Economy

US: Jobless claims unexpectedly dip to 237,000 . A report released by the Labor Department unexpectedly showed a modest decrease in first-time claims for US unemployment benefits in the week ended July 8th. The Labor Department said initial jobless claims slipped to 237,000, a decrease of 12,000 from the previous week's revised level of 249,000. The dip surprised economists, who had expected jobless claims to inch up to 250,000 from the 248,000 originally reported for the previous week. "Initial jobless claims fell last week, although we can't read too much into the one-week change as the seasonally adjusted headline figures can be noisy during the week that includes the July 4th holiday," said Nancy Vanden Houten, Lead US Economist at Oxford Economics. (RTT)

US: Producer prices inch up less than expected in June, annual growth slows to just 0.1%. Following yesterday's tamer than-expected consumer price inflation data, the Labor Department released a separate report showing producer prices in the US also inched up by slightly less than expected in the month of June. The Labor Department said its producer price index for final demand crept up by 0.1% in June after falling by a revised 0.4% in May. Economists had expected producer prices to rise by 0.2% compared to the 0.3% dip originally reported for the previous month. The report also said the annual rate of producer price growth slowed to just 0.1% in June from a revised 0.9% in May. (RTT)

EU: Eurozone industrial output grows at slower pace . Eurozone industrial production expanded for the second straight month in May, though at a weaker rate compared to the previous month, Eurostat reported. Industrial production posted a monthly growth of 0.2% in May after rising 1.0% in April. That was just below the 0.3% rise economists had expected. Capital goods production was the strongest performing sector in May, rising by 1.0%. Production of both intermediate goods and durable consumer goods advanced 0.5% over the month, while energy output declined by 1.1%. On a yearly basis, industrial production fell 2.2% in May after a 0.2% rebound in the preceding month. (RTT)

UK: Economy dips less than expected after strikes and coronation . Britain's economy contracted by less than expected in May despite the impact of strikes and an extra bank holiday to mark the coronation of King Charles, putting it on track to avoid a decline for the second quarter as a whole. Economic output fell 0.1% in May from April, the Office for National Statistics (ONS) said, following a growth of 0.2% in the previous month. A Reuters poll of economists had pointed to a contraction of 0.3%. (Reuters)

UK: Hunt says high inflation remains a 'drag anchor' on economy . Britain's Finance Minister Jeremy Hunt said that high inflation continued to hamper economic growth after the latest data showed that the economy contracted in May. “While an extra Bank Holiday had an impact on growth in May, high inflation remains a drag anchor on economic growth," Hunt said in a statement. "The best way to get growth going again and ease the pressure on families is to bring inflation down as quickly as possible. Our plan will work, but we must stick to it.(Reuters)

China: Exports fall most in three years as global economy falters . China's exports contracted last month at their fastest pace since the onset three years ago of the Covid-19 pandemic, as an ailing global economy puts mounting pressure on Chinese policymakers for fresh stimulus measures. Momentum in China's post-pandemic recovery has slowed after a brisk pickup in the first quarter, with analysts now downgrading their projections for the economy for the rest of the year, as factory output slows in the face of persistently weak global demand. (Reuters)

South Korea: Bank of Korea holds rates, to keep policy restrictive . South Korea's central bank held interest rates steady for a fourth straight meeting, saying it will maintain a tight stance on monetary policy amid still high prices and heightened financial uncertainty. The Bank of Korea (BOK) said its seven-member monetary policy board voted to keep the base rate unchanged at 3.50%, as it did in meetings in Feb, April and May. "The Board will maintain a restrictive policy stance for a considerable time with an emphasis on ensuring price stability," the BOK said in a statement. (Reuters)

Markets

TNB (Outperform, TP: RM12.42): Terminates another two contracts with Bintai Kinden worth RM84m. Bintai Kinden Corp said Tenaga Nasional Bhd (TNB) had terminated two contracts awarded to its subsidiary Kejuruteraan Bintai Kindenko SB (KBK) due to KBK’s inability to continue performing the contractual obligations. KBK is facing financial difficulties arising from its banking facilities being suspended or terminated by financial institutions. Based on prior filings, the two contracts were awarded in July and Oct 2018 and pertained to the establishment of a switching station and utilities, with a collective value of RM84.4m. (The Edge)

Oppstar: Signs MOU to look into developing integrated circuit products in China. Oppstar has entered into a MOU with two parties to look into jointly establishing an investment holding company and an IC related product company in Shanghai, China. The two parties are Chinese national Chen Junhua, and Shenzhen City Yixin Investment (Limited Partnership), a China-based company that invests in emerging industries like the IC industry. (The Edge)

Stella: Gets RM91m Penang project. Stella Holdings has been awarded a mixed development project in Seberang Perai Tengah, Penang by Warisan Kesumi Enterprise Sdn Bhd for RM91.4m. The company was appointed as sub-contractor in relation to structure, architecture and mechanical and electrical works for the project. (StarBiz)

Wellspire: Unit inks deal to distribute Cundo products in Malaysia, Singapore and Thailand. Wellspire Holdings’ unit Wellspire Global Trading SB has entered into an export agency agreement with China-based entity Cundo Food Co, Ltd to be the exclusive distributor of Cundo products in Malaysia, Singapore and Thailand. The agreement will last for a period of three years from July 13, 2023 to July 12, 2026. (The Edge)

KAB: Partners with China-based company to start biomass plant in Kedah. Kinergy Advancement’s (KAB) unit has signed a HOA with a China-based entity to start its first biomass plant, focusing on power and steam generation. This plant is expected to be set up on a plot of 300acres (121.41 hectares) in Kulim, Kedah. (The Edge)

Solarvest: To install residential solar solution for PKNS employees. Solarvest Holdings’ unit has signed an agreement to collaborate with Perbadanan Kemajuan Negeri Selangor (PKNS) to install residential solar solutions in the homes of the state development arm's employees. (The Edge)

Scomi Energy: To be suspended on July 24, possible delisting on July 26. Trading in the shares of Scomi Energy Services will be suspended 11 days later on July 24, with the stock possibly to be delisted two days after that on July 26, subject to an appeal being filed. (The Edge)

Shin Yang Shipping Corp: To trade as Ship Yang Group from July 14. Shipping and shipbuilding company Shin Yang Shipping Corp’s shares will be traded under its new name of Shin Yang Group, effective from July 14. (The Edge)

IPO: ACE Market-bound MyMBN shares offered to public oversubscribed by 30.77 times. ACE Market-bound MyMBN, which is set to be listed on Bursa Malaysia on July 25, saw 19.3m new shares offered to the public oversubscribed by 30.77 times. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks and government bond prices rose on Thursday after data provided further signs that inflation in the world’s largest economy is cooling. Wall Street’s benchmark S&P 500 index rose 0.8%, building on gains that carried it to a 15-month high in the previous session. The tech-dominated Nasdaq Composite added 1.6%. The moves followed data showing the producer price index, which tracks the prices businesses receive for their goods and services, rose less than expected in June. It was the second encouraging US inflation report in as many days, with figures on Wednesday showing that consumer price rises were also lower than forecast. Separate jobs data, however, highlighted that the labour market — a crucial driver of inflation — remains tight, with jobless claims falling by 12,000 to 237,000 in the week to July 8. Consumer price inflation hit a high of more than 9% last summer, and the Federal Reserve has been aggressively raising rates to bring it back towards the central bank’s 2% target. Europe’s region-wide Stoxx 600 added 0.6%, consolidating a 1.5% rise — the most since early June — in the previous session. France’s Cac 40 added 0.5%, while Germany’s Dax rose 0.7%.

Back home, late selling of selected heavyweights, led by healthcare and consumer products and services counters, resulted in Bursa Malaysia closing mixed on Thursday. At the closing bell, the FBM KLCI had slipped 1.83 points or 0.13% to 1,396.23, from 1,398.06 at Wednesday’s close. The regional markets rose even though China’s exports and imports both shrank faster than expected in June. China’s CSI 300 gained 1.4%, South Korea’s Kospi added 0.5%, while Japan’s Topix rose 1%. Hong Kong’s Hang Seng index added 2.6%, while the Hang Seng Tech index rallied 3.6% after government officials signalled their support for the tech sector.

Source: PublicInvest Research - 14 Jul 2023