Economy

US: Jobs growth slows; wage gains remain strong. The US economy added the fewest jobs in 2-1/2 years in June, but persistently strong wage growth pointed to still-tight labour market conditions that most certainly ensure the Fed will resume raising interest rate later this month. The Labor Department's closely watched employment report also showed 110,000 fewer jobs were created in April and May, indicating that higher borrowing costs were starting to dampen businesses' appetite to continue boosting headcount. There was also a jump in the number of people working part-time for economic reasons last month, in part because their hours had been reduced due to work slack or business conditions. Nevertheless, the pace of job growth remains strong by historical norms and was further evidence that the economy was far from a dreaded recession. "The labour market appears to be cooling but not fast enough to prevent another tap on the brakes from the Fed on July 26," said Sal Guatieri, as senior economist at BMO Capital Markets in Toronto. (Reuters)

EU: Fall in German industrial production exceeds expectations . Reflecting weak production of energy and pharmaceutical products, Germany's industrial output declined more than expected in May, darkening economic outlook. Industrial production posted a monthly fall of 0.2% in May in contrast to the 0.3% increase in April, Destatis reported. Output was forecast to drop 0.1%. The decline was largely driven by the sharp 13.1% fall in output of pharmaceutical products. The decline of 7.0% in energy production also had a negative effect on overall production. Meanwhile, output of motor vehicles, trailers and semi-trailers logged a monthly growth of 4.9%. Excluding energy and construction, industrial production gained 0.2%, data showed. Construction production decreased 0.4%. Production of capital goods grew 1.3%, while consumer goods production was down 1.2% and intermediate goods dropped 0.5%. (RTT)

EU: Italy retail sales rise for second month. Italy's retail sales increased for the second straight month in May as sales of food and non-food items advanced, data from the statistical office ISTAT showed. The retail sales value climbed 0.7% MoM in May after rising 0.2% in the previous month. Economists had expected only a 0.1% gain. The value of sales of non-food items grew 1.1% over the month, and sales of food goods increased by 0.2%. On a yearly basis, retail sales growth eased to 3.0% in May from 3.2% in April. Online sales were 1.5% higher in May compared to last year, but slower than the 2.8% rise in the preceding month. (RTT)

UK: House prices post biggest annual drop since 2011: Halifax. British house prices fell last month in annual terms at the fastest rate in 12 years and soaring interest rates are likely to herald more weakness in the housing market, mortgage lender Halifax said. House prices dropped 2.6% YoY in June, after a 1.1% fall in May, Halifax said. It was the largest such fall since June 2011. On the month, prices fell 0.1% after a 0.2% monthly drop in May. Kim Kinnaird, director of Halifax Mortgages, said the large annual drop reflected the comparison with a peak in house prices seen around a year ago, with relatively little movement in prices over the last few months. (Reuters)

Japan: Leading index hits 6-month high. Japan's leading index strengthened in May to reach its highest level in six months, preliminary data from the Cabinet Office showed. The leading index, which measures future economic activity, rose to 109.5 in May from 108.1 in April. This was the highest reading since November last year, when it was 109.6. The coincident index that measures the current economic situation declined to a 4-month low of 113.8 in May from 114.2 in the previous month. Meanwhile, the lagging index climbed to 106.1 from 105.5 in the previous month. The reading was the strongest since March 2020. (RTT)

Taiwan: June exports mark worst fall in 14 years on weak China, US demand . Taiwan's exports fell more than expected in June, clocking their worst decline in almost 14 years, as the island struggled with persistent weakness in demand from the US and China for its tech products as well as a dour outlook. June exports plunged 23.4% in value on the year to USD32.3bn (RM150.76bn), the finance ministry said, marking the 10th consecutive month of decline. That was worse than a fall of 14.1% in May and missed a Reuters poll forecast for a 13.35% contraction. Taiwan's export reliant economy will probably grow more slowly in 2023 than previously forecast, the government has said, as first-quarter GDP fell by a revised 2.87% YoY, slipping into recession and notching its worst performance since 2009. (Reuters)

Markets

Samaiden: Secures 20-year PPA with global beverage company Yakult. Samaiden Group’s wholly owned subsidiary Samaiden Capital Management SB has secured a 20-year power purchase agreement (PPA) with global beverage company Yakult Malaysia SB. Samaiden said under the PPA, it would supply Yakult with renewable energy generated from solar facilities at two strategic locations, Seremban, with a capacity of 496.3kWp, and Glenmarie, with a capacity of 212.2kWp. (The Edge)

MyEG: MoF approves MyEG appointment as govt’s revenue collection agent. The Ministry of Finance (MoF) has approved the appointment of MyEG Services (MyEG) as the collection agent for the government revenue and extended the company’s role as the provider of online services for the Immigration Department of Malaysia. The terms of the extension would be finalised pursuant to further discussion with the government in due course and an agreement to formalise the extension would be signed at a later stage. (StarBiz)

Fajarbaru: Clinches RM150.9m construction job in Shah Alam. Fajarbaru Builder Group has secured a RM150.9m contract for the building and related infrastructure works of an 18-storey serviced apartment and retail complex in Shah Alam, Selangor. Fajarbaru said its wholly owned Fajarbaru Builder SB has accepted the letter of award from Temasya Development Co SB. The contract period is 40 months, commencing on July 17, 2023, and shall be completed on Nov 16, 2026. (The Edge)

Econpile: Bags RM35m substructure works job in Subang Jaya from Vestland unit. Econpile Holdings has been awarded a contract worth RM35.1m to undertake the substructure works for a commercial development in Subang Jaya, Selangor. Econpile’s wholly owned unit Econpile (M) SB had received the letter of award from Vestland’s wholly owned unit Vestland Resources SB. (The Edge)

Zelan: Unit sued by UAE's Remco to enforce RM37m arbitration award. Zelan wholly-owned unit is being sued by its sub-contractor in the United Arab Emirates, Reliance Electro Mechanical Plumbing Contracting Co LLC (Remco) as Remco wants to enforce an arbitration award of AED28.9m (RM36.8m) plus interests that was obtained in Dec 2019 in its favour. (The Edge)

Bahvest: Seeks to nullify RM20.4m temporary resolution over mining land dispute. Bahvest Resources has filed a suit to annul the RM20.4m temporary resolution agreed between its wholly owned subsidiary Wullersdorf Resources SB and Southsea Gold SB, over Wullerdorf's wrongful occupation of Southsea Gold’s mining lease land. (The Edge)

Serba Dinamik: Units defaulted on RM435m payment on three financing facilities last year. Two of Serba Dinamik Holdings' subsidiaries defaulted on three facilities worth RM435.4m last year. (The Edge)

IPO: ACE-bound DC Healthcare's IPO attracts RM752.92m orders. Aesthetic medical services provider DC Healthcare Holdings, which is slated to list on the ACE Market of Bursa Malaysia on July 17, drew orders worth RM752.9m for its RM49.8m IPO, with a total of 17,614 applications received for 3.01bn shares. (The Edge)

Market Update

Key US benchmarks ended lower last Friday as fears over a possible resumption of rate hikes later this month gripped markets. The jobs report for June showed a lower than expected increase in payrolls though the overall unemployment rate improved to 3.6% as wages also increased stronger than expected. The Dow Jones Industrial Average and S&P 500 fell 0.6% and 0.3% as the Nasdaq Composite slipped 0.1%. European markets were mixed in reaction to the US jobs report. The media sector led losers with a 1.3% decline, though mitigated by a 1.3% gain in the chemicals sector. Amid a data-light day on the continent, Germany’s DAX and France’s CAC 40 gained 0.5% and 0.4% respectively though UK’s FTSE 100 fell 0.3%. Asian markets were mostly lower however, even as US Treasury Secretary Janet Yellen wrapped up her 4-day visit to visit Chinese officials, signifying a notably improved relationship between both countries. Japan’s Nikkei 225 fell 1.2%. The Hang Seng and Shanghai Composite indices fell 0.9% and 0.3% meanwhile. The FBM KLCI shed 0.6% to close at 1,377.67 pts.

Source: PublicInvest Research - 10 Jul 2023