Market Review

The FBMKLCI swung back to red last Friday, declining by 0.2% as investors sentiment turned cautious amid mixed performance by US equities overnight. Among the index constituents, PMETAL is the worst performer (-3.1%), followed by DIALOG (-2.7%) and PETGAS (-1.9%). Profit-taking activities in the Energy (-2.4%) and Technology (-1.7%) sectors saw them giving back gains from previous days. The broader market sentiment remained negative, with 561 gainers against 677 losers.

Economics

Japan: BOJ’s lack of detail on bond buying cuts leaves Yen vulnerable

The Bank of Japan's decision to delay details on its bond-buying reduction until its July meeting has left investors anticipating further yen depreciation. The announcement surprised traders who were expecting specifics on the reduction, viewed as vital for the currency's recovery. Despite Governor Kazuo Ueda's remarks indicating the possibility of a rate hike alongside the bond-buying adjustment, uncertainties linger about the timing and extent of these policy changes, influencing market sentiments and the yen's performance. (Bloomberg)

India: Trade deficit widens in May as imports continue to climb

India's trade deficit widened in May as imports continued to rise due to strong domestic demand, resulting in a gap of $23.8bn between exports and imports, exceeding economists' forecasts. Despite India's robust economic growth of over 8% in the fiscal year ending March, global trade conditions remain uncertain, with the World Bank projecting a challenging period for trade growth, potentially impacting India's current account and the value of the rupee, which has depreciated 0.4% against the dollar this year. (Bloomberg)

EU: Centeno urges prudence on rates as inflation nears 2%

European Central Bank Governing Council member Mario Centeno emphasized the importance of prudence in adjusting interest rates to levels that neither overstimulate nor constrain the economy, suggesting a cautious approach to further rate cuts. Centeno highlighted the need for data-dependent decision-making, indicating that the ECB will closely monitor inflation trends and economic reactions to looser monetary policy before deciding on future actions. While some policymakers hint at a potential pause in July, Centeno emphasized the significance of upcoming economic projections in determining the ECB's efforts to achieve its inflation target. (Bloomberg)

US: Consumer sentiment unexpectedly falls to seven-month low

In early June, US consumer sentiment unexpectedly declined to a seven-month low of 65.6, missing economists' expectations for an increase to 72. Concerns about personal finances, driven by persistently high prices, contributed to the drop, with consumers anticipating a 3.1% annual increase in prices over the next five to ten years. Additionally, deteriorating views on economic conditions and buying conditions for durable goods suggest restrained consumer demand in the coming months. (Bloomberg)

Companies

PPB Group (4065): Is major shareholder of Techbond Group

PPB Group Bhd (PPB Group) has emerged as a substantial shareholder in Techbond Group Bhd (Techbond) following the acquisition of a 15%-stake from Sonicbond Sdn Bhd. Techbond is a manufacturer and supplier of industrial adhesives while PPB Group is a diversified conglomerate which is principally engaged in investment holding, food production, film exhibition and distribution, and property. Techbond's managing director, Lee Seng Thye, expressed optimism about the partnership, citing it as a vote of confidence in their growth potential and strategic direction. (The Star)

Hibiscus Petroleum (5199): Buys TotalEnergies Brunei for US$259m

Hibiscus Petroleum Bhd (Hibiscus Petroleum) has proposed to acquire the entire equity interest in TotalEnergies EP (Brunei) B.V. for US$259.4m, aiming to secure TotalEnergies Brunei's 37.5% operated interest in the MLJ gas field offshore Brunei. The acquisition is expected to increase Hibiscus Petroleum's 2P reserves by 36% and boost its daily net production of oil, condensate, and gas by approximately 86%, aligning with its energy transition strategy and goal of becoming a net-zero emissions producer by 2050. Additionally, the deal includes the incorporation of TotalEnergies Brunei employees into Hibiscus Petroleum, bringing valuable expertise to enhance the asset's value safely and efficiently. (The Star)

Trive Property (5249): Proposes two-for-five bonus issue of warrants

Trive Property Group Bhd (Trive Property) has proposed a bonus issue of warrants to its shareholders, offering two warrants for every five existing shares in an effort to reward shareholders and strengthen its financial position. With a tenure of five years and no cost to entitled shareholders, the warrants could potentially raise up to RM25.3m in gross proceeds assuming full exercise, with proceeds to be utilised based on the board's discretion and deposited in financial institutions or short-term money market instruments. (The Edge)

Fitters Diversified (9318): Cita Realiti ceases to be largest shareholder after selling 6.3% stake

Fitters Diversified Bhd (Fitters Diversified) announced that Cita Realiti Sdn Bhd, its former largest shareholder, sold a 6.26% stake in the company via the open market, reducing its shareholding to 4.47%. Ho Jien Shiung, an executive director of PDZ Holdings Bhd, is now the largest shareholder, while other substantial shareholders include Datuk Seri Dr Pang Chow Huat and Wong Wei We. (The Edge)

Destini (7212): Indirect unit served winding-up petition over RM18.55 mil tax owed

Destini Bhd announced that its subsidiary, Destini Shipbuilding and Engineering Sdn Bhd, has been served with a winding-up petition by the Inland Revenue Board for purportedly failing to pay RM18.6m in taxes. While Destini Shipbuilding is seeking legal advice, Destini clarified that the unit is not a major subsidiary and stated that the company is not expected to incur further losses from the winding-up petition. This development follows arbitration proceedings initiated by Damen Shipyards Gorinchem BV against Destini and Destini Shipbuilding for alleged unpaid invoices totaling up to €3.0m (RM15.6m). (The Edge)

GUH Holdings (3247): Scraps lithium battery assembly project with Chinese partner

GUH Holdings Bhd announced the termination of its plan to develop a lithium battery assembly plant in Malaysia in partnership with Shenzhen Xixin Electronic Technology Co Ltd. The cooperation agreement, signed in November last year, has been mutually terminated, with neither party having established the planned battery assembly plant or transferred shares to Xixin. This termination agreement has no financial impact on GUH Holdings or its subsidiaries, with no charges, fees, expenses, or payments demanded or payable by either party. (The Edge)

Source: Mercury Securities Research - 18 Jun 2024