HEADLINES

Economy

US: Import prices fall, consumer sentiment slides. US import prices fell for the first time in five months in May amid lower prices for energy products, providing another boost to the domestic inflation outlook. The unexpectedly benign report from the Labor Department showing tame inflation readings last month to keep a Sept interest rate cut from the Fed on the table. Signs that inflation is subsiding have, however, failed to lift spirits among Americans, with a survey showing consumer sentiment dropping to a sevenmonth low in June. (Reuters)

EU: Eurozone hourly labour cost accelerates in 1Q. The euro area hourly labour cost increased at a faster pace in 1Q, data published by Eurostat showed. Hourly labour cost grew at a faster pace of 5.1% on a yearly basis, which was faster than the 3.4% increase seen in 4Q of 2023. Wages and salaries and non-wage costs, the two main components of labour costs, grew 5.3% and 4.5%, respectively. (RTT)

EU: Italy inflation confirmed at 0.8%. Italy's consumer price inflation was unchanged in May, as initially estimated, preliminary data from the statistical office ISTAT showed. Consumer prices logged an annual increase of 0.8% in May, the same as in April. That was in line with the flash data published on 31 May. On a monthly basis, consumer prices rose 0.2% in May, following a 0.1% rise in April. Core inflation softened slightly to 2.0% from 2.1%, as estimated. (RTT)

UK: Asking prices for houses stagnate in June. Asking prices for British homes coming to the market were flat this month, adding to signs of a recent cooling off in the housing market upswing, a survey from property market website Rightmove showed. The company said the average asking price was GBP375,110 (USD475,827) for property put on sale between 12 May and 8 June, down GBP21 from a month earlier and statistically a flat reading. (Reuters)

China: Industrial output rises 5.6% on month in May. Industrial production in China was up 5.6% on year in May, the National Bureau of Statistics said, well shy of forecasts for an increase of 6.2% and slowing sharply from 6.7% in April. The bureau also said that retail sales rose an annual 3.7%, beating expectations for an increase of 3.0% and accelerating from 2.3% in the previous month. The jobless rate came in at 5.0%, unchanged and in line with expectations. (RTT)

China: New home prices fall at fastest clip in nearly 10 years. China's new home prices fell at the fastest pace in more than 9.5 years in May, official data showed, with the property sector struggling to find a bottom despite government efforts to rein in oversupply and support debt-laden developers. Prices were down 0.7% in May from the previous month, marking the 11th straight MoM decline and steepest drop since Oct 2014, according to Reuters calculations based on National Bureau of Statistics (NBS) data. (Reuters)

Japan: Core machinery orders down in April. Japan's core machinery orders fell in April for the first time in three months, government data showed, due to a pullback from the prior month's big jump, but the Cabinet Office said capital spending remained on track for a recovery. The data followed BOJ’s decision last week to start trimming its huge bond purchases, with it due to announce a detailed plan next month on reducing its nearly USD5trn balance sheet. (Reuters)

Japan: BOJ to forgo July rate hike, taper USD152bn per year. The BOJ is likely to trim bond buying by around JPY24trn (USD152bn) annually in new guidance due next month, but forgo raising interest rates at least until Sept, former board member Makoto Sakurai said. At its policy meeting, the BOJ decided to start trimming its huge bond purchases and announce a detailed plan in July on reducing its nearly USD5trn balance sheet, taking another step toward unwinding its massive monetary stimulus. (Reuters) Markets

PPB Group: Acquires 15% stake in Techbond for RM37.7m. PPB Group Bhd (PPB) has acquired a 15% stake in Techbond Group Bhd (TGB) from Sonicbond SB, TGB's majority shareholder, making PPB a substantial shareholder. PPB disclosed the acquisition of 82.39m ordinary shares and 34.05m warrants in TGB directly from Sonicbond for RM37.67m in cash. The investment was financed using internally generated funds by the conglomerate, which operates in investment holding, food production, film exhibition and distribution, and property. (Bernama)

Destini: Indirect unit served winding-up petition over RM18.55m tax owed. Destini said \its indirect subsidiary was served with a winding-up petition for purportedly failing to pay RM18.55m owed to the tax authority. The Inland Revenue Board is seeking for Destini Shipbuilding and Engineering SB to be wound up and that the Official Receiver of Malaysia be appointed as the official liquidator, Destini said in an exchange filing. The unit, however, is not a major subsidiary, Destini noted. (The Edge)

Apollo Food: 4Q profits dip 11.85% on higher expenses. Apollo Food reported an 11.85% drop in net profit for its fourth quarter ended April 30, 2024, due to higher operating expenses. Net profit fell to RM5.9m, while revenue also decreased by 5.03% to RM57.23m, driven by reduced export sales. No dividends were declared for the quarter. Despite this, the company’s full-year net profit rose 70.08% to RM53.83m, boosted by an RM18.7m gain from the disposal of investment properties. Excluding this one-off gain, net profit increased by 11%, supported by better gross profit margins. Full-year revenue slightly declined to RM255.41m. (The Malaysian Reserve)

GUH Holdings: Scraps lithium battery assembly project with Chinese partner. GUH Holdings said it has scrapped a plan to develop a lithium battery assembly plant in Malaysia. The company and its joint venture (JV) partner, Chinese battery manufacturer Shenzhen Xixin Electronic Technology Co Ltd, have mutually agreed to terminate the agreement signed in November last year, GUH said. “No battery assembly plant has been established, no equipment has been purchased, and no shares in the JV have been transferred to Xixin pursuant to the cooperation agreement,” GUH said. (The Edge)

Boustead Heavy Industries: Secures RM1.1bn conract for RMN Submarine Support. BHIC Submarine Services Engineering SB (BSES), a wholly-owned subsidiary of Boustead Heavy Industries Corporation Berhad (BHIC), has received a Letter of Award (LOA) from the Ministry of Defence to provide In-Service Support 2 (ISS 2) services to the Royal Malaysian Navy (RMN) submarines. BHIC chief executive officer Feroz Razi Ramli said the award demonstrated the Malaysian Government's confidence in BSES and BHIC's capability to complete the project on time, within budget, and meeting customer requirements. (Bernama)

KYM: 1Q profit plummets 95% on absence of one-off gain. KYM Holdings reported a significant decline of 94.8% in its first quarter ended 30 April 2024 (1QFY2025) net profit, due to the absence of a one-off gain amounting to RM15.29m from the sale of a piece of land and building during the same period last year. Net profit for its 1QFY2025 plummeted to RM585,000 or 0.38 sen per share, from RM11.27m or 7.42 sen per share recorded a year earlier. The company’s revenue dropped slightly by 0.8% to RM22.72m in 1QFY2025 as compared to RM22.91m a year prior. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks rose to records Monday as gains for technology companies keep pushing the market higher. The S&P 500 climbed 0.8% to top its all-time high set on Thursday. The Dow Jones Industrial Average gained 188 points, or 0.5%, while the Nasdaq composite added 1% to its own record. Broadcom was one of the strongest forces pushing the S&P 500 upward, along with a 2% rise for Apple and 1.2% climb for Microsoft. Super Micro Computer, which sells server and storage systems used in artificial intelligence and other computing, leaped 5.1% to bring its gain for the year so far to a staggering 212.2%. It’s also part of the supernova around AI that’s been overshadowing almost everything else on Wall Street. The gains for tech helped offset pressure on the stock market caused by rising Treasury yields in the bond market. The climb in yields erased some of the slack created last week when better-than-expected reports on inflation raised hopes that the Federal Reserve will cut interest rates later this year. In stock markets elsewhere, European indexes calmed somewhat following last week’s rout. France’s CAC 40 rose 0.9% following its worst week in two years on worries that potential electoral losses by the President’s centrist party could lead to sharply higher debt for the country. The modest gains for Europe followed losses in Asia. Japan’s Nikkei 225 dropped 1.8%.

Source: PublicInvest Research - 18 Jun 2024