Economy

US: Retail sales rise moderately; economy plodding along. US retail sales rose less than expected in June as receipts at service stations and building material stores declined, but consumers boosted or maintained spending elsewhere, which likely kept the economy on a solid growth path in the second quarter. Overall, the mixed report painted a picture of consumer resilience, though slowing momentum in spending growth. It did not change expectations that the Fed would resume raising interest rates this month after keeping them unchanged in June. Retail sales increased 0.2% last month. Data for May was revised higher to show sales gaining 0.5% instead of 0.3% as previously reported. Economists polled by Reuters had forecast retail sales gaining 0.5%. Retail sales are mostly goods and are not adjusted for inflation. They rose 1.5% YoY in June. (Reuters)

US: Manufacturing output falls in June; rebounds in second quarter. Production at US factories unexpectedly fell in June, but rebounded in the second quarter as motor vehicle output accelerated after two straight quarterly declines. Manufacturing output dropped 0.3% last month, the Fed said. Data for May was revised down to show production at factories falling 0.2% instead of edging up 0.1% as previously reported. Economists polled by Reuters had forecast factory output would be unchanged. Production decreased 0.3% on a YoY basis in June. It rebounded at a 1.5% annualized rate in the second quarter after shrinking at a 0.2% pace in the January-March period. Factory output, which had also contracted in the fourth quarter, was boosted by a 36.7% surge in the production of motor vehicles and parts in the second quarter. (Reuters)

EU: German tax revenues drop sharply in June. Tax revenues of Germany's federal and regional state governments fell by 7.3% in June compared with the previous year, reflecting tax relief measures to compensate for inflation and a one-off effect, the finance ministry said. Federal and state governments' tax revenue declined to a total of 86.39bn euros (USD96.71bn), according to the ministry's monthly report. The ministry said the YoY decrease was amplified by a special revenue-increasing effect in June of last year. When adjusted for that effect, revenues would be down 3.5%, it said without elaborating further. (Reuters)

UK: High inflation cools, offering some relief to BoE. Britain's high rate of inflation fell by more than expected in June and was its slowest in over a year at 7.9%, according to data that will ease some of the pressure on the BoE to keep on raising interest rates sharply. Sterling weakened and investors scaled back their bets on future increases in borrowing costs as consumer price inflation growth came in at its lowest since March 2022, although it remained above the rate in other big, rich economies. Economists polled by Reuters had mostly forecast a smaller slowdown, to 8.2% in the 12 months to June from May's 8.7%. (Reuters)

Japan: Companies less confident about business conditions. Confidence at big Japanese manufacturers fell in July for the first time in six months, the Reuters Tankan survey showed on Wednesday, in a sign of growing exporter concern about weakening overseas demand. Their index fell to plus 3 in July, from plus 8 in the previous month. Industries like steel, oil refining and food processing saw particularly large slumps in sentiment. Last month saw Asian factory activity drop, hurt by sluggish demand from China in particular. (Reuters)

China: To increase support for private firms to bolster recovery. China on Wednesday pledged to make the private economy "bigger, better and stronger" with a series of policy measures designed to help private business and bolster the flagging post-pandemic recovery. China will strive to create a market-oriented first-class business environment, state news agency Xinhua said, quoting guidelines published by the Communist Party and the cabinet. (Reuters)

South Korea: To hike minimum wage by 2.5% in 2024, smallest in three years. South Korea has decided to raise the minimum wage by a three-year low of 2.5% in 2024, its Minimum Wage Commission said on Wednesday, amid slowing growth and high inflation. The minimum hourly wage will be raised to 9,860 won (USD7.80) next year, up from 9,620 won this year, the commission said. The figure was reached after 110 days of discussion, the most number of days it has ever taken reach an agreement. It will be the smallest increase since 2021, when the wage was raised by a record low of 1.5% amid the COVID-19 pandemic. (Reuters)

New Zealand: Q2 CPI rises 1.1%, slightly faster than expected. New Zealand's consumer inflation came in slightly above expectations in the second quarter, driving swap rates higher as the market pushed out expectations for when the central bank might start cutting the cash rate. Consumer prices rose 6.0% YoY in the second quarter, slower than the 6.7% increase in the first quarter, Statistics New Zealand said in a statement on Wednesday. It is now below the three-decade high of 7.3% inflation seen in the second quarter of 2022. The CPI rose 1.1% quarter-on-quarter, slower than the 1.2% rise in the first quarter. (Reuters)

Markets

Genting (Outperform, TP: RM5.50): Receives four offers for Miami property, one exceeding RM5.58bn - Report . Genting has reportedly received four offers for a Miami waterfront property it owns, which it had originally wanted to turn into a casino.One of the bids it received reportedly exceeded USD1.23bn (RM5.58bn), Bloomberg reported. “There’s been no break in the receipt of offers — at and even above the USD1.225bn price (RM5.56bn),” Avison Young broker Michael Fay was quoted as saying. The property, which spans almost 63,000 square metres, was the site of the old Miami Herald building, the report said. (Malay Mail)

Muda: Unit sells remaining 16.88% stake in Singapore waste paper company for RM23m . Muda Holdings 70%-owned unit has exercised its put option to sell the remaining 16.88% stake it holds in a Singapore waste paper recovery and processing company — KL Resources Pte Ltd — for RM23.06m — to realise its investment and generate funds for working capital. The subsidiary, Intrapac (Singapore) Pte Ltd, inked an agreement to dispose of the stake to Tansfield Ltd for SGD6.7m. The disposal, which is expected to be completed in 30 days, will result to a proforma gain of about RM1.91m to Muda Holdings for the financial year ending Dec 31, 2023. (The Edge)

Builder Siab: Plans to raise RM110m via rights issue to fund Taghill acquisition . Builder Siab Holdings is acquiring Taghill Projects SB for RM122m to be satisfied via a combination of RM96m cash and RM26m via issuance of Siab shares at an issue price of 13 sen each. Siab also plans to undertake a rights issue to raise up to RM110.34m, of which RM96m will be used to partly fund the cash consideration of the proposed acquisition and the rest for working capital. (The Edge)

Tex Cycle: To sell property in Jalan Kuchai Lama for RM29m . Tex Cycle Technology (M) is disposing of a three-storey detached industrial building constructed on a piece of leasehold land measuring 4,823 sq m in Jalan Kuchai Lama, Kuala Lumpur for RM29m. The group is selling the property via its wholly owned unit Metro Envy SB to Gorgeous Arena SB (GASB). Tex Cycle said the divestment, which is expected to be completed by the first quarter of 2024, will result in a gain of RM7.1m. (The Edge)

Solarvest: Partners Singapore companies to expand its geographical reach . Solarvest Holdings is partnering two Singapore companies to advance energy storage solutions or ESS development in solar energy systems, as it expands its geographical expansion to Singapore and Brunei to capitalise on the growing demand for sustainable energy solutions, given strong prospects in both the countries. In a statement, it said its wholly owned Solarvest Energy SB has entered into a MOU with Singapore’s multi-faceted industrial consultant IDA Holdings Pte Ltd (IDA) and Acumon Capital Pte Ltd (Acumon), a multi-disciplinary real estate developer and manager. (The Edge)

Barakah: Unit receives extension for pan-Malaysia MCM contract . Barakah Offshore Petroleum Bhd's unit, PBJV Group SB, has received a contract extension for pan-Malaysia maintenance, construction and modification services under Package A. The group said that the contract from Jadestone Energy (Malaysia) Pte Ltd — formerly Sapura Exploration and Production (PM) Inc — Hess Exploration and Production Malaysia BV, Petrofac (Malaysia PM304) Ltd and IPC Malaysia BV, which was due to expire in June this year, has been extended to Dec 31, 2024. (The Edge)

Market Update

The FBM KLCI might open higher today US stocks rose slightly on Wednesday as investors prepared for a pair of earnings results from big tech groups after the closing bell. On Wall Street, the benchmark S&P 500 pared an early advance to finish the session with a 0.2% gain, while the tech-focused Nasdaq Composite ended fractionally higher. In Europe, the region-wide Stoxx 600 closed 0.3% higher, extending gains from the previous session, while France’s Cac 40 edged up 0.1% and Germany’s Dax ended the day 0.1% lower. London’s FTSE 100 jumped 1.8%, its steepest one-day gain since November, as shares of UK property companies surged following signs that inflation was slowing and interest rates could peak lower. The moves came after the Office for National Statistics said the UK’s annual consumer price inflation eased to 7.9% in June, from 8.7% in the previous month, landing below analysts’ forecasts. The reading ended a four-month streak of UK price growth readings that exceeded expectations, easing the pressure on Bank of England policymakers who have lifted interest rates to 5%, their highest level since 2008. Meanwhile, the regional equities slipped, as China’s stalled economic recovery and the government’s slow rollout of stimulus measures weighed on market sentiment. The Hang Seng index dropped 0.3%, while China’s blue-chip CSI 300 index slipped 0.1%.

Source: PublicInvest Research - 20 Jul 2023