Economy

US: Dollar gains after Fed minutes reinforce rate hike expectations. The US dollar edged higher against other major currencies on Wednesday after minutes from the Fed's June policy meeting reinforced market expectations of another interest rate hike at the end of July. Almost all Fed officials agreed to hold interest rates steady last month and most expected policymakers would eventually need to tighten policy further, a view that pushed Treasury yields higher and added to earlier dollar gains. Fed funds futures showed expectations of a 25 basis point hike at the end of a two-day policy meeting on July 26 rose to 88.7%, according to CME Group's FedWatch Tool. (Reuters)

US: Factory orders rise much less than expected in May. New orders for US manufactured goods increased by much less than expected in the month of May, according to a report released by the Commerce Department. The Commerce Department said factory orders rose by 0.3% in May after rising by a downwardly revised 0.3% in April. Economists had expected factory orders to climb by 0.8% compared to the 0.4% increase originally reported for the previous month. The weaker than expected growth came as a 1.8% surge in orders for durable goods was partly offset by a 1.2% slump in orders for non-durable goods. (RTT)

EU: Private sector stagnates in June. Euro area private sector activity stalled in June amid the deepening downturn in manufacturing and the slowdown in services activity, final data from S&P Global showed. The final HCOB composite output index dropped more-than-estimated to 49.9 in June, as estimated, from 52.8 in May. The flash reading was 50.3. A score below 50.0 indicates contraction in the private sector. The survey highlighted the divergence between the performance of manufacturing and services activities. The downturn in manufacturing deepened in June, while services sector continued to expand, albeit at a softer pace. The services Purchasing Managers' Index, or PMI, fell to a five-month low of 52.0 from 55.1 in May. (RTT)

EU: French industrial production rises for second month. France's industrial production increased for the second month in a row in May, mostly due to an increase in output of coke and refined petroleum products, the statistical office INSEE reported. Industrial output climbed 1.2% MoM in May, faster than the 0.8% rebound in April. Meanwhile, production was expected to drop by 0.2%. Similarly, manufacturing output advanced 1.4% versus a 0.6% gain a month ago. Production of coke and refined petroleum products surged 45.1% monthly in May, well above the 22.5% increase in April. (RTT)

EU: Spain industrial production falls 0.1%, less than forecast. Spain's industrial production declined for the second straight month in May, largely due to a fall in the output of energy and intermediate goods, preliminary data from the statistical office INE showed. Industrial production declined by an adjusted 0.1% YoY in May, following a 1.0% drop in April. That was below the 0.5% fall economists had forecast. On an unadjusted basis, industrial output rebounded 0.2% after a 4.2% fall in the preceding month. The adjusted annual decline was largely driven by the 5.1% decline in energy production, closely followed by a 5.0% decrease in intermediate goods output. (RTT)

UK: Service sector growth weakens on softer orders. The UK service sector continued to expand in June but the upturn moderated as rising interest rates and economic uncertainty weighed on consumer demand, final survey results from S&P Global showed. The final Chartered Institute of Procurement & Supply services Purchasing Managers' Index dropped to 53.7 in June, as estimated, from 55.2 in May. The score signalled a slowdown in service sector output growth to the weakest since March. New orders increased at the slowest pace since the current period of growth began in Feb. Service providers delayed their purchasing decisions due to the uncertainty surrounding the economic outlook and the impact of higher borrowing costs. (RTT)

India: Service sector growth remains strong in June. India's service sector activity logged a further sharp expansion in June amid positive demand trends, the results of the purchasing managers' survey by S&P Global showed. The services PMI, dropped to 58.5 in June from 61.2 in May. Nonetheless, a score above 50 indicates expansion in the sector. The overall strong growth was attributed to on-going increases in new business, a healthy demand environment and marketing initiatives. New orders logged a quicker expansion in June on the back of fruitful advertising and favourable market conditions. Meanwhile, new export orders rose at a slower pace. (RTT)

Singapore: Retail sales growth eases to 1.8%. Singapore's retail sales growth eased further in May, data from the Department of Statistics showed. Retail sales climbed 1.8% YoY in May, slower than the 3.7% gain in April. Excluding motor vehicles, retail sales also grew 1.8% yearly in May after a 4.3% increase in the preceding month. In May, most industries recorded annual increases. Sales of food and alcohol grew the most, by 24.9% from a year ago, though well below the previous month's 30.5% surge. Similarly, the annual sales growth in the cosmetics, toiletries and medical goods industries eased to 13.1% from 16.8%. (RTT)

Philippine: Inflation eases to 5.4%, lowest in 13 Months. The Philippines' consumer price inflation eased further in June to the lowest level in just over one year, largely driven by a slowdown in prices for food products and a fall in transport costs, data from the Philippine Statistical Authority showed on Wednesday. The consumer price index, or CPI, climbed 5.4% YoY in June, slower than the 6.1% rise in May. Meanwhile, economists had forecast inflation to ease to 5.5%. Moreover, this was the weakest inflation rate since May last year, when prices had risen the same 5.4%. Nonetheless, the inflation was still above the central bank's target range of 2 to 4%. (RTT)

Markets

Apex Equity (Neutral, TP: RM1.15): Announces retirement of newly re-elected director Celine Leong. Apex Equity Holdings announced the retirement of Datuk Celine Leong Wai Leng as its executive director with immediate effect, less than three weeks after the 54-year-old was re-elected, albeit with opposition from certain substantial shareholders. The Kajang-based stockbroking firm made the announcement to Bursa Malaysia, which came on the heels of its Monday announcement that it had appointed former Export-Import Bank of Malaysia CEO Norzilah Mohammed, 58, as its new ED. (The Edge)

Malton: Signs MOU with Alliance Bank for green financing. Malton signed a MOU with Alliance Bank to offer green mortgage financing package, which will immediately benefit homebuyers of its green-certified River Park project in Bangar South, Kuala Lumpur. According to the developer's press release, the sustainable financing option features lower interest rates and a faster turnaround time for end-financing. (The Edge)

Serba Dinamik: Seeks second extension to submit regularisation plan. Serba Dinamik Holdings has once again applied to Bursa Securities for more time to submit its regularisation plan by extending its 5 July 2023 deadline to 5 Jan 2024. The troubled oil and gas company, however, did not say why it could not meet the 5 July deadline. Serba Dinamik was originally supposed to submit the plan in January this year, but was granted a six-month extension. Last month, Serba Dinamik said it had engaged Baker Tilly Insolvency PLT as its restructuring consultant, with Dennis Nik & Wong as its restructuring lawyers. (The Edge)

Priceworth: Proposes RM210m capital reduction. Priceworth International has proposed to undertake a capital reduction of RM210m of its issued shares, which is lost and unrepresented by available assets. The money would be utilised to set off its accumulated losses. The company had accumulated losses of RM441.43m, while including its subsidiary accumulated losses totaled RM202.6m. Priceworth said any remaining balance from the proposed exercise would be credited to the retained earnings of the company and be used in such manner as the board deems fit. (StarBiz)

Bahvest: Southsea files suit against Bahvest Resources for RM7m temporary settlement. Southsea Gold SB, the owner of the land in which Bahvest Resources' operations run, has filed a legal suit at the Tawau High Court in an effort to get Bahvest Resources to pay the outstanding RM7m as temporary settlement of lease free occupation of Southsea land for the period between 2018 and April 2023. The suit also seeks an order allowing the removal of any of Bahvest's building, equipment, machineries and/or related structures after expiration of the extension on 31 July 2023. (New Straits Times)

Destini: Former MP Abdul Aziz returns to Destini as independent director. Engineering solutions provider Destini has appointed Datuk Abdul Aziz Sheikh Fadzir as an independent and non-executive director, effective Wed (July 5). Abdul Aziz, 60, previously held the same position at Destini from Aug 30, 2017 until May 18, 2018, according to the company’s filing. (New Straits Times)

Market Update

The FBM KLCI might open lower today after US stocks dipped and Treasury yields edged higher after the minutes from the Federal Reserve’s June monetary policy meeting showed officials intend to resume raising interest rates after a pause last month. Wall Street’s benchmark S&P 500 index and the tech-heavy Nasdaq Composite both fell 0.2%. The two-year Treasury yield, which moves with interest rate expectations, rose 0.01 percentage points to 4.94%, nearing the four-month high hit on Monday. The moves in both markets were relatively modest, given the minutes were roughly consistent with the Fed’s statement in June immediately following its policy-setting meeting. Meanwhile, European stocks ended the day lower, as weaker than expected economic data from China weighed on the region’s basic materials and energy stocks. Europe’s region-wide Stoxx 600 fell 0.7% and France’s Cac 40 shed 0.8%. London’s energy-heavy FTSE 100 fell 1% and hit its lowest level since the end of March, dragged down by steep declines in energy and utilities stocks. The FTSE is down 0.1% since the start of the year, falling far behind its regional peers, as domestic inflation also damped investor sentiment.

Back home, continuous selling in selected heavyweights, led by consumer products and services counters, pulled back Bursa Malaysia to end at an intraday low on Wednesday, marking its second consecutive day of decline, in line with the negative sentiment on regional bourses. At the closing bell, the FBM KLCI eased 2.59 points, or 0.19%, to 1,389.90 from 1,392.49 at Tuesday’s close. China’s closely watched Caixin services purchasing managers’ index came in at 53.9 on Wednesday, down from 57.1 for May and below consensus estimates of 56.2. China’s CSI 300 dropped 0.8% and Hong Kong’s Hang Seng index lost 1.6% following the data release. Japan’s Topix was flat.

Source: PublicInvest Research - 6 Jul 2023