Economy

US: Manufacturing slowdown cools energy prices. US manufacturers reported another widespread decline in business activity during June, which continued to weigh down industrial energy consumption and prices. The Institute for Supply Management’s (ISM) composite manufacturing index slipped to 46.0 (11th percentile for all months since 1980) in June from 46.9 (14th percentile) in May and 53.0 (35th percentile) a year earlier. The composite index has fallen to the lowest level since the recession associated with the first wave of the coronavirus pandemic in 2020 and before that the recession caused by the financial crisis in 2008, signifying a major downturn in the industrial sector of the economy. (Reuters)

US: To curb China access to cloud services like Amazon, WSJ says. The US is preparing to curtail Chinese companies’ access to cloud-computing services including those provided by Amazon.com Inc. and Microsoft Corp., the Wall Street Journal reported, citing people familiar with the situation. Washington is considering requiring cloud providers to seek government permission before serving Chinese firms that employ such platforms to train AI models, the Journal reported. Microsoft Azure and Amazon Web Services are the global leaders in the business of providing internet computing to enterprises, and compete in China with the likes of Alibaba Group Holding Ltd. through local, state-affiliated datacenter partners. (Bloomberg)

EU: German exports unexpectedly edge down in May. German exports fell unexpectedly in May, as exports to the US and Russia posted strong declines. German exports decreased by 0.1% on the previous month, data from the federal statistics office showed. A Reuters poll had predicted a month-on-month increase of 0.3%. “Trade is no longer the strong resilient growth driver of the German economy that it used to be, but rather a drag,” said Carsten Brzeski, global head of macro at ING. Supply chain frictions, a more fragmented global economy and China increasingly being able to produce goods it previously bought from Germany, are all factors weighing on German exports, Brzeski said. (Reuters)

EU: Spain unemployment lowest since 2008. Spain unemployment declined sharply in June to hit the lowest level since 2008, reflecting the labour market tightness, data from the labour ministry showed. Registered unemployment reached 2.68m in June, the lowest level in the last 15 years. Over the last twelve months, the decline in unemployed persons was 200,000. The number of people out of work fell by 50,268 or 1.84% from May. The ministry said the uninterrupted improvement in the labour market over the past 14 months took the number of unemployed below three million.

All sectors expect agriculture posted a general decrease in unemployment. Unemployment in services dropped 42,133 and by 4,888 in industry. The decrease in construction was 1,688. (RTT)

EU: Romania producer price inflation lowest in over 2 years. Romania's producer price inflation slowed for the ninth month in a row to reach its lowest level in more than two years, data from the National Institute of Statistics showed. The producer price index increased 7.7% YoY in May, after an 11.6% growth in April. The latest inflation was the lowest since March 2021, when prices rose 4.88%. Prices in the domestic market increased to 11.49% yearly in May and those in the foreign market dropped 0.55%. Among the main industrial groups, prices in the energy industry climbed 12.40% annually in May. (RTT)

China: State lenders lower dollar deposit rates for second time in a month, sources. China’s major state banks have lowered their dollar deposit rates for the second time in a month, seven banking sources with direct knowledge of the matter said, as authorities have stepped up efforts to arrest a slide in the yuan. Interest rates offered by the “Big Five” state-owned lenders on most dollar deposits are now capped at 2.8%, down from 4.3% previously, said the people, who declined to be named as they were not authorised to speak to the media. The People’s Bank of China, which typically issues guidance on dollar deposit rates to state banks, did not immediately comment on the matter. (Reuters)

South Korea: CPI inflation slows more than expected. South Korea's consumer price inflation slowed for a fifth month in a row and at a stronger than expected pace in June to its lowest level in nearly two years, figures from Statistics Korea showed. The consumer price index, or CPI, rose 2.7% YoY in June, after a 3.3% increase in May. Economists had expected 2.9% inflation. The latest inflation rate was the lowest in 21 months. Consumer prices remained flat on a monthly basis in June following a 0.3% rise in the previous month. Economists had forecast a 0.2% increase. Core inflation that excludes prices of food and energy slowed to 3.5% from 3.9%. The core CPI rose 0.1% from May when it climbed 0.3%. (RTT)

Australia: RBA keeps rate unchanged, signals more tightening. The Reserve Bank of Australia decided to keep its key rate unchanged unexpectedly in order to assess the impact of the previous tightening on the economy and its associated risks. The board of the Reserve Bank of Australia, led by Governor Philip Lowe, left the cash rate target unchanged at 4.10%. Although further tightening of policy may be required to bring inflation back to the target in a reasonable timeframe, such move will depend upon how the economy and inflation evolve, Lowe said. Interest rates have been raised by 4 percentage points since May last year. (RTT)

Australia: Services PMI ebbs in June, Judo Bank. The services sector in Australia continued to expand in June, albeit at a slower pace, the latest survey from Judo Bank revealed with a services PMI score of 50.3. That's down from 52.1 in May, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. This marked a third consecutive month of service sector expansion but was the slowest in the current sequence and only marginal. Three of the five sub-services categories saw higher activity in June, led by information and communication firms. (RTT)

Markets

Farm Fresh: Receives UMA query as shares plummet to alltime low. Farm Fresh has received an unusual market activity (UMA) query from Bursa Malaysia after its shares hit an all-time low yesterday. At 5pm, Farm Fresh closed down five sen or 4.2% to RM1.14. In a filing with Bursa Malaysia with regards to the UMA query, Farm Fresh said rumours had been circulating on the company, drawing on the recent announcement by Australia’s Bega Group on the decline in Australian milk production. (The Star)

TWL Holdings: Scraps joint development plans in Klang, focuses on affordable housing project. TWL Holdings has decided to cancel its plans for a joint development project in Klang, Selangor, after six years. The company terminated its memorandum of understanding with LJ Development (KL) SB. The proposed venture involved the construction of residential and/or commercial units with a minimum GDV of RM80m. TWL announced an agreement to acquire two land parcels in Klang for RM30.3m, with plans to develop affordable apartments comprising 1,000 units. (The Malaysian Reserve)

Hextar Technologies: To exit warehouse segment after RM78.31m land disposal. Hextar Technologies Solutions (HexTech) is set to leave its warehousing segment upon completion of the proposed land sales that will enable the company to raise RM78.31m cash to expand its technology businesses. Upon completion of the disposed proposals, HexTech will continue mainly with its logistics, trading and technology and other businesses, such as insurance agency and investment holding. (The Edge)

Jaya Tiasa: To buy 55% stake in Wealth Houses Development for RM52.3m. Jaya Tiasa Holdings (JTH) is acquiring a 55% stake in Wealth Houses Development SB (WHD), which owns a 5,967 hectare piece of leasehold land in Sarawak, for RM52.3m. JTH had entered into a conditional share sale agreement with Tiong Toh Siong Holdings SB, Tiong Toh Siong Enterprises SB and Knightbridge Venture SB for the acquisition. (StarBiz)

Central Global: Partners with Permodalan Kedah for RM42.3m mixed development project. Central Global’s (CGB) wholly-owned subsidiary, Central Global Development SB (CGD) has entered into a collaboration agreement with Permodalan Kedah (PKB) for a mixed development project with a GDV of RM42.3m in Kedah. (StarBiz)

Bioalpha: CEO William Hon emerges as BTM Resources' substantial shareholder. Terengganu-based timber firm Bioalpha Holdings founder, managing director and CEO William Hon Tian Kok has emerged as a substantial shareholder of loss-making BTM Resources. Hon acquired 60.51m shares in BTM Resources via offmarket trade on 30 June. (The Edge)

Datasonic: Former deputy MD ceases to be substantial shareholder after share transfer. Datasonic Group’s former deputy managing director Chew Ben Ben has ceased to be a substantial shareholder of the integrated information and communications technology solutions provider, after he transferred 14.61m shares or 0.52% to his family, including his wife, the past week. On June 30, Ben Ben transferred a block of 3.61m shares to his wife Zhao Tong. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after European stocks closed higher on Tuesday as traders returned to real estate companies and awaited economic data that will influence the next policy moves of global central banks. Europe’s region-wide Stoxx 600 rose 0.1%, with investors snapping up shares of Swedish property companies that have been hit in recent months by fears that high interest rates would dent house prices and curb bank lending. The Stoxx Europe 600 Real Estate index closed up 2.7%, its biggest one-day rise in a month. London’s FTSE 100 fell 0.1 % and France’s Cac 40 lost 0.2 %. Overall trading volumes were thin as US markets were closed for the Independence Day holiday. The gains in property offset declines in Europe’s industrial stocks, which slipped after two of the world’s biggest oil producers, Saudi Arabia and Russia, said they would cut supply next month in a bid to boost prices.

Back home, Bursa Malaysia’s key index finished marginally lower on Tuesday amid the mixed regional market performance with the closure of the US markets for the Independence Day holiday. At the closing bell, the FBM KLCI fell 3.4 points, or 0.24%, to 1,392.49 from 1,395.89 at Monday’s close. The regional stocks traded higher after the Reserve Bank of Australia opted to hold interest rates steady at 4.1% while policymakers watched for the impact of previous rate rises on the economy. Policymakers were guided by a faster-than-expected decline in the country’s annual inflation rate, which dropped to a 13-month low of 5.6% in May from 6.8% a month earlier. Australia’s S&P/ASX 200 stock index rose 0.5% after the announcement, while China’s CSI 300 added 0.2% and Hong Kong’s Hang Seng was up 0.6%.

Source: PublicInvest Research - 5 Jul 2023