Economy

US: Consumer borrowing rises at slowest pace since late 2020. US consumer borrowing slowed to a more than two-year low in May, reflecting the first decline in non-revolving credit since the onset of the pandemic. Total credit rose USD7.2bn, the smallest advance since Nov 2020. The figure, which isn’t adjusted for inflation, was lower than all forecasts. Non-revolving credit, such as loans for school tuition and vehicle purchases, decreased USD1.3bn, the first decline since April 2020. Five-year lending rates for new-vehicle purchases reached 7.8% in May, the highest since 2006. (Bloomberg)

US: Wholesale inventories virtually unchanged in May. Wholesale inventories in the US were roughly flat in the month of May. The wholesale inventories were virtually unchanged in May after falling by a revised 0.3% in April. Economists had expected wholesale inventories to edge down by 0.1%, matching the dip originally reported for the previous month. The unchanged reading came as a 0.6% increase in inventories of durable goods offset a 1.0% slump in inventories of non-durable goods. (RTT)

EU: Eurozone Sentix investor confidence at 8-month low. Eurozone investor sentiment declined for the third straight month to hit an eight-month low in July, suggesting that the region remained in a recessionary mode and the situation is more severe than the usual summer lull. The Sentix economic index posted -22.5 in July, which was the lowest since November 2022, when euro area was facing acute energy crisis. The reading was forecast to fall to -17.9 from -17.0 in June. Both the current situation and expectation measures of the survey reached the lowest since Nov 2022. The current situation index declined to -20.5 in July from -15.8 in the previous month. (RTT)

UK: Inflation likely to drop ‘markedly’. Bank of England (BOE) Governor Andrew Bailey said Britain’s inflation rate is likely to drop “markedly” this year, and the full impact of interest rate increases has yet to hit the economy. The remarks released in a text of his speech at the Mansion House in London this evening indicate policy makers are growing more cautious about further increases in borrowing costs that are now at their highest since the global financial crisis in 2008. UK inflation has proved more persistent than other major economies, with the 8.7% headline rate more than four times the 2% target and the underlying “core” rate still rising in the latest official data. (Bloomberg)

China: Slides to brink of deflation, adding stimulus urgency. China’s consumer inflation rate was flat in June while factory-gate prices fell further, fuelling concerns about deflation risks and adding to speculation about potential economic stimulus. The CPI was unchanged last month from a year earlier. That was the weakest rate since Feb 2021, when slumping pork costs dragged on the index. Core inflation, which excludes volatile food and energy costs, slowed to 0.4% from 0.6%. Producer prices fell 5.4% from a year earlier, the deepest pace since Dec 2015. (Bloomberg)

Japan: Eco watchers index at 3-month low, outlook eases. A measure of public opinion about the Japanese economy weakened for the second straight month in June to the lowest level in three months. The current conditions index of the Economy Watchers' Survey, which measures the present situation of the economy, dropped to 53.6 in June from 55.0 in May. Economists had forecast the index to remain stable. (RTT)

Indonesia: Consumer confidence remains strong in June. Indonesia's consumer confidence stayed positive in June despite easing slightly from May's 1-year high. The consumer confidence index dropped to 127.1 in June from 128.3 in the previous month. However, a reading above 100 indicates optimism among households.. (RTT)

Markets

Hap Seng: In talks with Mercedes-Benz for agency distribution model shift. Hap Seng Consolidated announced it is in discussions with Mercedes-Benz Malaysia SB (MBM) to shift from its present dealership distribution model to an agency model. This came after Hap Seng’s wholly-owned unit Hap Seng Star SB (HSS) and MBM inked a MOU to commence negotiations over the proposed business model change. (The Edge)

Kumpulan Kitacon: Secures RM101.5m construction job in Selangor. Kumpulan Kitacon has won an RM101.5m contract for construction work pertaining to a residential development in Gombak, Selangor. The job won involves the main building and infrastructure works of the development. The contract shall commence on June 1, 2023, and is to be completed within 20 months from the commencement date. (The Edge)

Southern Cable: Clinches RM90.4m contract from TNB. Southern Cable Group Bhd has secured a RM90.4m contract to supply underground cables and conductors to utility giant TNB. The contract won by the group’s wholly-owned unit, Southern Cable SB, follows the addendum contract of more than RM30m secured last month. This boosts the cable and wire manufacturer’s total contract value to TNB to RM422.5m from RM332.1m previously. (The Edge)

Econpile: Gets RM20.8m foundation and basement job in Bangsar. Econpile Holdings has won a contract worth RM20.8m from Bangsar Hill Park Development SB (BHPD) to undertake foundation and basement works for two blocks of apartments on Lorong Maarof, Bangsar. The project is to undertake earthworks, piling, pile cap, basement slab and reinforced concrete ramp works for two blocks of apartments. The overall duration of the project shall be 10½ months from May 6, 2023. (The Edge)

Mr DIY: Becomes master franchisee of hardware brand EMTOP. Mr DIY Group has launched its new retail hardware outlet EMTOP, bringing the globally recognised hardware brand EMTOP to Malaysia. Mr DIY previously opened its first EMTOP store on April 24 in Bandar Puteri Puchong and is set to open another at Jalan Nanas Kawasan 18 in Klang. Currently, Mr DIY is the only entity licensed to operate EMTOP in Malaysia. (The Edge)

Censof Holdings: Awarded RM13.4m financial management system project by SSM. Censof Holdings has accepted the Letter of Acceptance from the Suruhanjaya Syarikat Malaysia (SSM) in relation to the financial management system project, valued at RM13.4m involves the development, supply, implementation, warranty, support, maintenance and licenses of the financial management system by to SSM. (Business Today)

Hong Seng: Offloads digital biz stake to Revenue Group less than six months after acquiring it. In less than six months after acquiring a controlling 51% stake in Innov8tif Holdings SB in Jan to venture into the digital industry, Hong Seng Consolidated is offloading the stake to Revenue Group, citing its lack of experience in the digital business as the reason. (The Edge)

Ageson: Kobena mutually abort MOUs for land deal, smart vending machine biz. Ageson's subsidiaries and Koperasi Belia Nasional (Kobena) have mutually agreed to terminate three MOUs in relation to a vending machine business and the sale and development of a parcel of land in Gombak. (The Edge)

Market Update

The FBM KLCI might open higher today after Wall Street equities rose as traders assessed data showing China’s economy on the cusp of deflation and prepared for US inflation numbers that will feed into the Federal Reserve’s interest rate decision in late July. The blue-chip S&P 500 closed 0.2% higher in New York on Monday to end a three-session losing streak, having oscillated between gains and losses early in the day. The tech-heavy Nasdaq Composite also added 0.2%. The US moves came after data on Friday from the Bureau of Labour Statistics showed the world’s largest economy added 209,000 jobs in June. In Europe, the region wide Stoxx 600 added 0.2%, while France’s Cac 40 rose 0.4%. Germany’s Dax gained 0.4%, having dipped in early trade. London’s FTSE 100 rose 0.2%. Back home, Bursa Malaysia snapped a four-day losing streak to close higher on Monday, supported by continuous buying momentum for heavyweights, amid mixed sentiments in regional markets. At the closing bell, the FBM KLCI had gained 5.39 points, or 0.39%, to 1,383.06, from 1,377.67 at last Friday’s close. The regional markets also closed in positive territory after the Chinese data, with Hong Kong’s Hang Seng index up 0.6 % and China’s CSI 300 gaining 0.5 %.

Source: PublicInvest Research - 11 Jul 2023