Economy

US: Weekly jobless claims fall as labour market remains tight. The number of Americans filing new claims for unemployment benefits fell last week, pointing to a still tight labour market. Initial claims for state unemployment benefits dropped 11,000 to a seasonally adjusted 239,000 for the week ended Aug 12, the Labor Department said. Economists polled by Reuters had forecast 240,000 claims for the latest week. Claims surged in the week ending Aug 5, with applications in Ohio accounting for a big chunk of the increase. The state has previously experienced fraudulent filings, leading most economists to shrug off the rise in claims. (Reuters)

EU: Trade surplus grows sharply in June . The eurozone trade surplus grew markedly at the end of the 2Q as imports fell faster than exports, Eurostat reported. The trade surplus rose to a seasonally adjusted EUR12.5bn in June from EUR0.2bn in May. Exports posted a monthly decline of 0.5%, while imports decreased by 5.6% in May. On a yearly basis, exports of goods climbed 0.3%. At the same time, imports plunged 17.7%. Consequently, the trade balance swung to a surplus of EUR23.0bn from a deficit of EUR27.1bn. The expected surplus was EUR18.3b. (RTT)

EU: Dutch economy enters recession as inflation bites . The Dutch economy has entered a recession as it shrank 0.3% on a quarterly basis in the 2Q, a first estimate published by Statistics Netherlands. The euro zone's fifth largest economy shrank for the second consecutive quarter, after a 0.4% contraction in the first three months of the year. Economic growth in the Netherlands had been almost 5% per year in 2021 and 2022 in a quick recovery from a Covid-19 slump. The first recession since the pandemic was driven by a drop in consumer spending and exports, as surging inflation drove up food prices and energy bills in the Netherlands and its trading partners. Consumer spending fell 1.6%, while exports were 0.7% lower than in the first three months of the year. (Reuters)

Japan: Exports fall for first time since 2021, stoking concerns about outlook . Japan's exports fell in July for the first time in nearly 2-1/2 years, dragged down by faltering demand for light oil and chip-making equipment, underlining concerns about a global recession as key markets like China weakened. Ministry of Finance (MOF) data showed Japanese exports fell 0.3% in July YoY, compared with a 0.8% decrease expected by economists in a Reuters poll. It followed a 1.5% rise in the previous month. Separate data by the Cabinet Office showed a key gauge of capital expenditures rose in June. However, manufacturers are braced for core orders to slide during the current quarter, partly due to the impact from weak offshore demand. (Reuters)

Hong Kong: Jobless rate falls to 2.8%, lowest in 4 years . Hong Kong's unemployment rate decreased further to the lowest level in four years as the labor market continued to improve alongside the domestic economic recovery, labor force statistics from the Census and Statistics Department showed. The seasonally adjusted unemployment rate fell slightly to 2.8% in the May-July period from 2.9% in the April-June period. That was in line with expectations. Further, this was the lowest unemployment rate since the May-July period in 2019, when it was also 2.8%. The data showed that the underemployment rate remained stable at 1.1%. (RTT)

Australia: July jobs take a surprise fall as market loosens. Australia employment unexpectedly fell in July to end two months of very strong growth, while the jobless rate ticked higher in a sign the drum-tight labour market might finally be loosening. The softer reading stoked speculation the Reserve Bank of Australia (RBA) might be done hiking interest rates and dragged the local dollar down to nine-month lows at USD0.6366. Figures from the Australian Bureau of Statistics (ABS) showed net employment fell 14,600 in July from June, reversing some of June's 31,600 jump and confounding market forecasts of a 15,000 rise. All the losses were in full-time jobs which dropped 24,200. (Reuters)

New Zealand: Central bank governor says recession is bare minimum to tame inflation . New Zealand’s central bank governor Adrian Orr said the nation’s economy needs a mild recession at the very least to slow activity before policymakers could consider reducing interest rates. “It’s the bare minimum we need to see, because without doubt, demand has been well outstripping the pace of the supply capacity” of the economy, Orr said. “We need to see subdued consumer spending, business investment and government constraints on spending. These are a critical part of the inflation process.” Orr said he’s confident inflation will return to the RBNZ’s 1% to 3% target band over the medium term if rates are kept at their current levels for long enough. (Bloomberg)

Markets

Plenitude: Buys second hotel in Seoul for RM114m. Plenitude, which owns 10 hospitality assets, is acquiring its second hotel in South Korea for KRW32bn (RM114.3m), in a bid to expand its footprint there. The company said its first hotel in that country, Travelodge Myeongdong Euljiro, has been registering an occupancy rate of above 80% and an average daily rate of more than 90,000 won (RM320) since Jan. Hence, it believes the second hotel will enhance its business in South Korea and achieve economies of scale in operations, especially given that the two hotels are located just 450 metres away from each other in the Seoul metropolitan area. (The Edge)

Pekat: Selected as CGPP solar power producer. Pekat Group’s wholly owned subsidiary, Pekat Teknologi SB (PTSB), has been selected for the development of a 29.99MW solar power plant project under the corporate green power programme (CGPP) conducted by the Energy Commission. PTSB is one of the 22 successful bidders selected for the CGPP (800MW). (StarBiz)

Puncak Niaga: Sells three parcels of land in Ijok at a loss. Puncak Niaga Holdings is selling three parcels of land in Ijok for RM306.1m at a loss of RM22.4m, as part of its strategy to monetise its landbank. The total purchase price for the land was arrived at RM43.00psf (and RM20.00psf for 20,234.3sqm of buffer zone only in respect of one plot of land), which represents a discount of RM2.00psf from the fair value of the lands as at Dec 31, 2022. (BTimes)

Awantec: Plunges to lowest since April 2020 after failing to get more time to submit regularisation plan. Shares in AwanBiru Technology (Awantec) on Aug 17 closed at 17.5 sen, the lowest since their closing price of 16.6 sen on April 6, 2020 after Bursa Malaysia rejected the company's application for another extension of time to submit its regularisation plan to the relevant authorities. (The Edge)

Bintulu Port: Gets 12-month extension to continue operating Sarawak's main LNG port. Bintulu Port Holdings has secured an extension from the government to continue operating the Bintulu Port, Sarawak’s main port for liquefied natural gas (LNG), for 12 months. The group, via its wholly owned Bintulu Port SB (BPSB), has inked a second interim agreement with the Ministry of Transport and Bintulu Port Authority (BPA) to continue operating the port from July 1, 2023 to June 30, 2024. (The Edge)

Perak Corp: Signs deal to amend land selling price. Perak Corp has entered into a supplemental agreement (SA) to the SPA with Makmur Impian Property Sdn Bhd (MIP) in relation to the disposal of two pieces of land at Hulu Bernam Timor, Perak. Perak Corp said that under the new salient terms of the SA SPA, it and MIP agreed to amend the initial consideration for the proposed disposal of RM24.97m to RM23.25m. (StarBiz)

Scomnet: Gets nod for transfer to Bursa's Main Market. Supercomnet Technologies (Scomnet) has reeceived approval from Bursa Malaysia for the transfer of its listing from the ACE Market to the Main Market. The transfer is scheduled on Aug 21. (The Star)

Market Update

The FBM KLCI might end the week with a whimper after yields on long-term US government debt on Thursday neared their highest level since 2007 as investors increased bets that the Federal Reserve would successfully avoid a recession while curbing inflation through higher interest rates. The sell-off in bonds — yields rise as prices fall — was mirrored in European markets, where UK 10-year gilt yields hit their highest level since 2008 and Germany’s equivalent hit levels not seen since 2011. Central banks on both sides of the Atlantic have maintained a hawkish stance with higher interest rates even as inflation pressures have eased, leading investors to worry that the Fed and others are unlikely to let rates fall any time soon. Rising yields weighed on stocks, and the tech heavy Nasdaq Composite dropped 1.2% while the blue-chip S&P 500 gave up opening gains to end 0.8% lower. Earlier, Europe’s region-wide Stoxx Europe 600 finished down for a third consecutive day, off 0.9%, while France’s Cac 40 fell 0.9% and Germany’s Dax gave up 0.7%.

Back home, persistent profit-taking from selected plantation and financial services counters resulted in Bursa Malaysia ending at an intraday low on Thursday, amid mixed sentiments on regional stock markets. At the closing, the FBM KLCI had slipped 15.53 points to 1,447.98, from 1,463.51 at Wednesday’s close. Equities in China steadied from a sharp sell-off earlier in the week, with the benchmark CSI 300 up 0.3%, while Hong Kong’s Hang Seng was flat.

Source: PublicInvest Research - 18 Aug 2023