Economy

US: Small business confidence reaches 7-month high in June, NFIB says . US small business confidence climbed to a seven month high in June as pessimism about the economic outlook diminished sharply and sales expectations improved, but a still-tight labor market continued to drive concerns about inflation, according to a survey released. The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rose 1.6 points to 91 last month, the greatest MoM improvement since August 2022. That improved optimism appeared to be helping firm up small businesses' investment plans and expectations for price increases: One-in-four firms plan near-term capital spending, up from a three-year low earlier in the spring, and nearly a third reported intentions to raise prices - a seven-month peak. (Reuters)

EU: Italy industrial output recovers more than forecast . Italy's industrial production expanded for the first time in five months in May, and at a faster-than-expected pace, the statistical office ISTAT showed. Industrial production rose 1.6% MoM in May, reversing a 2.0% drop in April. All components contributed positively in May. Production of capital goods grew the most, by 1.4% over the month, closely followed by intermediate goods with a 1.2% gain. Both consumer goods and energy goods increased by 1.1% and 0.1%, respectively, in May. On a yearly basis, industrial production declined at a slower rate of 3.7% in May after falling 7.4% a month ago. Data showed that unadjusted industrial production fell 3.6% annually in May versus a 10.2% decline in the prior month. (RTT)

EU: German ZEW economic confidence at 7-month low . Germany's economic sentiment deteriorated to a seven-month low in July as financial market experts expect further economic downturn in the face of more monetary policy tightening, results of a closely watched survey showed. The Indicator of Economic Sentiment declined more-than-expected to -14.7 in July from -8.5 in June, survey data from the ZEW-Leibniz Centre for European Economic Research showed. This was the lowest since Dec 2022 and also worse than economists' forecast of -10.0. The score has remained negative for the third month in a row. Similarly, experts' assessment of the current economic situation weakened in July. (RTT)

EU: German inflation accelerates in June . Germany's inflation accelerated in June, as initially estimated, after slowing to a 14- month low in May, final data from Destatis showed. Consumer prices advanced 6.4% on a yearly basis, faster than the 6.1% increase in May. The rate matched the preliminary estimate published on June 29. The CPI rate increased in June after slowing for three straight months. The May figure was the lowest since March 2022. Destatis President Ruth Brand said food remained the biggest driver of inflation. "There also is a base effect due to the Federal Government's relief measures of 2022 - the 9-euro ticket and the fuel discount, - which pushes up the current rate of inflation," said Brand. (RTT)

UK: Wage growth hits joint record high, keeping pressure on BoE . A key measure of British wages matched its highest growth rate on record but there were also some signs that the inflationary heat in the labour market is subsiding, offering the prospect of some relief ahead for BoE. The 7.3% increase in basic earnings in the three months to May matched the reading in the three months to April — which was revised up from an initial estimate of 7.2% — and also the second quarter of 2021, the Office for National Statistics (ONS) said. Economists polled by Reuters had forecast a 7.1% rise. Sterling touched a 15-month high against the dollar as it rose by 0.3% on the day and also gained moderately against the euro after the data. (Reuters)

China: Loan growth picks up after rate cut to boost economy . China’s new loans accelerated in June after a central bank interest rate cut in the middle of the month aimed at boosting credit demand. New corporate medium and long-term loans — which reflect investment demand — improved from a high level recorded in the same month last year. New household mid and long-term loans, a proxy for mortgages, also increased slightly from last year. Aggregate financing, a broad measure of credit, was CNY4.2trn (USD583bn or RM2.72trn), the PBOC said on July 11. Financial institutions offered CNY3.05trn worth of new loans in the month, above economists’ forecasts of CNY2.3trn, and compares with the CNY2.8trn a year ago. That was higher than the median estimate of CNY3.1trn in a Bloomberg survey of economists, and compares with CNY5.2trn yuan in the same month a year ago. (Bloomberg)

Japan: Machine tool orders plunge 21.7%. Japan's machine tool orders declined for the sixth straight month in June amid lower demand both domestically and internationally, preliminary data from the Japan Machine Tool Builders Association, or JMTBA, showed. Machine tool orders plummeted 21.7% YoY in May, slightly slower than the 22.1% fall in the previous month. Domestic demand was 29.9% lower in June compared to last year, and foreign orders contracted 16.7%. On a monthly basis, machine tool orders rose 1.4% in June, reversing a 9.9% drop in the prior month. (RTT)

Markets

Sapura Resources: To sell aviation business in Subang Airport to Abu Dhabi’s RoyalJet. Sapura Resources is disposing of its aviation business at the Subang Airport to Abu Dhabi-based private jet operator RoyalJet LLC for an undisclosed sum. Sapura Resources said the two parties signed a conditional heads of agreement on June 23. Both companies believe that the proposed deal is in tandem with Malaysia’s current plans to rejuvenate the private aviation industry, which would benefit Selangor’s economic development around Subang Airport. (The Edge)

Scientex: Buys more land in Johor, this time from PNB unit for RM299.8m. Scientex, which is in the midst of acquiring 960 acres of prime freehold land in Tebrau, Johor from S P Setia for RM547.6m, is buying another 550.7 acres of land in Kulai, also in Johor, for RM299.8m. Scientex indirect subsidiary Scientex Lestari Sdn Bhd has inked a conditional sale and purchase agreement with Seriemas Development SB to acquire the six parcels of land in Kulai to increase its landbank. (The Edge)

Samaiden: Bags RM181m contract to build solar power plant in Kedah. Samaiden Group’s unit has secured a contract worth RM181.3m to develop a solar power plant in Sungai Petani, Kedah. The company received the contract from Uzma Bhd’s associate company Suria Infiniti SB. The project is a large-scale solar PV (LSSPV) power plant with a capacity of 50MWac, which has been approved by the Energy Commission pursuant to the LSS4 (large scale solar 4) programme. (The Edge)

Velesto: Gets RM60.6m rig-drilling job from PTTEP. Velesto Energy's indirect wholly owned subsidiary Velesto Drilling SB has secured a contract for the provision of drilling rig services for PTTEP Sabah Oil Ltd and PTTEP Sarawak Oil Ltd worth some RM60.6m. The contract will involve the assignment of the group's Naga 3 for PTTEP's drilling programme, requiring it to drill two firm wells starting from Feb 2023. (The Edge)

SCIB: Signs MOU with IRIX to participate in submarine cable system project. Sarawak Consolidated Industries Bhd (SCIB) has signed a MOU with IRIX SB that will pave the way for SCIB to acquire a 30% stake in IRIX SEA H2X SB, pending satisfactory due diligence. Through its MOU with IRIX, the company would participate in the SEA-H2X project by investing in IRIX SEA H2X, which is part of the consortium responsible for constructing and operating the Southeast Asia Hainan-Hong Kong express cable system. (The Edge)

Bright Packaging: JV deal with Datai Plantations becomes unconditional. Bright Packaging announced its joint venture deal with Datai Plantations SB (DPSB) to diversify into oil palm plantations has become unconditional, thereby fulfilling its obligation to invest in DPSB. The JV will facilitate Bright Packaging’s expansion into oil palm plantations, together with facilities and the provision of services ancillary to such plantation on parcels of land located in Sarikei, Sarawak. (The Edge)

IPO: Main Market-bound MST Golf’s IPO attracts RM924m interest from institutional investors. MST Golf Group’s IPO to raise RM184.7m from the sale of new and existing shares at 81sen apiece has attracted an “overwhelming demand” of RM924m orders from institutional investors. (The Edge)

Market Update

The FBM KLCI might open higher today after Wall Street stocks closed higher on Tuesday, ahead of a much-anticipated inflation reading that investors will scrutinise for clues about the future path of US interest rate rises. A late rally left the benchmark S&P 500 0.7% higher at the closing bell, while the technology-heavy Nasdaq Composite rose 0.5%. In European equities, the region-wide Stoxx 600 gained 0.7%, while France’s Cac 40 was helped higher by luxury goods groups and real estate stocks, rising 1.1%. Germany’s Dax added 0.7%. London’s FTSE 100 closed 0.1% higher after data showed UK wage growth accelerated more than expected in the three months to May.

Back home, Bursa Malaysia ended at its intraday high on Tuesday, in sync with the upbeat performance on regional bourses as market sentiment turned positive, fuelling investors' risk appetite. At the closing bell, the FBM KLCI had gained 8.40 points, or 0.61%, to 1,391.46, from 1,383.06 at Monday’s close. Asian stocks made headway after Chinese officials on Monday said measures designed to support the property sector would be extended until the end of 2024. Hong Kong’s Hang Seng index added 1%, China’s CSI 300 rose 0.7% and South Korea’s Kospi climbed 1.7%. Japan’s Topix fell 0.3%, however.

Source: PublicInvest Research - 12 Jul 2023