Economy

US: Bank credit contracts, loans drop in latest week. Bank credit at US commercial banks shrank in the latest week as commercial banks pulled back on lending to businesses. Overall bank credit fell to USD17.23trn in the week ending 9 Aug, down from USD17.25trn a week earlier and USD17.32trn a year earlier, its second straight YoY drop. Loans and leases fell to USD12.13trn, from USD12.15trn the week prior; commercial and industrial loans slipped to USD2.74trn, from USD2.75trn in the week ending 2 Aug. From a year earlier, commercial and industrial (C&I) loan growth slowed sharply to less than 1%. (Reuters)

US: All Eyes on Fed Chief Powell in Jackson Hole. It’s late August, which means we’re headed to Jackson Hole for the Kansas City Fed’s annual symposium, attended by top central bankers from around the world. And as usual, everyone is wondering in particular just what Fed Chair Jerome Powell, who’s expected to speak Friday morning might have to say. The US central bank just published minutes of its July policy meeting, and the record showed that, at the time, most Fed officials saw significant upside risk to inflation, which in turn may require even more tightening. On the other hand, two also favored holding rates steady, marking the first real hint of disagreement over the way forward that we’ve seen in quite some time. (Bloomberg)

EU: Eurozone construction output falls 1.0%. Eurozone construction output declined in June after recovering somewhat in the previous month. Production in the construction sector decreased 1.0% MoM in June, reversing a 0.2% rise in May. The downward trend was led by a 1.2% fall in the output of the building sector. At the same time, civil engineering production showed a comparably slower decline of 0.2%. On a yearly basis, total construction output fell 0.3% in June, in contrast to a 0.3% increase a month ago. (RTT)

EU: Austrian inflation unrevised at 16-month low. Austria's CPI moderated further in July to the lowest level in more than a year on lower energy prices, as initially estimated. The CPI climbed 7.0% YoY in July, slower than the 8.0% increase in June. Moreover, this was the weakest inflation rate since March 2022. That was in line with the flash data published on July 31. (RTT)

EU: Swiss industrial output falls 0.8% in Q2. Switzerland's industrial production declined in the second quarter amid contractions in both mining and quarrying and manufacturing output. Industrial production dropped 0.8% YoY in the second quarter, reversing a 4.2% growth in the first quarter. Further, this was the first decrease since the first quarter of 2021. (RTT)

UK: Property sellers cut asking prices at sharpest pace this year. UK property sellers cut the prices they’re asking at the sharpest pace since Dec, adding to evidence that soaring interest rates are weighing on the ability of buyers to afford purchases. The property portal Rightmove said its index tracking the cost of homes coming to market fell 1.9% to GBP364,895 (USD465,620) this month. It was the biggest decline for August since 2018 and the sharpest drop since the end of last year, when sellers were trying to wrap up deals. (Bloomberg)

UK: Retail sales fall more than expected. UK retail sales registered a bigger-than-expected fall in July as poor weather reduced footfall as the rising cost-of-living hurt household consumption. The retail sales volume declined 1.2% MoM in July, offsetting June's 0.6% increase. This was the first drop in four months. Sales were forecast to fall 0.5%. (RTT)

China: July soybean imports from US tumble, Brazil shipments surge. China’s soybean imports from the US tumbled 62% in July from a year earlier while shipments from Brazil, its top supplier, surged 32%, spurred by a bumper crop and lower prices in the Latin American country. China, the world’s top buyer of soybeans, imported 142,129mt of the oilseed from the US in July, down from 377,192 tons a year earlier. (Reuters)

China: Set to cut lending rates as economic recovery drags. China is expected to make the biggest cuts this year to two of its core lending rates as pressure mounts on policymakers and banks to reverse slowing momentum and revive flagging demand in the world’s second-biggest economy. The People’s Bank of China is set to announce reductions to both one-year and five-year loan prime rates, which affect borrowing costs for businesses and households, at a monthly meeting on Monday, after making a surprise cut to its closely related medium-term financing rate last week. (Financial Times)

Taiwan: GDP recovers 1.36% in Q2, less than estimated. Taiwan's economy expanded less than initially estimated in the second quarter after remaining in contraction for the previous three quarters, the latest estimate by the Directorate General of Budget, Accounting, and Statistics revealed on Friday. GDP advanced 1.36% YoY in the second quarter, reversing a revised 3.31% fall in the previous quarter. (RTT)

Markets

Pestech: Says termination of KLIA aerotrain contract is 'misconceived and invalid' . Pestech International claims the termination of its contract to undertake the aerotrain project at the Kuala Lumpur International Airport (KLIA) is “misconceived and invalid”. The group said it had informed Malaysia Airports Holdings Bhd's (MAHB) unit, Malaysia Airports (Sepang) SB (MASSB), of this through a formal letter. “Pestech firmly disputes the termination as contemplated in the termination notice and will enforce its legal rights if necessary, but prefers to seek an amicable resolution with MASBB,” the group added in a bourse filing. In a separate filing, Pestech said the termination of the RM743.0m contract was expected to "pose unfavourable effects" to its revenue and profit for the financial year ending June 30, 2024. (The Edge)

Yinson: Secures funding from private equity firm for floating facility in Angola. Yinson Holdings has secured USD300m (RM1.39bn) from a private equity firm, RRJ Capital, to partly finance its floating, production, storage and offloading asset for the Agogo Integrated West Hub Development Project in Angola (FPSO Agogo). The group signed a collaboration agreement with RRJ on Friday to jointly develop energy infrastructure and technology projects globally, including through the provision of the USD300m financing. (The Edge)

TIME dotcom: Divestment gain lifts Time's 2Q net profit to RM2.26bn. TIME dotCom posted a near 20-fold jump in net profit to RM2.26bn for 2QFY2023 from RM118.3m a year earlier, thanks to a RM2.26bn gain from the divestment of its stakes in AIMS Data Centre Holding SB (AIMS) and AIMS Data Centre (Thailand) Ltd (AIMS TH). The deal with the US digital infrastructure assets firm DigitalBridge Group Inc, which was announced in November last year, entailed the divestment by TIME of 49% of the ordinary shares and 100% of the irredeemable convertible preference shares in AIMS, as well as 21% of the shares in AIMS TH. (The Edge)

CSC Steel: 2Q net profit falls 13% on weaker sales and absence of disposal gains of investment property . CSC Steel Holdings net profit fell 12.71% to RM14.9m in the 2QFY2023 from RM17.1m a year ago, due to the absence of disposal gain of an investment property and lower revenue incurred during the quarter under review. As a result, earnings per share declined to 4.03 sen in 2QFY2023 from 4.62 sen a year before, its bourse filing showed. Revenue for the quarter dropped 28.22% to RM373m from RM519.6m a year before, due to weakened export sales volumes and lower average selling prices. (The Edge)

Kelington: 2Q earnings jump 41%, revenue up 36%. Kelington Group Bhd's net profit increased 41% to RM19.1m in the 2QFY2023 from RM13.6m registered a year ago, following significant growth in all its major operating markets. Revenue increased 36% to RM424.9m from RM312.4m in 2Q, with the ultra high purity (UHP) division continuing to be KGB's primary revenue contributor, accounting for 68% of its total revenue. (New Straits Times)

IPO: ACE Market-bound SSF Home inks underwriting agreement with M&A Securities . Homegrown furniture and home living products retailer SSF Home Group has inked an underwriting agreement with M&A Securities SB, for its initial public offering (IPO) and intended listing on the ACE Market of Bursa Malaysia. The IPO exercise involves a public issue of 200m new shares as well as an offer for sale of 24m existing shares, according to SSF Home’s statement. (The Edge)

Market Update

The FBM KLIC might open flat today after global stocks had their biggest weekly drop since March, as investors grappled with the prospect of a buoyant US economy keeping interest rates higher for longer and soft data and developments in China that continued to stir concerns about its post-pandemic recovery. Wall Street’s benchmark S&P 500 oscillated between positive and negative territory on Friday, finishing fractionally lower at the close and falling 2.1% for the week. The tech-focused Nasdaq Composite fell 0.2% and dropped 2.6% over the past five sessions. Equities have stumbled this week as robust US economic data stamped out hopes that the Federal Reserve — which took interest rates to a 22-year high last month — would start cutting rates soon. In Europe, the region-wide Stoxx 600 fell 0.6%, marking a weekly decline of almost 2% and its worst monthly performance since September. France’s Cac 40 slipped 0.4% and Germany’s Dax was down 0.7%.

Back home, Bursa Malaysia extended Thursday's losses to close slightly lower on Friday on continued profit-taking from selected financial services as well as industrial products and services counters, in line with the weaker sentiment on regional bourses. At the closing bell, the FBM KLCI had slipped 1.89 points to 1,446.09, from 1,447.98 at Thursday’s close. China’s CSI 300 stock index fell 1.2% and Hong Kong’s Hang Seng shed 2.1%. Japan’s Topix fell 0.7% and South Korea’s Kospi slid 0.6%. China’s securities regulator on Friday announced a package of market-friendly reforms to try to “boost capital market investor confidence”, flagging a potential extension of trading hours for the country’s stock and bond markets, as well as lower transaction fees for brokers.

Source: PublicInvest Research - 21 Aug 2023