Economy

US: Mortgage rates spike to highest since Nov, approach 22- year high. The average US 30-year mortgage rate jumped to a nine-month peak and hit the second-highest rate since 2001, as interest rates reacted sharply to a downgrading of US government debt. The average 30-year mortgage rate shot up to 7.09% for the week ending Aug. 4, a 16 basis point increase from the previous week’s 6.93% rate, according to a weekly report released by the Mortgage Bankers Association. (Reuters)

EU: Italy trims bank windfall tax after USD10bn value wiped out. The Italian government backtracked on part of its new windfall tax on banks, saying it would introduce a cap to limit the impact for many lenders as it tries to calm a market rout that wiped out USD10bn from the banks’ market value. The levy won’t exceed 0.1% of a firm’s assets and banks that have already increased the interest rates offered to depositors “will not have a significant impact as a consequence of the rule,” the finance ministry said. (Bloomberg)

China: Tips into deflation as efforts to stoke recovery falter. China’s consumer sector fell into deflation and factory-gate prices extended declines in July, as the world’s second-largest economy struggled to revive demand and pressure mounted for Beijing to release more direct policy stimulus. Anxiety is rising that China is entering an era of much slower economic growth akin to the period of Japan’s “lost decades”, which saw consumer prices and wages stagnate for a generation, a stark contrast to the rapid inflation seen elsewhere. (Reuters)

Japan: Machine tool orders plunge 19.8%. Japan's machine tool orders declined for the seventh straight month in July amid lower demand both domestically and internationally, preliminary data from the Japan Machine Tool Builders Association, or JMTBA, showed. Machine tool orders plummeted 19.8% YoY in July, slower than the 21.1% fall in the previous month. (RTT)

South Korea: Jobless rate rises unexpectedly to 2.8%. South Korea's unemployment rate increased unexpectedly at the start of the third quarter, data from Statistics Korea showed. The unemployment rate rose to a seasonally adjusted 2.8% in July from 2.6% in June. Meanwhile, economists had expected the rate to fall to 2.5%. In the same month last year, the unemployment rate was 2.9%. (RTT)

Indonesian: Retailers expect sales to rise strongly. Retail sales in Indonesia rebounded sharply at the end of the 2Q, and retailers expect sales to maintain strong growth momentum in July, the results of a survey by Bank Indonesia showed. Retail sales climbed 7.9% YoY in June, reversing a 4.5% rise in the previous month. (RTT)

Markets

Bumi Armada (Outperform, TP: RM0.70): Resolves unplanned shutdown of Armada Kraken FPSO. Bumi Armada's unplanned shutdown of the Armada Kraken floating production storage and offloading (FPSO) which is mobilised in the UK North Sea has been restored following work done. An additional HSP transformer has been reconditioned from the failed HSP transformer units. Following the successful installation of this second reconditioned HSP transformer on the Armada Kraken FPSO, the vessel's operational performance has now been restored to pre-shutdown levels, (StarBiz)

Reservoir Link (Neutral, TP: RM0.39): Consortium chosen as solar power producer under CGPP. Reservoir Link Energy's consortium has been selected as a solar power producer by the Energy Commission under the Corporate Green Power Programme (CGPP). In a statement, the energy-related services provider said the consortium, which comprises its wholly-owned subsidiary Reservoir Link Renewable SB, Sumitumo Corp and Maqo Engineeing SB, was among 22 applicants selected as solar power producers with a combined export capacity of over 560MW. (StarBiz)

AME REIT: Aiming for 100% lease renewal in FY2024. Shariah compliant industrial REIT AME Real Estate Investment Trust (AME REIT) is aiming for 100% renewal of the 12 leases expiring in FY24 to reinforce the REIT’s future earnings. Of the 12 leases, AME REIT has successfully renewed leases with five existing tenants, obtained one replacement tenant, and confirmed lease renewals with six existing tenants, which will be finalised by end-FY24. (SunBiz)

Handal Energy: At three-year high amid shareholder changes. Shares of Handal Energy surged to a nearly three-year high amid changes in ownership, which saw Seaoffshore Capital SB ceasing to become a substantial stakeholder, just days after Deepetro Offshore Brokers Pte Ltd emerged as its largest investor with an 11.43% stake. (StarBiz)

Perak Corp: Disposes of Perak agricultural land for RM5.5m cash as part of regularisation plan. PN-17 status Perak Corporation is disposing of a piece of agricultural land in Perak to Kim Poh Sitt Tat Feedmill SB (KPSTF) for RM5.5m cash as part of its regularisation plan. The company had entered into a SPA with KPSTF for the disposal, which is expected to be completed by year end. (The Edge)

Majuperak: To sell back 51% stake in developer as sales target falls short. Majuperak Holdings has opted to divest its 51% holding in the developer of Nexus Residence in USJ Subang West, Selangor, 30 months after acquiring the stake due to the vendor’s inability to meet the 50% sales target. The Perak State Development Corporation subsidiary has initiated selling of its stake in Nexusbase Development SB back to the vendor at the original purchase price of RM12.5m. (FMT)

MRDIY: Expands strategically for growth. MR D.I.Y Group will continue to invest in measured store expansion, enabling it to reach more market centers and less urban areas, thereby driving growth. The group’s growth will be funded by the group’s strong operating cash flow and net cash balance sheet position which will also support a robust dividend payout policy. (StarBiz)

Market Update

The FBM KLCI might open lower after Wall Street stocks fell on Wednesday, with investors turning their attention to data on Thursday that is expected to show an acceleration in US inflation in July. The benchmark S&P 500 closed 0.7% lower, dragged down by technology stocks. The tech-heavy Nasdaq Composite shed 1.2%. Among notable moves, semiconductor group Nvidia was down 4.7%, making it one of the worst performers in the S&P 500. Europe’s region-wide Stoxx 600 trimmed earlier gains to close up 0.4%, France’s Cac 40 added 0.7% and Germany’s Dax climbed 0.5%. London’s FTSE 100 rose 0.8%.

Back home, Bursa Malaysia closed higher on Wednesday, with the key index ending at its intraday high on the back of foreign buying support particularly in the heavyweights, despite a gloomy external environment. At the closing, the FBM KLCI gained 11.03 points to 1,462.03 from 1,451.00 at Tuesday’s close. The regional equities were mixed as data showed China’s economy slipped into deflation in July, heightening concerns over low consumption and growth after the release of disappointing trade numbers earlier in the week. Hong Kong’s Hang Seng index rose 0.3% and China’s CSI 300 shed 0.3% after consumer prices in the world’s second-biggest economy fell 0.3 % year on year in July. Data released on Tuesday showed China’s exports and imports declined by 14.5% and 12.4% year on year in dollar terms, respectively.

Source: PublicInvest Research - 10 Aug 2023