Economy

US: Consumer sentiment pulls back slightly in Aug . After reporting a surge in US consumer sentiment in the previous month, the University of Michigan released preliminary data showing a slight pullback in consumer sentiment in the month of Aug. The report said the consumer sentiment index edged down to 71.2 in Aug after spiking to 71.6 in July.

US: Producer prices rise 0.3% in July, slightly more than expected . Partly reflecting an increase in prices for services, the Labor Department released a report showing US producer prices climbed by slightly more than expected in the month of July. The Labor Department said its producer price index for final demand rose by 0.3% in July following a revised unchanged reading in June. Economists had expected producer prices to inch up by 0.2% compared to the 0.1% uptick originally reported for the previous month. The report also showed the annual rate of producer price growth reaccelerated to 0.8% in July after slowing to just 0.2% in June. (RTT)

US: Goldman pencils in first Fed rate cut for 2Q of 2024. Goldman Sachs Group Inc. economists anticipate the Fed will start lowering interest rates by the end of next June, with a gradual, quarterly pace of reductions from that point. “The cuts in our forecast are driven by this desire to normalize the funds rate from a restrictive level once inflation is closer to target,” Goldman economists including Jan Hatzius and David Mericle wrote in a note. For now, the Goldman team is penciling in rate cuts to begin in the 2Q of 2024. Bloomberg)

EU: Italy trade balance swings to surplus . Italy's foreign trade balance turned to a surplus in June from a deficit in the previous year as exports rose amid a sharp fall in imports, data from the statistical office Istat showed. The trade balance for June came in at a surplus of EUR7.7bn versus a deficit of EUR2.5bn in the corresponding month last year. In May, there was a surplus of EUR4.8m. Exports grew at a stable rate of 1.0% annually in June. Outgoing flows to non-EU countries increased by 2.8%, while those to EU countries dropped by 0.6%. Meanwhile, imports plunged 16.9% annually in July, much faster than the 7.5% fall in June. (RTT)

UK: Economy surprises with strongest growth in more than a year . The UK economy delivered its strongest quarterly growth in more than a year, a surprise that indicated resilience in the face of soaring borrowing costs. GDP rose 0.2% from 1Q, the biggest increase since the start of 2022, the Office for National Statistics said. The BOE had expected a 0.1% expansion. Output in June jumped 0.5%, more than double the 0.2% pace expected by economists. Manufacturing and construction output were both stronger than expected in June, rebounding from the loss of a working day in May for King Charles III’s coronation. (Bloomberg)

China: Economic recovery faces fresh risks from property crisis . China’s economic recovery is being weighed down by a worsening property slump, with the latest data likely to show little sign of a rebound in growth. Official figures due Tuesday are expected to show only moderate increases in industrial output, retail sales and fixed-assets investment. Property investment likely continued to shrink, with fears of a debt crisis at a major developer and a further contraction in housing sales holding back a rebound in the sector. Swathes of the country were also hit by heavy rains and deadly floods, hindering construction activity last month. (Bloomberg)

Singapore: GDP climbs 0.1% on quarter in 2Q . Singapore's GDP expanded a seasonally adjusted 0.1% on quarter in the 2Q of 2023, the Ministry of Trade and Industry said. That was shy of expectations for an increase of 0.3% following the 0.4% contraction in the three months prior. (RTT)

Markets

Top Glove (Underperform, TP: RM 0.59): Out of MSCI index . Top Glove Corp has been dropped as a constituent for the MSCI Global Standard Indexes which will take place as of the close of Aug 31, 2023. (The Edge)

WTK: To buy stake in Sarawak oil palm firm for RM132.2m. WTK Holdings has proposed to buy a stake in an oil palm plantation company in Sarawak for RM132.2m to expand its oil palm presence in the state. WTK’s unit BioFarm Venture SB had entered into share sale agreement with Ocarina Development SB (in liquidation) to acquire a 70% stake or 9.8m shares in Durafarm SB. Some RM92.5m of the purchase sum will be financed by bank borrowings and issuance of debt securities, while the remaining RM39.6m from internally generated funds. (The Edge)

Pertama Digital: Calls off placement of shares to Macquarie Bank. Pertama Digital has said it is not proceeding with the placement of its shares to Australia-based Macquarie Bank Ltd to raise gross proceeds of up to RM87.8m. The group had in March inked a subscription agreement for Macquarie Bank to subscribe up to 43m new shares of the group, representing 10% of Pertama Digital’s share base of 433.36m shares at that time. In a bourse filing on Aug 11, Pertama Digital said both parties have now decided to mutually terminate the subscription agreement effective Aug 15, with no subscriptions to be made up to that date. (The Edge)

Prolexus: To raise RM16.2m via rights issue to fund rooftop solar PV. Prolexus will be undertaking a five-for-one renounceable rights issue to raise between RM16.2m and RM102.6m to fund solar energy systems at all its factories. The apparel and textile company said the rights issues entail the issuance of up to 2.05bn shares for five years at 0.10% to raise RM102.6m and irredeemable convertible unsecured loan stocks at 100% of its nominal value of 5sen each. The rights issue would raise at least RM16.2m, and up to RM102.6m will be raised under the maximum subscription level. (BTimes)

PPB Group: Sells 51% interest in Indonesian unit for RM87.5m. PPB Group's indirect wholly-owned unit, Mantap Aman SB has entered into a conditional SPA with PT Sentratama Niaga Indonesia and Pt Wilmar Nabati Indonesia to dispose its 51% stake in PT Pundi Kencana for RM87.5m (IDR290.7m). Mantap Aman is held by PPB via FFM. PPB said the flour milling business in Indonesia was highly competitive and a single standalone flour mill in Indonesia would not provide competitive advantage to FFM's flour milling businesses from the market share and distribution efficiency perspective in the longer-term. (BTimes)

Media Chinese International: Issues profit warning for April June quarter. Media Chinese International Ltd (MCIL) said losses attributable to owners of the company may widen to between USD2m (RM9.17m) and USD3m for the 1QFY24, from USD300,000 a year earlier. This is mainly due to the absence of one-off government grants and subsidies of USD1.4m recognised in 1QFY23, and lower turnover from the publishing and printing segment for the quarter under review. (The Edge)

Cnergenz: Plans Main Market transfer. After spending over a year listed on Bursa Malaysia’s ACE Market, electronic manufacturing solutions provider Cnergenz is eyeing a transfer to the Main Market. (The Edge)

Market Update

The FBM KLCI might open lower today as US stocks slipped on Friday after producer price inflation data came in above market expectations, heightening investors’ concerns that the world’s largest economy could keep rates higher for longer. Wall Street’s benchmark S&P 500 closed 0.1% lower while the tech-focused Nasdaq Composite fell 0.7%. Friday marked the second consecutive week of losses for both indices. It was the first time the Nasdaq has had back-to-back weekly declines since December, and the first time for the S&P 500 since May. The biggest weekly drop in 11 months for chipmaker Nvidia, which is one of the top weighted stocks in the S&P 500 and Nasdaq, did little to help the indices’ fortunes. Nvidia shares fell 9.5% over the five trading days. The broader market’s moves came after data in the US showed that annual producer inflation accelerated to 0.8 % in July from 0.2% in the previous month. In Europe, the CAC 40 gained 0.34%, while the FTSE 100 led the DAX lower. They fell 1.24% and 1.03% respectively.

Back home, Bursa Malaysia pared most of its earlier losses to end mixed on Friday on late buying, with bargain-hunting dominating the broader market throughout the day ahead of the state elections. At the closing bell, the FBM KLCI had eased 1.77 points to 1,457.16, from 1,458.93 at Thursday’s close. In the region, the Shanghai Composite Index lost 2.0% while Hong Kong’s Hang Seng lost about 0.8%. Japan was closed for a holiday.

Source: PublicInvest Research - 14 Aug 2023