HEADLINES

Economy

US: Labor market, housing data point to slowing economy. First-time applications for US unemployment benefits fell moderately, while new housing construction dropped to the lowest level in nearly four years in May, suggesting that economic activity remained moderate in 2Q. The data combined with tepid retail sales last month to keep a Sept interest rate cut from the Fed on the table. Financial markets are anticipating one or more rate cuts this year despite policymakers' more hawkish outlook. Momentum is ebbing under the weight of the higher borrowing costs engineered by the US central bank. (Reuters)

US: Mortgage rates fall for third week. US mortgage rates decreased for a third week in a row amid signs of cooling inflation and expectations of a future Fed rate cut, the Freddie Mac Primary Mortgage Market Survey data showed. The 30-year fixed rate mortgage averaged 6.9% for the week ending 20 June versus 7.0% in the previous week. In the same week last year, the rate was 6.7%. The rate was the lowest since early April, when it was 6.8%. The 15-year fixed rate mortgage averaged 6.1% compared to 6.2% in the previous week. A year ago, the rate was 6.0%. (RTT)

EU: Consumer confidence improves for fifth month. Pessimism among euro area consumers lessened for a fifth month in a row in June and their confidence was the highest in over two years as the ECB cut interest rates for the first time in five years. The flash consumer confidence index for Eurozone rose to -14.0 from -14.3 in May, preliminary results of the monthly survey by the European Commission showed. That was in line with economists' expectations. The latest reading was the highest since Feb 2022, when the score was -9.4. (RTT)

UK: Markets jolted back to life by rate cut hopes, election buzz. Traders upped bets for a BOE rate cut in Aug, helping to underpin a pre-election rally for UK stocks and government bonds even though the central bank left rates on hold at a 16-year high. After the BOE delivered its widely expected decision it hinted that it was edging closer to cuts, prompting money markets to place a 44% probability on a move in Aug, up from around 32% a day earlier. They priced in a 90% chance of a Sept cut. (Reuters)

China: Leaves benchmark rates steady as PBOC walks tight rope. China left benchmark lending rates unchanged at a monthly fixing, in line with market expectation. The steady monthly LPR fixings underscore that Beijing's monetary easing efforts continued to be limited by narrowing interest rate margins and a weakening currency, despite a flurry of recent data showing more support is needed to shore up an uneven economic recovery. The one-year loan prime rate (LPR) was kept at 3.5%, while the five-year LPR was unchanged at 4.0%. (Reuters)

Japan: overall consumer prices rise 2.8% on year in May. Overall consumer prices in Japan were up 2.8% on year in May, the Ministry of Internal Affairs and Communications said. That exceeded expectations for an increase of 2.6% and up from 2.5% in April. On a seasonally adjusted monthly basis, inflation rose 0.5%, again above forecasts for 0.2% and up from 0.4% in the previous month. Core consumer prices, which exclude the volatile costs of food, rose 0.1% on month and 2.5% on year after the flat monthly reading and the 2.2% yearly gain a month earlier. (RTT)

South Korea: Producer prices perk 0.1% in May. Producer prices in South Korea were up a seasonally adjusted 0.1% on month in May, the Bank of Korea said, easing from 0.3% in April. Among the individual components of the survey, prices for agricultural, forestry and marine products tumbled 4.0% on month, while manufacturing products were flat and utilities and services both were up 0.5%. On a yearly basis, producer prices climbed 2.3%, accelerating from 1.9% in the previous month. Individually, prices for agricultural products climbed 5.4% on year, while manufacturing products added 1.9%, utilities were up 3.9% and services gained 2.4%. (RTT)

Indonesia: Keeps interest rates unchanged. Indonesia's central bank maintained its benchmark interest rate as inflation is expected to remain within the target range. The Board of Governors of Bank Indonesia, governed by Perry Warjiyo, voted to hold the seven-day reverse repo rate to 6.3%. The current rate is the highest since 2016, when the bank made the seven-day reverse repo as its main policy rate. The bank had last raised the rate by 25bps in April. The bank has hiked the rate by cumulative 275bps since Aug 2022. (RTT)

Taiwan: Export orders rise 7.0%, more than forecast. Taiwan's export orders increased for the third straight month in May and at a faster-than-expected pace, largely on the back of strong demand for chemicals, information, and communication products, according to data released by the Ministry of Economic Affairs. Export orders grew 7.0% YoY in May, though slower than the 10.8% surge in April. Nonetheless, that was above the expected growth of 6.0%. Orders for chemicals grew the most by 17.1%, followed by orders for information and communication products, which grew by 11.4%. (RTT)

Markets

Press Metal: To acquire Hong Kong firm stake via share swap. - Press Metal Aluminium Holdings Bhd has proposed to sell 25% or 3.86m of its shares in PT Bintan Alumina Indonesia (PT BAI) to Hong Kong Prime Aluminium Investment Limited (HK PAI) for USD329.80m (RM1.55bn). HK PAI is wholly owned by Nanshan Aluminium International Holdings Ltd (NAIHL). The exercise is for a share swap of 25.59% interest in NAIHL, which is proposed to be subscribed by Press Metal International Resources (HK) Ltd (PMIRHK), a wholly owned subsidiary of Press Metal Aluminium. (Bernama)

Hengyuan: Earnings likely to be impacted. Hengyuan Refining Company Bhd expects its earnings to be affected by the unplanned shutdown of its long residue catalytic cracking unit (LRCCU). Following a leakage found at the carbon monoxide boiler to the LRCCU, Hengyuan said it will shut down the LRCCU for inspection and repair. “The refinery production will be affected during the shutdown period as a result of the above incident, meaning that the revenue earned by the company during the shutdown period will be reduce. (The Star)

Genting: Awards USD1bn FLNG facility contract to Wison New Energies. Genting Bhd, via its subsidiaries, has contracted Chinese firm, Wison New Energies Co Ltd, for the construction of a 1.2m tonnes per annum floating liquefied natural gas (FLNG) facility in West Papua, Indonesia, in a deal valued at USD1bn. The contract, executed by Genting Oil & Gas Sdn Bhd and PT Layar Nusantara Gas (PTLNG), initially valued at USD962.8m, includes additional reimbursable costs up to USD70m, pushing the total above USD1bn. (The Malaysian Reserve)

TAS Offshore: Buys land in Sarawak to expand shipyard operations. TAS Offshore said it has entered into a deal to buy 14.37 hectares of land in Sarawak for RM12m in cash to expand its shipyard business. The land is expected to increase its shipyard capacity and contribute positively towards the group’s long-term growth in terms of profitability and net assets. “The land is situated on the true right bank of Batang Rajang, Tanjung Manis and is suitable to be utilised as a shipyard,” it added. (The Edge)

FSBM Holdings: To exit PN17 status after financial recovery. FSBM Holdings will exit Bursa Malaysia’s Practice Note 17 (PN17) financially distressed category after regularising its financial condition. Bursa Securities announced today that FSBM no longer triggers PN17 criteria and will be monitored for compliance with listing requirements. FSBM entered PN17 status on 30 Dec 2019, after auditor Moore Stephens PLT expressed a disclaimer on its FY2018 financial statements due to insufficient evidence. (The Malaysian Reserve)

Tex Cycle: Announces launch of biogas power plant. Tex Cycle Technology Bhd has announced that its 30%-owned GLT BP Power SB biogas power plant in Bukit Pasir, Johor, has commenced operations. The facility converts palm oil mill effluent into biogas, significantly reducing environmental waste and providing a sustainable energy source. According to Tex Cycle, the centralised nature of the plant allows for more efficient management and greater scalability, setting the stage for future expansions and innovations in renewable energy. "The operational start of the GLT BP Power plant is a landmark achievement in our ongoing commitment to sustainable energy. (The Star)

MARKET UPDATE

The FBM KLCI might open lower today after US stock indices edged back from their records Thursday, weighed down by a dip for Wall Street darling Nvidia, following a mixed set of reports on the economy. The S&P 500 dropped 0.3% from its all-time high set before trading paused for Wednesday’s Juneteenth holiday. The Nasdaq composite also pulled back from its record and slipped 0.8%. The Dow Jones Industrial Average beat the market with a gain of 299 points, or 0.8%. The hope on Wall Street is actually for a slowdown in the US economy’s growth. That could help keep a lid on inflationary pressures and convince the Federal Reserve to cut its main interest rate later this year. Such a cut would release pressure on the economy and boost investment prices. Stock indices rose across much of Europe following the moves. The French CAC 40 gained 1.3% to recoup more of its losses from last week following jolting results from elections. Asian indices were mixed. Back home, Bursa Malaysia ended lower for the fourth consecutive day today, primarily due to profit-taking activities in the construction, telecommunications, utilities and energy sectors. At the closing bell, the FBM KLCI was 0.44% or 7.10 points easier at 1,592.69 from Wednesday’s close of 1,599.79.

Source: PublicInvest Research - 21 Jun 2024