Economy

US: Mortgage delinquency rates fall to all-time low. US mortgage delinquency rates fell to a record low in the second quarter due to a strong job market and low interest rates prevailing on most home loans despite the big jump in mortgage rates over the last two years, a report said. Delinquency rates fell to 3.37% at the end of the second quarter, according to the Mortgage Bankers Association’s National Delinquency Survey, their lowest since the MBA began collecting data in 1979 and down from 3.64% YoY. (Reuters)

US: Fed making progress in inflation fight, Harker says. The Fed is making progress in its fight to lower inflation, Philadelphia Fed President Patrick Harker said on Thursday, as the US economy reaches a “watershed moment.” “I’m not just talking about the fight against inflation, in which we’re making progress,” Harker said in remarks prepared for delivery at the end of a seminar presenting US central bank research on how the priorities of job-seekers and low-wage workers have shifted since the coronavirus pandemic. (Reuters)

US: Weekly jobless claims climb much more than expected. First-time claims for US unemployment benefits rose by much more than expected in the week ended Aug 5th, according to a report released by the Labour Department. The report said initial jobless claims climbed to 248,000, an increase of 21,000 from the previous week's unrevised level of 227,000. Economists had expected jobless claims to inch up to 230,000. (RTT)

US: Consumer prices increase 0.2% in July, in line with estimates. A highly anticipated report released by the Labour Department showed US consumer prices increased in line with economist estimates in the month of July. The Labour Department said its consumer price index rose by 0.2% in July, matching the uptick seen in June as well as expectations.

EU: Italy inflation at 19-month low. Italy's consumer price inflation hit the lowest in 19 months in July, final data from the statistical office ISTAT showed. CPI eased to 5.9% in July from 6.4% in June. The July rate was revised down from 6.0% and was the weakest since Feb 2022. Data showed that the slowdown was driven by the deceleration in cost of transport-related services and non-regulated energy goods costs. (RTT)

EU: Denmark inflation accelerates for first time in 9 months. Denmark's CPI accelerated in July for the first time since Oct last year, led by higher prices for holiday rentals and electricity, preliminary data from Statistics Denmark showed. The CPI, rose 3.1% YoY in July after a 2.5% increase in the previous month. Headline inflation accelerated for the first time since Oct 2022, when it had peaked at 10.1%. Services inflation climbed to 6.2% from 4.7%, boosted by the rise in prices for holiday rentals and packages. (RTT)

India: Central bank keeps interest rates unchanged. India's central bank left its benchmark interest rates unchanged, as widely expected. Reserve Bank of India Governor Shaktikanta Das said policymakers decided to keep the policy repo rate unchanged at 6.50% with preparedness to act, should the situation so warrant. The bank has lifted the benchmark rate by 250 basis points since May 2022. (RTT)

New Zealand: Manufacturing PMI slips to 46.3 in July. The manufacturing sector in New Zealand continued to contract in July, and at a faster rate, the latest survey from BusinessNZ revealed with a manufacturing PMI score of 46.3. That missed expectations for a score of 49.4 and was down from the downwardly revised 47.4 in June (originally 47.5). (RTT)

Philippines: GDP growth falls short of expectations. The Philippine economy growth slowed more than expected in the 2Q on a sharp fall in government spending, official data revealed. GDP posted a slower annual growth of 4.3% in the 2Q after expanding 6.4% a quarter ago, the Philippine Statistics Authority reported. The rate was weaker than economists' forecast of 6.0%. This was also the slowest growth in the current sequence of expansion that started in the second quarter of 2021. (RTT)

Markets

IHH Healthcare (Outperform, TP: RM7.63): Indirect wholly owned Pantai Holdings acquires Bedrock Healthcare for RM245m. Pantai Holdings, an indirect wholly-owned company of IHH Healthcare, has acquired the entire equity interest in Bedrock Healthcare SB (BHSB). (The Edge) Comment: IHH’s acquisition of BHSB will allow the group to expand its operational region to Sarawak through 82-bed Timberland Medical Centre and the construction of a new 200-bed tertiary hospital in central Kuching. We gather that the Timberland Medical Centre is running at c.50% occupancy rate in FY22. We expect the earnings impact to be minimal, as the addition of a total of 282 beds only accounts for c.2% of the IHH’s total operational beds. Hence, we make no changes to our core earnings forecast and maintain our Outperform call on IHH.

Berjaya Land: Vincent Tan, Berjaya Land haul Sanusi to court for defamation. Tycoon Vincent Tan and his company, Berjaya Land, have filed a defamation suit against Kedah menteri besar Sanusi Nor for allegedly making defamatory remarks about the RM700m river-widening project known as the Selangor Maritime Gateway (SMG). (FMT)

Advancecon: Associate bags RM45m contract to build combined cycle gas turbine power plant project in Sarawak. Advancecon Holdings’ associate has bagged a RM45.48m award as the contractor for the proposed construction and completion of earthworks and other related works, in relation to the Miri combined cycle gas turbine power plant project. Its 30%-owned associate company Advancecon (Sarawak) SB (ASSB) had accepted the LOA from Petros Power Sendirian for the project. (The Edge)

Prolexus: Proposes 5-for-1 rights issue to raise up to RM103m. Prolexus intends to raise up to RM102.58m about 92% of its market capitalisation of RM111m, through a renounceable rights issue of irredeemable convertible unsecured loan stocks (ICULS) to trim its bank borrowings and to fund its working capital. (The Edge)

NCT: Plans another private placement to fund property development projects. NCT Alliance (formerly Grand-Flo) is undertaking another private placement exercise of about 10% of its share base to raise some RM54.42m, based on an illustrative price of 37 sen, mainly to fund its property development of the Grand Ion Majestic and Ion Vivace projects. (The Edge)

EA Holdings: Urges shareholders not to attend EGM called by substantial shareholder. EA Holdings has urged its shareholders not to attend and vote at an EGM on Aug 22 called by substantial shareholder Ng Cheng Shin. The ICT services provider said the notice of EGM issued by Ng on Aug 7 is independent of the company and against the terms of two interim injunction orders dated Aug 1 and Aug 2 obtained by Vinvest Capital Holdings in the High Court. (The Edge)

Top Builders: Announces voluntary resignation of auditor. PN17 company Top Builders Capital’s external auditor, Kreston John & Gan, has resigned on a volunary basis. Kreston John & Gan's term of office will end 21 days after the resignation notice date of Aug 9 in line with the Companies Act 2016, said the piling and engineering company in a bourse filing. (The Edge)

Market Update

The FBM KLCI might open flat after US government bonds came under pressure and stock markets wavered on Thursday as investors balanced the impact of softer inflation data against a weaker-than-expected 30-year bond auction. On Wall Street, the blue-chip S&P 500 closed flat having given up gains of more than 1% early in the session following inflation data. The tech-heavy Nasdaq Composite added 0.1%. The moves on Thursday came after the latest US inflation reading showed prices rose at an annual rate of 3.2% in July, marginally below the 3.3% expected. The reading was higher than 3% in the previous month. Europe’s region wide Stoxx Europe 600 index added 0.8%, extending gains from the previous session, while France’s Cac 40 rose 1.5% and Germany’s Dax advanced 0.9%.

Back home, Bursa Malaysia closed slightly lower on Thursday due to profit-taking activities following Wednesday's rally, with some investors keeping to the sidelines awaiting fresh catalysts. At the closing, the FBM KLCI had eased 3.1 points to 1,458.93, from 1,462.03 at Wednesday’s close. Japan’s Topix rose 0.9%. South Korea’s Kospi fell 0.1% but the declines were offset by gains for travel and leisure companies. Chinese equities showed little reaction to a US executive order restricting investment in the country’s quantum computing, advanced chip and artificial intelligence industries. China’s CSI 300 gained 0.2% while Hong Kong’s Hang Seng was flat.

Source: PublicInvest Research - 11 Aug 2023