Economy

US: Pending home sales unexpectedly increase in June. A report released by the National Association of Realtors on Thursday unexpectedly showed a modest increase in pending home sales in the U.S. in the month of June. Its pending home sales index rose by 0.3% to 76.8 in June after tumbling by 2.5% to a revised 76.6 in May. Economists had expected pending home sales to decrease by another 0.5% compared to the 2.7% slump originally reported for the previous month. Pending home sales increased for the first time since February but were still down by 15.6% compared to the same month a year ago. (RTT)

US: GDP growth unexpectedly accelerates to 2.4% in Q2. US economic growth unexpectedly accelerated in 2Q2023. Real GDP surged by 2.4% in 2Q after jumping by 2.0% in 1Q. Economists had expected the pace of GDP growth to slow to 1.8%. Quirky seasonal adjustment factors may lead to outsized revisions down the road, but these data suggest the economy was solid in Q2. The economy withstood pervasive pressures from persistent recession fears, elevated interest rates, the Fed's hawkish policy tilt, and tighter bank lending standards.. (RTT)

EU: ECB hikes rates again as Lagarde leaves door open for pause ahead. The ECB raised its interest rates as expected, for the ninth policy session in a row citing the prospect of inflation in the euro area staying too high for too long, while the bank chief Christine Lagarde signalled that policymakers are having an open mind regarding future rate decisions, suggesting that a pause may be on the horizon. The Governing Council, led by ECB President Lagarde, increased the main refinancing rate, or refi, by 25bps at 4.25%. (RTT)

UK: Retailers expect sales to decline sharply in August. UK retailers expect the downturn in sales to gather pace in Aug. A net 25% of retailers said the sales volume fell in July, which was the biggest fall since April 2022. A net 32% said sales are set to fall again next month. The survey showed that orders placed upon suppliers decreased the most since Jan 2021. The corresponding balance fell to -39% from -10% in June. Nearly 45% of respondents said orders will fall again next month. Firms remain cautious about the retail sector's near-term outlook as they pare back on orders and brace themselves for another sales contraction in the year to Aug. (RTT)

China: Industrial profits fall at slower pace. China's industrial profits declined in June but the pace of annual decrease slowed. During Jan to June, industrial profits declined 16.8% from the same period last year. This followed a decrease of 18.8% in Jan to May period. In the month of June, industrial profits slid 8.3% annually but slower than the 12.6% decrease in May. Industrial profits data cover firms with annual revenue of at least RMB20m. The statistical office said profits at companies are improving. However, factory gate deflation as well as weak demand continued to weigh on corporate margins. (RTT)

South Korea: Industrial production slips 1.0% in June. Industrial output in South Korea was down a seasonally adjusted 1.0% on month in June. That missed expectations for a decline of 0.3% following the 3.0% drop in May. On a yearly basis, industrial production sank 5.6% - also shy of expectations for a decline of 5.5% after falling a downwardly revised 7.6% in the previous month (originally -7.3%). (RTT)

Markets

Capital A : Bursa grants extension until Oct 7 on regularisation plan. Bursa Malaysia Securities has granted Capital A an extension of three months up to Oct 7, 2023, to submit its regularisation plan to the regulatory authorities. Capital A said the extension was without prejudice to Bursa Securities’ right to proceed to suspend the trading of listed securities of the company and to delist in the event the company failed to submit its regularisation plan to the regulatory authorities on or before Oct 7, 2023. (StarBiz)

Pharmaniaga: Bursa Securities 'unable to consider' second private placement. Bursa Malaysia Securities has informed Pharmaniaga that it is "unable to consider" the company's proposed second private placement of new shares to the Armed Forces Fund Board (LTAT). Pharmaniaga said it was told that as a Practice Note 17 (PN17) company it must ensure expeditious regularisation of its financial condition to warrant continued trading and listing on the exchange. (The Edge)

Citaglobal: Partners Abu Dhabi energy firm to explore developing solar farm in Pahang. Citaglobal’s unit has inked a MOU with UAE-based Abu Dhabi Future Energy Company PJSC (Masdar) to look into jointly developing renewable energy projects in Malaysia. The execution of the MOU will enable Citaglobal to strengthen the development of a 2GW solar farm (landed and floating) in Pahang that will cater to the local and export renewable energy markets. Both parties will also explore battery energy storage systems (BESS), as well as wind and other renewable energy technologies in line with the Malaysian government target of meeting net-zero emissions by 2050. (The Edge)

MBSB: Gets shareholders’ nod to acquire MIDF in RM1.01bn share deal. MBSB has received shareholders’ approval to buy MIDF from PNB for RM1.01bn that will be satisfied via the issuance of 1.05 bn MBSB shares at 96.52 sen per share. Following the proposed acquisition — which is expected to be completed in August this year — MIDF will become a wholly owned subsidiary of MBSB, and PNB will emerge as a substantial shareholder of MBSB with an equity stake of 12.78%. Meanwhile, EPF shareholdings in MBSB will be reduced from 65.87% to 57.45%. In an EGM held on July 27, MBSB's new group chief executive officer Rafe Haneef said that the merger will expand MBSB's banking spectrum. (The Edge)

SCIB: Sues Dynamic Prestige Consultancy over RM14m refunds. SCIB has filed a lawsuit against Dynamic Prestige Consultancy SB and is seeking RM14 million in refunds previously paid to “explore business opportunities in the engineering, procurement, construction and commissioning (EPCC) sector”. SCIB claimed that it had paid the sum “in tranches” to Dynamic Prestige between October and November last year. “The defendant (Dynamic Prestige) in consideration, were to propose redeemable convertible preference shares (RCPS) in their company,” said SCIB. (The Edge)

Aneka Jaringan: Cautiously optimistic about the future. Aneka Jaringan Holdings is cautiously optimistic about its performance in the upcoming financial quarters, according to MD Pang Tse Fui. “To date, we have secured a total of RM304.9m in new projects, with the most recent projects secured since the last interim quarterly report amounting to RM193.3m. With these new projects, our focus remains on timely execution,” Pang said. He added that PT Aneka Jaringan Indonesia (PTAJI) continued to meet its growth expectations, contributing positively to the group's performance. (StarBiz)

Market Update

The FBM KLCI might end with a whimper today after monetary policy deliberations dominated markets on Thursday with the Yen leaping on reports the Bank of Japan will discuss policy changes on Friday while punchy US growth figures pushed Treasury yields to two-week highs. Earlier on Thursday the European Central Bank raised its benchmark interest rates by a quarter-point to 3.75% for its ninth consecutive increase in the space of one year. It was, however, the Yen’s move that drew attention in the New York afternoon after Japan’s Nikkei newspaper reported that while the BoJ was expected to continue its yield curve control by capping the yield on 10-year government bonds at 0.5%, it may allow long-term interest rates to rise above that by a certain amount. The bond market selling damped an early upbeat tone on Wall Street leaving the S&P 500 and Nasdaq Composite each about 0.6% lower and dashing hopes the Dow Jones Industrial Average would match a 14-day winning streak for only the second time in its 127-year history. Earlier on Thursday, Europe’s Stoxx 600 rose 1.3%, closing at its highest level since Russia invaded Ukraine in February 2022, while France’s CAC 40 gained 2.1% and Germany’s Dax advanced 1.7%.

Back home, Bursa Malaysia extended its winning streak for the sixth consecutive trading day, amid positive investor sentiment. At the closing, the FBM KLCI had risen 1.98 points to 1,451.27, from 1,449.29 at Wednesday’s close. Markets were mixed in the region, where Hong Kong’s benchmark Hang Seng index rose 1.4%, while the CSI 300 index of Shanghai- and Shenzhen-listed stocks slipped 0.1%.

Source: PublicInvest Research - 28 Jul 2023