Economy

US: Economic soft landing hinges on Fed’s tolerance of inflation. Rising hopes of a soft landing for the US economy likely hinge on the Federal Reserve’s willingness to tolerate inflation markedly higher than it would prefer. After taking a break from tightening credit last month, Fed Chairman Jerome Powell and his colleagues look locked in to raising interest rates by a quarter ppts this week. The aim: To slow the economy enough to reduce inflation to its 2% target over time, without crashing the US into a recession — a proverbial soft landing. (Bloomberg)

UK: Budget deficit narrows in June. The UK budget deficit narrowed in June but remained the third-highest for the month since records began in 1993. Public sector net borrowing excluding public sector banks decreased by GBP0.4bn to GBP18.5bn in June. However, this was the third-largest June borrowing since records began in 1993. The expected level was GBP22bn. The higher tax receipts as well as a strong fall in debt interest payable compared to last year, were largely offset by increased benefit payments and other costs. In the financial year to June, public sector net borrowing increased GBP12.2bn to GBP54.4bn. (RTT)

UK: Retail sales growth exceeds expectations. Despite the high inflation, UK retail sales growth accelerated more than expected in June as good weather boosted food and non-food store sales. However, survey results from the market research group GfK showed that the consumer confidence weakened for the first time in six months in July. Retail sales advanced 0.7% MoM in June, which was faster than the 0.1% rise in May. This was also faster than the economists' forecast of 0.2%. All the main sectors of retail sales, namely food, non-food and non-store retailing expanded in June, except automotive fuel. (RTT)

China: Addresses investor concerns in global fund meeting. Chinese regulators met with global investors on Friday, according to people familiar with the matter, stepping up the government’s bid to boost market confidence as the country’s economic recovery loses steam. China Securities Regulatory Commission Vice Chairman Fang Xinghai met with some global venture capital and private equity firms to hear their concerns about investment in the country. The rare meeting with global funds comes after Chinese President Xi Jinping’s administration voiced its strongest support in recent years for the country’s private tech enterprises just days earlier. (Bloomberg)

Taiwan: Top bank looks to Southeast Asia in shift from China. One of Taiwan’s largest lenders is shifting its business and hiring focus to Southeast Asia as its corporate clients in high-tech and textile manufacturing seek to diversify supply chains away from China amid geopolitical tensions. Cathay United Bank Co. from 2020 to 2022 boosted headcount in Vietnam by 75% and increased hiring by more than a third in Singapore. The expansion plans have “literally switched positions” with China, In an interview, pointing to Vietnam, Indonesia and Cambodia as focus countries. (Bloomberg)

Australia: Manufacturing PMI improves to 49.6 in July. The manufacturing sector in Australia continued to contract in July, albeit at a slower pace with a manufacturing PMI score of 49.6. That's up from 48.2 in June, although it remains beneath the boom or-bust line of 50 that separates expansion from contraction. Total new orders and new export business both declined again in July, but at reduced rates amid some signs of demand stabilization. There were several reports of new orders from customers in the US. The pace of input cost inflation ticked higher at the start of 3Q but remained relatively muted. (RTT)

New Zealand: June trade surplus has NZD9m. New Zealand posted a merchandise trade surplus of NZD9m in June. That was well shy of expectations for a surplus of NZD235m following the upwardly revised NZD52m surplus in May (originally NZD46m). Exports were worth NZD6.31bn, easing from the downwardly revised NZD6.97bn in the previous month (originally NZD6.99bn). Imports came in at NZD6.30bn, down from the downwardly revised NZD6.91bn a month earlier (originally NZD6.95bn). (RTT)

Markets

Pharmaniaga: Plans second private placement to raise up to RM50m for working capital. Pharmaniaga has proposed to undertake a second private placement of up to 144.12m new shares, representing 10% of its total issued shares, to the Armed Forces Fund Board (LTAT), subject to shareholders’ approval. The pharmaceutical group, which has booked negative net operating cash flow since 2020, said its largest shareholder LTAT confirmed that the subscription of the placement will be satisfied in cash at an issue price to be determined later. Based on the indicative issue price of 35.6 sen and assuming 140.45m shares being placed out, the placement is expected to raise gross proceeds of about RM50m. (The Edge)

MAHB: Records over 10m passenger movements in June 2023. - Malaysia Airports Holdings Bhd’s (MAHB) network of airports recorded over 10m passengers in June 2023, the highest since the global shutdown in March 2020. MAHB’s network of airports in Malaysia and Turkiye continued to showcase consistent passenger growth by recording a new high of 4.9m total international passenger movements for June 2023, an increase of 7.1% from the preceding month. Meanwhile, total domestic passenger movements maintained above the 5.0m mark for the second consecutive month in June 2023 at 5.3m. (Bernama)

Jentayu Sustainables: To collaborate with Sumitomo in RE projects. Jentayu Sustainables ,which is developing a 170MW run of-river hydropower plant in Sipitang, Sabah, plans to collaborate with Japan's Sumitomo Corp in renewable energy (RE) projects. The company inked a two-year MOU with Sumitomo to enter into a detailed discussion to solidify the potential collaboration. (The Edge)

7-Eleven: To dispose of entire 75% stake in Caring Pharmacy for RM637.5m. 7-Eleven Malaysia Holdings Bhd (SEM) has received an offer from BIG Pharmacy Healthcare SB to acquire its entire 75% equity interest in Caring Pharmacy Group Bhd for RM637.5m. SEM said its wholly-owned subsidiary Convenience Shopping (Sabah) SB (CSSSB) received a binding term sheet from BIG Pharmacy for the proposed disposal. (StarBiz)

Chin Hin Group Property: Collaborates with Affin Bank to assist homebuyers. Chin Hin Group Property (CHGP) is collaborating with Affin Bank to provide Affin Home Step Fast/i to assist homebuyers by giving them the flexibility of monthly repayments in the first five years of their homeownership. “Affin Home Step Fast/i is especially advantageous for young couples starting a family and looking for a wholesome home, as well as young professionals building their careers. (The Edge)

IPO: Daythree Digital posts RM2.62m net profit for 2Q. ACE Market-bound Daythree Digital posted a net profit of RM2.62m or 71 sen per share for the second quarter ended June 30, 2023 (2QFY2023). The global business services (GBS) provider’s revenue for the quarter stood at RM23.04m, with its energy and utilities segment being the main revenue contributor, amounting to RM9.78m or 42.4% of 2QFY2023 revenue. Daythree highlighted that as this is its first interim financial report for 2QFY2023, there are no comparative figures for the preceding year’s corresponding quarter. Subsequently, the group recognised its profit before tax of RM3.58m for this quarter after deducting administrative expenses that amounted to RM2.45m. (The Edge)

Market Update

The FBM KLCI might open flat today after US stocks were mixed on Friday, following a steep drop in large-cap technology stocks in the previous session, with traders turning their attention to the Federal Reserve’s policy meeting next week and a wave of corporate results. Wall Street’s benchmark S&P 500 made fractional gains on Friday, led by defensive sectors such as healthcare, consumer staples and utilities. It advanced 0.7% across five sessions, its second straight week of gains. The tech-focused Nasdaq Composite lost 0.2% on the day, and was 0.6% lower for the week. The moves came a day after technology stocks sold off sharply across the US and Europe, as earnings reports by industry heavyweights Tesla and Netflix failed to impress investors. In Europe, the region-wide Stoxx 600 index recovered after early morning losses to end the day 0.3% higher. France’s Cac 40 added 0.6%. Germany’s Dax index was the only faller in Europe, down 0.2%.

Back home, Bursa Malaysia ended the week on a firm note, hitting an intraday high convincingly above the 1,400-level on Friday, as upbeat investor sentiment lifted buying momentum despite the mixed performance in regional bourses. At the closing bell, the FBM KLCI rose 0.49% or 6.83 points to 1,413.52 from 1,406.69 at Thursday’s close. Equities were mixed in the region, with Hong Kong’s Hang Seng adding 0.8 % while China’s benchmark CSI lost 0.1 %.

Source: PublicInvest Research - 24 Jul 2023