HEADLINES

Economy

US: Labor market fairly tight. Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 222,000 for the week ended May 11, the Labor Department said. Economists polled by Reuters had forecast 220,000 claims in the latest week. Claims raced to an eight-month high in the prior week. Unadjusted claims decreased 13,325 to 196,725. Claims in New York tumbled 9,442, almost reversing a prior surge which the state attributed to layoffs in transportation and warehousing, accommodation and food services as well as educational services industries. (Reuters)

EU: German experts cut their tax revenue forecasts for 2024- 28 by 1.5%. Germany's council of tax experts cut their forecast for total tax revenue over the next five years by 1.5%, which could add another layer of complexity to already challenging negotiations for next year's budget. The council now expects EUR80.7 bn (USD87.7 bn) less in total tax revenue in the 2024-2028 period compared with its October forecast. (Reuters)

UK: BoE's Greene says she wants more evidence of waning inflation persistence. The Bank of England should wait for more conclusive evidence that strong inflation pressures in Britain are becoming less stubborn before it moves to cut interest rates, BoE policymaker Megan Greene said. Greene said in a speech that there was more uncertainty about the degree to which the persistence of inflation - chiefly in the country's tight labour market - was easing than about how the BoE's high interest rates were weighing on the economy. (Reuters)

Japan: Economy skids, clouding BOJ's rate hike plans. Japan's economy fell faster than expected in the first quarter as the weak yen continued to batter consumers, throwing a fresh challenge to the central bank's push to get interest rates further away from near zero. GDP data from the Cabinet Office showed Japan's economy shrank 2.0% annualised in Jan-March from the prior quarter, faster than the 1.5% drop seen in a Reuters poll of economists. (Reuters)

South Korea: State-run think tank raises GDP, inflation forecasts. South Korea's state-run think tank on raised its economic growth forecast for this year and said inflation is expected to ease at a slightly slower pace, as it noted the need for gradual easing of monetary policy. n its biannual economic forecast, the Korea Development Institute (KDI) projected the economy would now grow by 2.6% in 2024 compared to 2.2% before. (Reuters)

India: Cuts windfall tax on petroleum crude. India has cut the windfall tax on petroleum crude to INR5,700 (USD68.34) per MT from INR8,400 with effect from May 16. The tax, which is revised every two weeks, remains unchanged at zero for diesel and aviation turbine fuel. The government on May 1 cut the windfall tax on petroleum crude to INR8,400 rupees a MT from INR9,600 rupees. (Reuters)

Markets

TNB (Neutral, TP: RM11.50): IRB fails in bid to get RM1.8bn taxes from TNB. The Court of Appeal has upheld the High Court’s decision two years ago to dismiss the Inland Revenue Board’s (IRB) claim of taxes totalling RM1.8bil against Tenaga Nasional Bhd (TNB). This represents the largest corporate tax dispute in the country’s history. The issue arose when TNB sought to challenge the IRB’s decision made on July 13, 2020 to impose on it an additional assessment of RM1.8bn. The IRB had rejected TNB’s argument that it was a claim for reinvestment allowance (RA). The IRB contended that the utility giant is not entitled to the RA, granted to manufacturing companies, as it is not a manufacturer but a service provider. (StarBiz)

Pansar: Secures RM30m contract to manage museum building in Kuching. Pansar has secured a RM30.1m contract to undertake facilities management and maintenance for the Borneo Cultures Museum and annex building at the Sarawak Museum Complex in Kuching. The Sarawak-based engineered solutions provider said the job, awarded by the state Public Works Department, involves civil, structural and architectural services, as well as mechanical, electrical, landscape, and housekeeping services. Pansar said the project will run for 39 months from May 27, and is expected to contribute positively to the group’s earnings. (The Edge)

Iconic Worldwide: Unit sues Jovian Apparel over unpaid face masks totalling RM4.96m. Iconic Medicare SB (IMED), a whollyowned unit of Iconic Worldwide, is suing Jovian Apparel SB over an alleged outstanding sum of RM4.96 million in unpaid face masks supplied by the company to the fashion retailer. Iconic Worldwide said IMED, which is currently a major contributor to the financial performance of the group, had filed a writ of summons and statement of claim against Jovian Apparel on May 13, 2024 at the Penang High Court. According to the statement of claim filed with the court, IMED had supplied customised face masks to Jovian Apparel based on the latter's specification and customised order under the Jovian RTW brand. (The Edge)

Pertama: In talks to continue operating online bail system eJamin. Pertama Digital, which runs the digital court bail payment system e-Jamin, said it is in discussions with the relevant authorities to allow the company to continue operating the system. Pertama said its unit Dapat Vista (M) SB had received a “directive letter” dated April 30 from the Office of the Chief Registrar of the Federal Court of Malaysia, requiring it to transfer all e-Jamin funds and accrued interest to the main receiving account of the Prime Minister's Department. (The Edge)

Thong Guan: To develop RM200m commercial job. Thong Guan Industries has entered into a JV agreement with Kedah State Development Corporation or PKNK to jointly develop 8.09ha of freehold land into a proposed commercial area with an estimated GDV of RM200m. Thong Guan said the project will be undertaken by its wholly-owned unit, TG Development SB(TGD). Comprising 221 units of shop/office lots, the project is expected to be completed within five years. (Bernama)

Seremban Engineering: Wins RM40m project. Seremban Engineering has won a RM39.8m contract from Kerry Ingredients (M) SB to supply, execute and complete civil, structural and architectural works as well as electrical works at the latter’s Shah Alam headquarters. (StarBiz)

MARKET UPDATE

US markets ended marginally lower on the day the Dow Jones Industrial Average (Dow) briefly broke through the 40,000-point level for the first time in its history. Market sentiment remains buoyant nonetheless, supported by a relatively healthy earnings reporting season and hopes that interest rates have peaked. On the day, the Dow slipped 0.1%. The S&P 500 and Nasdaq Composite fell 0.2% and 0.3% meanwhile. European markets were unable to capitalise on the previous day’s global rally on account of softer-than-expected US inflation data, ending lower instead on mixed earnings reports. Insurance stocks gained following strong earnings from Swiss insurers. Shares of EasyJet fell after reporting a larger-than-expected pretax loss. Germany’s DAX and France’s CAC 40 fell 0.7% and 0.6% while UK’s FTSE 100 was 0.1% lower. Asian markets were mostly higher overnight. Japan reported a contraction in its 1Q 2024 GDP at an annualized rate of 2.0%, and likely to jeopardise the Bank of Japan’s plans to raise rates. The Nikkei 225 jumped 1.4% higher regardless. The Hang Seng Index reopened after a holiday to close 1.6% higher. The Shanghai Composite Index gained 0.1%.

Source: PublicInvest Research - 17 May 2024