HEADLINES

Economy

US: Consumer confidence unexpectedly rebounds in May. Consumer confidence in the US unexpectedly saw a significant improvement in the month of May, according to a report released by the Conference Board. The Conference Board said its consumer confidence indexjumped to 102.0 in May from an upwardly revised 97.5 in April. The rebound surprised economists, who had expected the consumer confidence index to decrease to 95.3 from the 97.0 originally reported for the previous month. (RTT)

US: 10-year Treasury yield rises above 4.5% following weak auction. Treasury yields moved higher following a poor auction on the five-year note and as investors await fresh data releases on inflation. The benchmark 10-year note yield rose almost 7bpts to 4.542%, while the 2-year Treasury yield shed more than 2bpts to 4.974%. Yields and prices move in opposite directions. One basis point equals 0.01%. (CNBC)

EU: Euro zone consumers lower inflation expectation. Euro zone consumers lowered their inflation expectations last month, a fresh ECB survey showed, just as the bank was making plans to start rolling back a record string of interest rate hikes. Expectations for inflation in the next 12 months eased to 2.9% from 3.0% a month earlier to hit their lowest level since Sept 2021. Meanwhile expectations for inflation three years out slipped to 2.4% from 2.5%, still far above the ECB's 2% target. (Reuters)

EU: ECB revamps its annual health checks on banks. The ECB is streamlining its health checks on the euro zone's banks, allowing it to train its focus on pressing lapses and get tough on laggards. The central bank's supervisory chief, Claudia Buch, said while the revamp would make its annual checks less cumbersome, it would also make greater use of powers to penalise and force changes. The ECB checks on the financial health of around a hundred of the bloc's biggest lenders, but has often complained that banks are slow in making vital changes, whether to their technology or risk management. Banks have countered that the ECB's Supervisory Review and Evaluation Process (SREP) was cumbersome and more about ticking boxes than keeping up with big changes to the economy or geopolitical shocks, such as war. (Reuters)

EU: Ireland retail sales fall 1.2%. Ireland's retail sales decreased in April after rebounding in the previous month, preliminary data from the Central Statistics Office showed. The volume of retail sales dropped a seasonally adjusted 1.2% MoMin April, reversing a 2.1% gain in March. Among categories, the largest monthly decline was observed in sales at department stores, which fell by 5.5%. A 5.1% decrease was seen in sales of newspapers and stationery. Meanwhile, the biggest monthly volume increase was observed in sales of clothing, footwear, and textiles, by 17.3%. (RTT)

Australia: Retail sales rise less than expected. Australia's retail sales grew less than expected in April as consumers reduced their discretionary spending, flash data from the Australian Bureau of Statistics showed. Retail turnover edged up 0.1% on a monthly basis, reversing a 0.4% fall in March. But the pace of growth was weaker than economists' forecast of 0.3%. Data showed that turnover in most non-food related industries increased in April. Other retailing, which gained 1.6% had the largest rise this month, followed by household goods retailing with 0.7% growth. Meanwhile, clothing, footwear, and personal accessory retailing fell 0.7%. Food-related spending showed a mixed picture. Food retailing dropped 0.5%, while there was a small rise of 0.3% in cafes, restaurants and takeaway food services. (RTT)

China: Property rescue to deliver modest GDP boost. China’s most forceful attempt to shore up its beleaguered property market is expected to improve growth prospects modestly this year, according to economists surveyed by Bloomberg. 7 out of 12 respondents to a flash survey said the rescue package unveiled May 17 will give a boost of between 0.1 and 0.3 percentage point to GDP this year. 4 economists expect a contribution of less than 0.1 percentage point, while one saw no impact from the policies. The median forecast for growth in 2024 edged up to 4.9%. The support package announced by Beijing includes lower downpayment requirements for homebuyers and CNY300bn (USD42bn) of central bank funding to help local authorities buy excess inventory from developers. Those properties would then be converted into affordable housing. (Bloomberg)

China: Needs urgent response to low population growth challenge. China’s population development has entered a new normal of low and even negative growth, according to a senior economic adviser who also called for a change in family planning laws to encourage more births. China was facing a low birth rate, an ageing population, as well as a declining proportion of young people, and a shrinking working-age cohort. The structural changes to China’s population would deeply affect the country’s economy and required an urgent response. (SCMP)

Markets

Ageson: Gets RM54.3m apartment job. Ageson has accepted a LOA from R&C Cergas Teguh SB (RCCT) to carry out the subcontract works for a 40-storey service suite at Jalan Terowong Sepanggar, Sabah, worth RM54.3m. Ageson said its indirect wholly owned subsidiary, Ageson Kensetsu SB, will plan, organise, supervise, monitor and control all aspect of the sub-contract works in accordance with the requirement and satisfactory acceptance by RCCT. The sub-contract period shall be 36 months from the commencement date, to be notified by RCCT at the later stage. (StarBiz)

Fajarbaru: Gets RM15.7m contract extension from Australian Department of Defence. Fajarbaru Builder Group has secured an additional contract from the Australian Department of Defence worth RM15.7m, as part of the redevelopment of the Royal Malaysian Air Force (RMAF) base in Butterworth, Penang. As part of the amended contract, Fajarbaru said the duration of the planning phase of the project has been extended to 9 Sept 2024, from 30 April 2024, initially. (StarBiz)

Aurelius: Plans to raise RM123m via private placement for manufacturing plant. Aurelius Technologies has proposed to undertake a private placement of up to 39.4m shares, or 10% of its issued share capital, mainly to build a new manufacturing plant in Kulim Hi-Tech Park in Kedah. The placement is expected to raise RM123.3m based on an illustrative issue price of RM3.13 per share. A total of RM55m of the gross proceeds will be used for the construction of the new integrated manufacturing plant spanning 243,977 sq ft. (The Edge)

MPHB Capital: Gets privatisation offer at RM1.70 per share. MPHB Capital said its controlling shareholder and chairman Tan Sri Surin Upatkoon plans to take the credit services provider private through a selective capital reduction totaling RM748.1m. Entitled shareholders will receive RM1.70 per share under the capital repayment proposed by Upatkoon and his family, who together control 43% of MPHB. The offer price represents an 8.3% premium to MPHB’s closing price of RM1.57, and a 30.8% premium to the prevailing three-month volume-weighted average price of RM1.30. (The Edge)

YTL Power: Raises stake in Ranhill, triggers MTO. YTL Power International’s 70%-owned subsidiary SIPP Power SB has agreed to a RM405.2m deal for about 31.4% equity in Ranhill Utilities from Tan Sri Hamdan Mohamad and related entities Hamdan (L) Foundation and Hamdan Inc (Labuan) Pte Ltd. This has triggered an unconditional mandatory takeover offer for any remaining shares it does not already own it the water utility firm. YTL Power announced the unconditional share purchase agreement, which will see SIPP Power increase its equity interest in Ranhill to 34.3% from 2.9% at a purchase price of 99.5 sen a share. (StarBiz)

FGV: Posts RM13m net loss in 1Q on reduced segmental profits. FGV Holdings posted a net loss of RM13.5m for 1Q versus net profit RM12.1m in the year-ago quarter, due to reduced profits from almost all divisions. The plantation group said revenue for the quarter dipped to RM4.5bn from RM4.6bn a year ago. Loss per share was 0.37 sen against earnings per share of 0.33 sen previously. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today as most US stocks fell in a quiet day of trading Tuesday after a tick higher in bond yields tightened the screws a bit on Wall Street. Nearly three out of every four stocks fell within the S&P 500. But strength for a handful of highly influential Big Tech stocks nevertheless helped the index hold up overall. It edged higher by 1.32, or less than 0.1%, to 5,306.04. The Dow Jones Industrial Average fell 216.73 points, or 0.6%, to 38,852.86. The Nasdaq composite rode the strength of tech stocks to rise 99.09 points, or 0.6%, to 17,019.88 and added to its latest all-time high set on Friday. In stock markets abroad, indices fell modestly across much of Europe and Asia. London’s FTSE 100 slipped 0.8%, and Tokyo’s Nikkei 225 edged down by 0.1%. Back home, Bursa Malaysia gave up its earlier gains to close lower today, tracking the downbeat performance in regional markets. At the closing, the FBM KLCI slid 2.45 points, or 0.15 per cent, to 1,615.82 from Monday’s close of 1,618.27.

Source: PublicInvest Research - 29 May 2024