Economy

Global: Public debt hits record USD92trn — UN report . Global public debt surged to a record USD92trn (RM427.8trn) in 2022 as governments borrowed to counter crises, such as the Covid-19 pandemic, with the burden being felt acutely by developing countries, a United Nations report said. Domestic and external debt worldwide has increased more than five times in the last two decades, outstripping the rate of economic growth, with GDP only tripling since 2002, according to the report, released in the run up to a G20 finance ministers and central bank governors' meeting July 14-18. (Reuters)

US: Inflation hits two-year low, giving hope for end to Fed hikes . US inflation sharply cooled last month, offering fresh hope that the Fed can soon wrap up the most aggressive interest-rate hikes in decades. The consumer price index rose 3% last month from a year ago, according to data from the Bureau of Labor Statistics. From May, it advanced 0.2%. Excluding food and energy, the CPI rose 0.2% from the prior month. From a year ago, the so called core measure — which economists view as the better indicator of underlying inflation — advanced 4.8%, the lowest since late 2021 but still well above the Fed’s target. (Bloomberg)

US: Mortgage rates jump above 7% to highest level since Nov . US mortgage rates rose last week to the highest since Nov, edging close to levels last seen more than two decades ago. The contract rate on a 30-year fixed mortgage increased 22 bps to 7.07% in the week ended July 7, according to Mortgage Bankers Association data. The weekly jump during the period that included the Fourth of July holiday was also among the biggest since late last year. The MBA’s index of refinancing applications declined a seasonally adjusted 1.3% from the prior week. However, the home-purchase gauge rose, contributing to an advance in the overall measure of mortgage applications. (Bloomberg)

EU: ECB's Lane says full impact of monetary policy tightening to play out in next few years. Eurozone economy will experience the full force of the unprecedented policy tightening that the ECB undertook in the face of runaway inflation, only in the next few years, ECB Executive Board member Philip Lane said. "The banking channel is likely to further strengthen in the coming months," Lane said in a speech at the NBER Summer Institute conference in Cambridge, Massachusetts. "The typical lags in monetary transmission mean that the full economic impact of the considerable monetary tightening over the last year will only play out over the next couple of years. (RTT)

UK: BoE says four million households face a jump in mortgage costs . The Bank of England warned that some four million households will face a sharp increase in mortgage costs, with the average borrower paying almost GBP3,000 (RM18,114) a year more. Governor Andrew Bailey said that the surge in mortgage rates will have an “impact clearly” on finances as the central bank’s Financial Stability Report predicted that one million households face a GBP500-plus hike in monthly repayments. (Bloomberg)

UK: BoE says UK economy is coping with higher rates . Britain's economy is so far proving resilient to a surge in interest rates over the past year and a half, but it will take time for the full impact to feed through, the Bank of England said. The Bank last month raised rates to 5% that had stood at 0.1% at the end of 2021, raising concerns about a hit to households, businesses and the broader financial sector that could push the economy into a recession. But in a half-yearly assessment of the health of the financial system, the BOE said there was no reason for alarm. (Reuters)

South Korea: Jobless rate rises unexpectedly to 2.6%. South Korea's unemployment rate increased unexpectedly in June, though marginally, data from Statistics Korea showed. The unemployment rate rose to a seasonally adjusted 2.6% in June from 2.5% in May. Meanwhile, economists had expected the rate to remain stable at 2.5%. In the same month last year, the unemployment rate was 2.9%. On an unadjusted basis, the jobless rate held steady at 2.7% at the end of the second quarter. (RTT)

Markets

Hap Seng: To offload hotel operating unit for RM51m to largest shareholder. Hap Seng is disposing of hotel operator Richmore Development SB to its largest shareholder Gek Poh (Holdings) SB for RM51m cash. Via the deal, the diversified group is to see RM212.5m in liabilities deconsolidated from the group’s books as Gek Poh replaces it as the new guarantor for Richmore’s bank borrowings. (The Edge)

AHB: Announces third new venture in under six months, this time into EVs. Only a month after mooting to diversify into trading of building materials, machineries and equipment, office furniture maker AHB Holdings is now eyeing a venture into the electric vehicles (EV) business. The company is eyeing a 51% equity interest in automotive distributor CAF Motors SB for an indicative consideration of RM10m in a cash and shares deal. (The Edge)

Pharmaniaga: Gets seven-year concession to provide medical supply logistics services to MOH. Pharmaniaga announced on that it has bagged a new seven-year concession agreement to provide medical supply logistics services to the Ministry of Health (MOH), following the end-June expiry of the six-month extension on its concession agreement with the government for the provision of medicines and medical supplies. (The Edge)

Steel Hawk: Plans transfer to ACE Market from LEAP Market. After spending a year and eight months on Bursa Malaysia's LEAP Market, O&G support services provider Steel Hawk is pursuing a transfer to the ACE Market. (The Edge)

ManagePay: Clarifies Prolintas deal, to charge nominal fees at toll lanes. ManagePay Systems has clarified that the appointment of its wholly owned subsidiary ManagePay Services SB (MPSB) as the open payment system provider at selected toll lanes for a subsidiary of highway concessionaire Projek Lintasan Kota Holdings SB (Prolintas) does not involve an outright purchase contract, but ManagePay will instead charge nominal fees, including mobilisation and monthly maintenance costs, without disclosing the specific contract value due to “sensitivity” of the information. (The Edge)

Microlink: Bags RM29m contract from National Audit Department. Microlink Solutions announced that it had accepted a letter of award (LOA) worth RM28.97m from the National Audit Department to design, develop and deliver a data warehouse, audit analytics application, audit dashboard as well as hardware and other supporting infrastructure. The contract is subject to a formal agreement being entered into by the National Audit Department and Microlink. (The Edge)

T7 Global: Facility begins gas production. T7 Global’s wholly owned subsidiary Tanjung Offshore Services SB has announced the commencement of gas production by the TSeven Elise mobile offshore production unit (Mopu) at the Bayan field. The integrated solutions provider said the event marked the official start of revenue contribution by TSeven Elise Mopu, which would provide a fixed and recurring income base for T7 Global Group over the next 10 years. (StarBiz)

Serba Dinamik: Public Bank to auction five Serba Dinamik properties over RM14.6m unpaid loans. The High Court in Shah Alam has fixed Aug 24 as the auction date in respect of five properties of Serba Dinamik Holdings for which Public Bank has obtained an order for sale. The five parcels of properties, charged to the bank, are located in Section 11, Shah Alam. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks and Treasuries rallied while the dollar tumbled after inflation fell more than expected in June, easing pressure on the Federal Reserve to keep raising interest rates. Wall Street’s benchmark S&P 500 stock index closed 0.7% higher on Wednesday at its highest level since April 2022, propelled by the tech and utilities sectors. The tech heavy Nasdaq Composite gained 1.2%. The moves came after data showed that US inflation slowed to 3%, its lowest level on an annual basis since March 2021. Across the Atlantic, Europe’s region-wide Stoxx 600 advanced 1.5%, while France’s Cac 40 gained 1.6%. London’s FTSE 100 rose 1.8%.

Back home, Bursa Malaysia extended its gaining streak for a third consecutive day on Wednesday, supported by persistent buying of heavyweights led by industrial products and services counters, in sync with the positive performance of regional bourses. At the closing bell, the FBM KLCI had gained 6.60 points, or 0.47%, to 1,398.06, from 1,391.46 at Tuesday’s close. The regional markets were mixed. China’s CSI 300 and Japan’s Topix both fell 0.7%, but Hong Kong’s Hang Seng index rose 1.1% and Korea’s Kospi added 0.5%.

Source: PublicInvest Research - 13 Jul 2023