HEADLINES

Economy

US: Job gains surge past expectations, wage growth quickens. The US economy created far more jobs than expected in May and annual wage growth reaccelerated, underscoring the resilience of the labor market and reducing the likelihood the Federal Reserve will be able to start rate cuts in September. The Labor Department's closely watched employment report also showed the unemployment rate ticked up to 4.0% from 3.9% in April, a symbolic threshold below which the jobless rate had previously held for 27 straight months. The unexpectedly strong report made plain that while the labor market has softened around the edges in recent months, its still-solid performance is set to underpin economic growth and keep the Fed on the sidelines and taking its time in deciding when to begin lowering borrowing costs. The hotter-than-expected wage gains also raised the prospect that elevated inflation may prove stickier than hoped although the impact from the rise in the unemployment rate could temper that. (Reuters)

EU: German central bank warns on inflation and cuts 2024 growth outlook. Upward pressure from wages means inflation is proving stubborn, Germany's central bank said, a day after the ECB delivered its first interest rate cut since 2019. The warning from Europe's biggest economy is likely to reinforce expectations that interest rates can only come down slowly. Inflation has fallen from double-digit territory in late 2022, but the "last mile" is proving tricky, both in the euro zone and the US. "Inflation is proving to be stubborn, especially in the case of services, where strong wage growth and the resulting cost pressures are major factors," Germany's Bundesbank said in a twice-yearly update of its economic projections. Reuters)

China: Exports rise solidly, but slower imports temper outlook. China's exports grew more quickly and for a second month in May, suggesting factory owners are managing to find buyers overseas and providing some relief to the economy as it battles to mount a durable recovery. The jury is still out, however, on whether the export sales are sustainable while a protracted property crisis has led to persistent weakness in domestic demand - a factor highlighted again in last month's imports figures. Outbound shipments from the world's second-largest economy grew 7.6% YoY in value in May, customs data showed. (Reuters)

Japan: Q1 GDP seen falling less that first reported on capex upgrade. The Japanese economy likely contracted at a slightly slower pace than initially reported in January-March due to upgrades to capital spending figures, a Reuters poll showed, although risks continue to cloud the outlook. Economists expect growth to return this quarter, helped by tax cuts and wage hikes, but higher import costs due to a weaker yen are seen squeezing consumption while disruptions at some automakers are also likely to weigh. Cabinet Office data is expected to show the pace of GDP contraction narrowed to 1.9% annualised in the first quarter, slightly better than a 2.0% contraction first reported. (Reuters)

Japan: Growth strategy panel calls for vigilance to weak yen impact. Japanese Prime Minister Fumio Kishida's advisory panel tasked with growth strategies called for the government and the BoJ to be vigilant to the impact of the yen's depreciation. The call reflects the government's growing concerns about a weak yen, a headache for Kishida's administration as the currency's decline pushes up households' cost of living by inflating the price of imported food and fuel. "The yen has weakened by about 10% to the dollar since the beginning of this year, and the impact of this depreciation may be reflected in inflation over the next six months to a year," the panel said in its draft action plan on Kishida's "new capitalism" programme of driving growth. The government and the BoJ should work closely to achieve the 2% inflation target in a sustainable and stable manner through flexible policy management, the draft said. (Reuters)

India: Central bank holds rates, raises growth outlook. The Reserve Bank of India (RBI) kept its key interest rate unchanged in a widely expected move, saying robust economic growth will give it space to focus on bringing down inflation towards its medium-term target of 4%. The central bank raised its economic growth outlook for the current year but kept its outlook on inflation unchanged, though it warned of persistent price pressures on food. Governor Shaktikanta Das said the RBI wants to ensure that inflation aligns with its target on a sustained basis. (Reuters) Markets

Maxis (Neutral, TP: RM3.90): Says it is ready to complete share subscription agreement process with DNB. Maxis said that it is ready to complete the Digital Nasional Bhd (DNB) share subscription agreement (SSA) process. This puts the company on track to an early completion of its SSA process and to participate in the rollout of the second 5G network ahead of the timeline given by Communications Minister Fahmi Fadzil. (The Edge)

Public Bank: Gets green light to buy RHB’s stockbroking business in Vietnam. Public Bank as received approval from the State Securities Commission of Vietnam (Vietnam SSC) to acquire RHB Bank Bhd’s stockbroking firm in Vietnam for RM72.6m. The approval by Vietnam SSC is subject to two conditions, namely the proposed acquisition must be completed within six months from the date of approval, failing which the approval shall lapse, and the stockbroking firm RHB Securities Vietnam Company Ltd (RHBSVN) shall implement the reporting and publication regime in accordance with the applicable regulation. (The Edge)

Binastra: Secures RM315m contract to build apartments. Binastra Corp said it has secured a contract worth RM315m to build two blocks of residential apartments in Bandar Tasik Selatan, Kuala Lumpur. The job scope covers the main building works of the development, comprising two 40-storey apartments — one with 757 units and the other with 743 units, as well as an eight-storey carpark. The project is to be completed within 33 months from the date of commencement, which is tentatively fixed for July 8. (The Edge)

Sunview: Bags RM51.9m LSSPV construction contract. Sunview Group has secured a RM51.9m contract from Cenergi Solar Kuala Ketil SB for the construction of a large scale solar photovoltaic (LSSPV) plant under the corporate green power programme in Ladang Bukit Selarong, Tawar, in Kuala Ketil, Kedah. The group said the LSSPV plant will have a capacity of 44.99 MWp/29.99 MWac. The contract will commence on June 10, 2024 and the project is expected to achieve commercial operations date by June 24, 2025, at the latest. (StarBiz)

Engtex: Proposes 3-for-4 bonus issue. Engtex Group has proposed to undertake a bonus issue of up to 414.30m new shares on the basis of three bonus share for every four existing shares. As at May 31, the group's total number of shares stood at 443.3m, including 1.9m treasury shares. The company said the exercise is to reward its existing shareholders for their continuous support and encourage trading liquidity and affordability on the Main Market. (StarBiz)

DS Sigma: Seeks listing transfer to Main Market. DS Sigma Holdings has proposed to transfer its listing from the ACE Market to the Main Market of Bursa Malaysia, saying it has met the required profit requirements. DS Sigma noted that it recorded a PAT attributable to owners of the company of RM8.2m for its financial year ended June 30, 2023 (FY2023) and an aggregate PAT of RM49.5m for FY2021, FY2022 and FY2023. (The Edge)

Euro Holdings: Sells Rawang warehouse land. Euro Holdings said it is disposing of an 8,000 sq m industrial land in Rawang, together with a two-storey detached factory and an annexed threestorey office building sited on it, for RM17.3m, cash. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower after global stocks pulled back from an all-time high yesterday after surprisingly strong US monthly jobs data dimmed hopes that the Federal Reserve would soon follow euro zone and Canadian interest rate cuts, causing Treasury yields to shoot higher. The world’s largest economy added 272,000 jobs last month, beating the 185,000 hires predicted by economists and derailing an investor consensus that the jobs market had slackened just enough to push consumer prices lower. Diminished hopes for a near-term Fed move weighed on stocks, which closed lower after a choppy session. The MSCI’s world share index dropped 0.3%, after touching a record high of 797.48 points. Wall Street finished in the red. The S&P 500 fell 0.1% after hitting an alltime high of 5,375.08 points. The Dow Jones Industrial Average edged down 0.2 %, and the Nasdaq Composite also lost 0.2%. Europe’s Stoxx 600 share index, which has gained almost 10% year-to-date, lost 0.2%.

Back home, Bursa Malaysia closed on a firmer note today on positive investor sentiment and strong buying interest in commodity-related stocks. At the closing bell, the FBM KLCI gained 3.13 points, or 0.19%, to 1,617.86 from yesterday’s close of 1,614.73. The regional stocks were mixed Friday after a steady Thursday on Wall Street as markets anticipated the key U.S. jobs data that will be revealed later in the day. Japan’s benchmark Nikkei 225 edged 0.1% lower to 38,661.04 after Friday data showed the household spending figures in April were up 0.5% yearon-year. This is the first increase since February 2023, a key indicator to assess the country’s economy as central bank officials prepare to hold the policy meeting next week. Hong Kong’s Hang Seng index declined 0.6% to 18,367.73, and the Shanghai Composite index was down 0.4% to 3,036.08 as China trade data showed that exports in May rose faster than expected at 7.6% compared to the previous year, while imports were weaker than market forecasts. Australia’s S&P/ASX 200 climbed 0.4% to 7,853.40. South Korea’s Kospi added 0.8% to 2,709.63.

Source: PublicInvest Research - 10 Jun 2024