneteenth holiday. Initial jobless claims decreased by 26,000 to 239,000 in the week ended June 24. The figure was lower than all estimates in a Bloomberg survey of economists. (Bloomberg)

EU: Economic confidence weakens In June. Eurozone economic sentiment weakened in June due to lower confidence in industry, construction and services, survey results from the European Commission showed on Thursday. At 95.3 in June, the economic sentiment index fell from 96.4 in May. The index hit the lowest since last Nov and was also below economists' forecast of 96.0. (RTT)

EU: Spain inflation eases to 1.9%, lowest in 27 months. Spain's CPI eased further in June to the lowest level in more than two years, mainly due to a slower rise in prices for fuel, electricity, and food products. The CPI climbed 1.9% YoY in June after a 3.2% increase in May. Economists had expected inflation to moderate to 1.7%. (RTT)

UK: Mortgage approvals climb despite rising interest rates. British mortgage approvals increased more than expected in May despite the rising interest rates, but households started to reduce their reliance on credit and withdrew more money from their savings. The number of mortgages approved in May, an indicator of future borrowing, increased to 50,500 from 49,000 in April.. (RTT)

Australia: Inflation at 13-month low. Australia's CPI slowed more than-expected to a 13-month low in May. CPI grew 5.6% from a year ago, slower than the 6.8% increase in April. This was the slowest growth since last April, when prices gained 5.5%. Also, the rate was weaker than economists' forecast of 6.1%. Excluding volatile items and holiday travel, inflation eased slightly to 6.4% in May from 6.5% in April. (RTT)

Japan: Retail sales growth accelerates; consumer confidence strengthens. Despite high inflation, Japan's retail sales grew at a faster pace in May suggesting strong contribution by private consumption to economic growth. Elsewhere, a monthly survey published by the Cabinet Office showed that consumer confidence improved to an 18-month high in June as households were more positive about income growth and employment. (RTT)

Singapore: Producer prices fall at faster rate. Singapore's PPI decreased for the fourth straight month in May, largely due to a slump in the oil index. The manufacturing PPI fell 8.1% YoY in May, faster than the 4.6% rise in the prior month. (RTT)

Markets

Hextar Tech: Sells land to firms linked to shareholder Eddie Ong to raise RM78.3m cash. The proposed land sales will enable HexTech to raise RM78.3m cash. It has no plan for dividend payment. HexTech will use most of the proceeds for expansion of its technology businesses (RM68m) and working capital (RM8.71m) within the next two years. Meanwhile, one of the land buyers, SWS Capital, in which Eddie Ong also holds a 13.07% stake, announced it will diversify into the property development business and will change its name to Hextar Homes. (The Edge)

Gagasan Nadi: Accepts RM76m sub-contract superstructure works of The Atera. Gagasan Nadi Cergas (GNCB) has accepted a sub-contract work of a development project in Petaling Jaya, Selangor from Paramount Corp worth RM75.7m for the superstructure works for phase one of The Atera. (The Edge)

MAG: Invests RM22m into Indonesian shrimp farm venture. MAG Holdings is investing RM22m, to acquire a 50% stake in Lim Shrimp Aquapolis Pte Ltd, and is entering into a joint venture with PT Gerbang NTB Emas for shrimp farming and processing on the island of Sumbawa in Indonesia. MAG Holdings has signed a term sheet with Lim Shrimp Organization Ltd (LSOL) in relation to the purchase of the equity stake. (The Edge)

Solarvest: Sets up RM1bn sukuk programmes. Solarvest Holdings has made a lodgement with the SC to establish an IMTN programme and an ICP programme with a combined limit of up to RM1bn. The IMTN programme has a tenure of 30 years while the ICP programme has a tenure of 7 years from the date of first issue. RAM Rating Services has assigned a stable outlook and preliminary credit ratings of A1 to the IMTN programme and P1 to the ICP programme. (The Edge)

AmanahRaya REIT: To sell Holiday Villa Resort Hotel in Langkawi for RM145m. AmanahRaya REIT is planning to dispose of Holiday Villa Beach Resort & Hotel Spa in Langkawi, Kedah for RM145m, cash, to trim its borrowings. AmanahRaya REIT is expected to record a gain of RM45m from the disposal. Post disposal, gearing will improve to 42.33 times from 45.04 times. (The Edge)

Ge-Shen: Says RM12.5m land purchase in Kedah to boost manufacturing capacity. Ge-Shen Corp is buying two parcels of industrial land in Sungai Petani, Kedah to expand its manufacturing facility. The acquisition of the property comes at an opportune time as the group is looking to scale up its presence in the northern region of Malaysia with more high technology manufacturing, especially for the medical sector. (The Edge)

Destini: Bags Mindef contract worth RM18.75m to supply rockets. Destini has secured a LOA from the Ministry of Defence for a contract worth RM18.8m to supply 70MM rockets. The contract is for a period of 2 years. (The Edge)

Citaglobal: Inks MOU with Petronas unit to collaborate in RE tech and applications. Citaglobal has signed a MOU with Petronas Global Technical Solutions SB (PGTS) for a strategic collaboration in a wide range of renewable energy technologies and applications. The agreement was signed on June 27, during the Energy Asia conference, by Citaglobal executive chairman and president and PGTS CEO. (The Edge)

Market Update

US markets ended higher overnight, led by banking names following reports of the institutions passing the Federal Reserve’s (FED) annual stress test. Investors are keeping close watch on inflation data however, with May’s Personal Consumption Expenditure (PCE) numbers due out later today. The PCE Index is the FED’s preferred gauge on inflation, incidentally. With the economy (and job market) remaining relatively strong to-date, despite the rapid rate increases, the market appears to be opening up to the idea that the FED may continue tightening until some economic weakness sets in, so that there’s less inflationary pressure. The Dow Jones Industrial Average and S&P 500 rose 0.8% and 0.5%, though the Nasdaq Composite ended the day flat. European markets were mixed on the day, as a cautious mood prevailed. Investors are assessing comments from leading central bankers on the need to continue to fight inflation despite growth risks. Retail-based stocks led gainers however, following robust earnings report from Swedish giant, H&M. UK’s FTSE 100 slipped 0.4% though France’s CAC 40 gained 0.4%. Germany’s DAX was largely unchanged. Asian markets were also mixed, with investors also sifting through central bankers’ comments, most notably Jerome Powell’s, who indicated there could be multiple rate hikes ahead. Japan’s Nikkei 225 inched 0.1% higher, against the backdrop of official data showing the country’s retail sales rising 5.7% YoY in May. The Hang Seng and Shanghai Composite indices fell 1.2% and 0.2% however. Markets in Malaysia, Singapore, Indonesia and India were closed for a holiday

Source: PublicInvest Research - 30 Jun 2023