HEADLINES

Economy

US: Manufacturing output beats expectations with 0.4% rise in June. Production at US factories increased more than expected in June, contributing to a solid rebound in output in 2Q, though higher borrowing costs remain a constraint for the manufacturing industry. Factory output rose 0.4% last month following an upwardly revised 1.0% increase in May, the Fed said. Economists had forecast factory output would advance 0.2% after a previously reported 0.9% jump in May. Production at factories shot up 1.1% on a YoY basis in June. It increased at a 3.4% annualized rate in 2Q, rebounding from the 1.3% pace of decline in the Jan-March quarter. (Reuters)

US: Crude oil inventories unexpectedly decrease. A report released by the Energy Information Administration showed an unexpected decrease by US crude oil inventories. The EIA said crude oil inventories slid by 4.9m barrels last week after falling by 3.4m barrels in the previous week. Economists had expected crude oil inventories to rise by 0.8m barrels. At 440.2m barrels, US crude oil inventories are about 5% below the five-year average for this time of year, the EIA said. Meanwhile, the report said gasoline inventories increased by 3.3m barrels last week and are slightly above the five-year average for this time of year. (RTT)

US: Firms point to slowing activity and softer labour market. US economic activity expanded at a slight to modest pace from late May through early July with firms expecting slower growth ahead as they also reported signs the jobs market continues to soften, in line with the Fed's recent pivot to more keenly assessing slowing demand for labour to ensure it doesn't wait too long before cutting interest rates. The US central bank's latest temperature check on the health of the economy also showed that inflation pressures increased at a modest pace with most Fed districts reporting input costs were beginning to stabilize. (Reuters)

EU: Inflation slows to 2.5% as estimated. Eurozone inflation slowed as initially estimated in June but the ECB is expected to hold its benchmark rate as underlying inflation remains too high. The harmonized index of consumer prices rose 2.5% on a yearly basis, which was slower than the 2.6% growth posted in May. The 2.5% matched the flash estimate published on 2 July. At the same time, core inflation that excludes prices of energy, food, alcohol and tobacco, held steady at 2.9% in June, in line with flash estimate. On a monthly basis, the HICP gained 0.2% in June. (RTT)

UK: Inflation holds steady at BOE’s 2% target, above expectations. UK inflation held steady at the BOE’s 2% target in June, Official National Statistics data showed. The headline reading came in above analyst expectations at 1.9%, and was in line with the previous 2% reading in May. Sterling rose slightly shortly after the release, trading at USD1.3. Services inflation, which is closely watched by the BOE, given its dominance within the UK economy and its reflection of domestically-generated price rises, remained at 5.7% in June. Core inflation, excluding energy, food, alcohol and tobacco, was 3.5%, also on par with the 3.5% recorded in May. (CNBC)

UK: House price inflation accelerates in May. UK house prices grew at a faster pace in May, while private rents posted a slower annual growth, the Office for National Statistics reported. Average house prices grew 2.2% on a yearly basis, after rising by a revised 1.3% in April. This was the third consecutive increase in prices following eight months of annual falls. Further, data showed that private rents grew 8.6% from a year ago, which was slower than the 8.7% rise in May. Earlier, average rents had posted a record high annual growth of 9.2% in March 2024. (RTT)

Hong Kong: Posts record home purchases by mainland Chinese. Hong Kong saw record home purchases by mainland Chinese buyers in the first six months after the financial hub removed all buying curbs. In late Feb, Hong Kong removed all additional stamp duties for foreign and second home buyers, as well as on those selling flats within two years of buying them, after prices had plunged 20% from their 2021 peak. During the first half, 6,117 new and second-hand homes worth a total of HKD70.5bn (RM42.1bn) were purchased by mainland Chinese buyers, up 70% and 42% respectively from a year ago. (Reuters)

Indonesia: Keeps key interest rate unchanged. Indonesia's central bank kept its benchmark interest rate unchanged, as widely expected. The Board of Governors of Bank Indonesia, governed by Perry Warjiyo, decided to maintain the seven-day reverse repo rate to 6.25%. The current 6.25% is the highest since 2016, when the bank made the seven-day reverse repo as its main policy rate. The bank unexpectedly lifted the interest rate by a quarter-point in April. The bank has raised the rate by cumulative 275bps since Aug 2022. The economy is projected to grow in the range of 4.7% to 5.5% in 2024. (RTT)

Markets

ILB Group: To acquire solar energy business for RM98 m. ILB Group said it is acquiring a solar energy company and its assets for RM98m cash. ILB said it will pay RM30m for the purchase of Armani Sinar SB from Andy Woo Weng Kok, and another RM68m for the acquisition of a solar photovoltaic (PV) system from Armani Energy SB. Armani Energy is a company founded by Woo. Besides him, the other shareholders of the company are Datuk Seri Azlan Azmi and Datuk Seri Wong Sze Chien. Armani Energy owns about 16.9 megawatt peak (MWp) of solar assets, said ILB. The group said the acquisition of Armani Sinar and the solar PV assets will be funded by internally generated funds and bank borrowings. (The Edge)

B.I.G Industries: Ceases concrete division amidst financial struggles. B.I.G Industries announced the cessation of its concrete division operations, effective 16 July, 2024, citing intense competition and sustained financial losses as key factors. The division, managed by wholly-owned subsidiaries Uni-Mix SB, UniMix Concrete Products SB, and Kinalaju Supply SB, will be shuttered, while Uni-Mix’s property development arm will continue unaffected. (The Malaysian Reserve)

Berjaya Land: Berjaya Rail joins MARIC, set to propel local rail sector. Berjaya Land's rail division, Berjaya Rail SB, is positioning itself to improve and develop the local rail industry, with an emphasis on the Kuala Lumpur-Singapore high-speed rail (KL-SG HSR) project. BLand group CEO and Berjaya Rail board member Syed Ali Shahul Hameed highlighted the company's dedication to collaborating with stakeholders such as the Malaysia Rail Industry Corporation (MARIC). (New Straits Times)

Hong Seng: Acquires HSF for RM45m. Hong Seng Consolidated Bhd’s wholly owned subsidiary HS Green Valley SB (HSGV) has entered into an agreement to acquire all of Hong Seng Frontier SB (HSF) from Velocity Capital Partner Bhd. The purchase, involving 250,000 ordinary shares worth RM45.25m, would be entirely financed by cash, with a 10% deposit being paid to Velocity upon execution of the sale and purchase agreement and the balance to be remitted on or before the completion date of the agreement. (The Star)

Bintai Kinden: Bags RM25.68m contract. Bintai Kinden Corp Bhd, via its wholly-owned Kejuruteraan Bintai Kindenko SB, has secured two contracts worth a combined RM25.68m. The first contract, valued at RM24.98m, involves the construction of 24 units of semi-detached three stories houses and 12 units of townhouses within a three-storey building in Cheras, Selangor. Construction is set for 18 months with an expected completion before mid-2026. (New Straits Times)

PGF Capital: Secures exclusive deal for mineral wool panels, eyes data centre market. PGF Capital Bhd has secured an exclusive distributorship agreement with Centria Building Material Manufacturing (Shanghai) Co Ltd for mineral wool sandwich panels in Malaysia. The five-year deal allows PGF’s subsidiary, PGF Global Distribution SB, to distribute these panels, which are ideal for data centres due to their thermal performance and fire-resistant properties. (The Malaysian Reserve)

MARKET UPDATE

The FBM KLCI might open lower today after Wall Street’s recordbreaking rally ran into a wall Wednesday, as worries about potentially worsening trade tensions with China hit stocks of chip companies. That dragged indices to their worst day in months, but conditions may have been less discouraging underneath the surface. The S&P 500 slumped 1.4% a day after setting an all-time high for the 38th time this year. Losses for Nvidia and other Big Tech heavyweights also dragged the Nasdaq composite to a loss of 2.8%, its worst drop since 2022. But slightly more stocks in the S&P 500 nevertheless rose than fell, and the Dow Jones Industrial Average added 243 points, or 0.6%, to its record set a day earlier. In stock markets elsewhere, London’s FTSE 100 rose 0.3% after data showed the inflation rate remained steady at the Bank of England’s 2% target in June. Indices were mixed elsewhere across Europe and Asia. Back home, Bursa Malaysia pared down gains at the closing bell today with the index recording a fresh three-year high, aligned with the global rally as expectations that the US Federal Reserve (Fed) will soon cut rates fuelled a rush into riskier market segments. At the closing bell, the FBM KLCI rose 7.58 points, or 0.47%, to 1,633.54 from Tuesday’s close of 1,625.96. Regionally, Japan’s Nikkei 225 eased 0.43%, Singapore’s Straits Times Index went up 0.05% and Hong Kong’s Hang Seng Index rose 0.06%.

Source: PublicInvest Research - 18 Jul 2024