Economy

US: Yellen sees strong job market, lower inflation, even as US economy cools. US Treasury Secretary Janet Yellen said that the US economy is on a path to maintain a strong labour market while reducing inflation, even if the economy cools a bit more. Yellen said in prepared remarks at a residential solar power company in New Orleans that strong household and business balance sheets will serve as a source of US economic strength along with a continuing surge in US factory construction. (Reuters)

US: Consumer spending hits speed bump, inflation picture mixed. US consumer spending fizzled in May as households cut back on purchases of new light trucks and other long-lasting manufactured goods amid higher borrowing costs, suggesting the economy lost some speed in the second quarter. While the Commerce Department's report showed annual inflation rising last month at its slowest pace in more than two years, underlying price pressures remained too strong to discourage the Federal Reserve from returning to its strategy of raising interest rates in July, economists said. (Reuters)

EU: France inflation slows more than expected, household consumption recovers. France's inflation slowed in June due the downturn in energy prices and a slowdown in food price growth, provisional estimate from the statistical office INSEE showed. Another official report showed that household spending recovered in May on higher energy and food consumption. Consumer prices registered an increase of 4.5% in June, following a 5.1% gain in May. (RTT)

EU: Italy jobless rate falls unexpectedly to 7.6%, lowest in 37 months. Italy's unemployment rate decreased in May to reach its lowest level in just over three years, preliminary figures from the statistical office Istat showed. The seasonally adjusted jobless rate dropped to 7.6% in May from 7.8% in April. Meanwhile, economists had expected the rate to rise to 7.9%. Further, this was the lowest unemployment rate since April 2020, when it was 7.5%. At the same time, the employment rate edged up to 61.2% in May from 61.1%. (RTT)

UK: House prices fall less than expected. UK house prices declined for the fifth straight month in June, though at a slowerthan-expected pace, data published by Nationwide Building Society showed. House prices posted an annual fall of 3.5% in June, almost in line with the 3.4% decline seen in May. Economists had expected a 4.0% decline for the month. East Anglia was the weakest performing region, with prices down 4.7% over the year. (RTT)

China: Manufacturing activity continues to shrink. China's manufacturing activity continued to contract in June, official survey results published by the National Bureau of Statistics showed. The manufacturing Purchasing Managers' Index rose to 49.0 in June from 48.8 a month ago. The score came in line with expectations. However, a reading below 50.0 indicates contraction in the sector. (RTT)

Japan: Housing starts recover unexpectedly in May. Japan's housing starts increased for the first time in four months in May, defying economists' expectations for a further decline, data from the Ministry of Land, Infrastructure, Transport, and Tourism showed. Housing starts rose 3.5% YoY in May, reversing an 11.9% drop in April, which was the sharpest decline since June 2020. (RTT)

Markets

Pelikan: To dispose of core business to France's Holdham for RM695m. Pelikan International Corp (PICB) and its subsidiaries have agreed to dispose of Pelikan Group GMBH (PGG) to Holdham SAS for GBP136m (RM695.44m), which will see the group exit from its core stationery business. Following the disposal, the company plans for the bulk of the proceeds to be returned to shareholders via a proposed distribution. (StarBiz)

Yinson: Production JV secures USD27.3m bareboat charter extension. Yinson Holdings offshore production unit's joint venture with PetroVietnam Technical Services Corp (PTSC) has secured a 12-month extension for the bareboat charter contract for FPSO PTSC Lam Son, with a further automatic extension of six-month. In a statement, Yinson said the addendum entered by PTSC and the JV company PTSC Asia Pacific Pte Ltd on 29 June 2023, sets an extension of charter period from 1 July 2023 – 30 June 2024, and further automatic extension until 31 Dec 2024. (StarBiz)

Rimbunan Sawit: Plans RM223m capital reduction to reduce losses. Oil palm plantation company Rimbunan Sawit has proposed to undertake a capital reduction to cancel RM223.09m of its issued share capital to offset accumulated losses. Loss-making Rimbunan Sawit said the credit of RM223.09m arising from the exercise will be used to set-off against the accumulated losses of the company, while the remaining balance, if any, will be credited to the retained earnings. (The Edge)

MN Holdings: Bags RM13.1m ECRL contract. MN Holdings has secured an underground utilities contract worth RM13.1m for the ECRL project. In a statement, it said its wholly-owned subsidiary Mutu Nusantara SB accepted the award from the main contractor, Rentak Segar SB, for its appointment as the sub-contractor. (StarBiz)

FGV: Takes strategic step with bonus issue to meet public shareholding spread requirement. FGV Holdings (FGV) has unveiled its plans to address and fulfil the public shareholding spread requirement through a bonus issue. The company recently received a fourth extension from Bursa Securities to comply with the minimum public shareholding spread by Sept 2023. (The Malaysian Reserve)

Opcom: Opcom and Global Forway have agreed to mutually terminate their collaboration. Opcom has announced that its earlier collaborative agreement with Global Forwaty on the potential of securing contracts related to 5G has now been mutually terminated. The fibre cable company has back in Oct 2021 entered into an agreement with Global Forway in anticipation of a massive rollout of 5G in the country and could possibly land lucrative contracts in relation to the rollout. However, since there was a delay and a change of Minister the 5G rollout was further delayed. (StarBiz)

IPO: ACE Market-bound MYMBN to capture growth via expanding offerings in edible bird's nest value chain. Melakabased MYMBN, en route to be the first bird’s nest processor to list on the Ace Market of Bursa Malaysia on 25 July this year, is banking on bright growth prospects in the edible bird’s nest industry by expanding its offerings in the industry’s value chain, following its IPO next month. (StarBiz)

MARKET UPDATE

US markets closed out the first half of the calendar strongly as sentiment continued to be lifted by data showing a relatively resilient economy despite the rapid rate increases over the last 15 months. The US Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditure (PCE) Index, saw growth moderate to +3.8% (Apr: +4.3%), though the core PCE remains elevated at +4.6% (Apr: +4.7%). More data will be out this week, notably manufacturing PMI numbers as well as a keynote jobs report. The Nasdaq Composite gained 1.5% on the day and 31.7% for the first six months, buoyed by enthusiasm around artificial intelligence that boosted share prices of technology stocks. The S&P 500 rose 1.2% last Friday for a 15.9% gain for the half year. Gains on the Dow Jones Industrial Average was a more modest 3.8% for the first half, helped by a 0.8% gain on the day. European markets also ended higher, with sentiment lifted by reports of Eurozone inflation falling more than expected in June, which also suggests that the monetary tightening of the European Central Bank could be starting to have the desired effects. UK’s FTSE 100 rose 0.8%. Germany’s DAX and France’s CAC 40 were 1.3% and 1.2% higher respectively. Asian markets were mixed meanwhile, with positive reaction from US banks passing the FED’s annual stress test negated by news of factory activity in China contracting for a third straight month. The Shanghai Composite Index gained 0.6% though the Hang Seng Index slipped 0.1%. Japan’s Nikkei 225 fell 0.1% as investors digested Tokyo’s core consumer price index, which remained at levels above the central bank’s target for thirteen straight months.

Source: PublicInvest Research - 3 Jul 2023