Economy

US: May budget deficit shrinks as revenue rise sharply, Treasury says. The US government posted a May deficit of USD132bn, about a third of the May 2020 deficit of USD399bn, as higher employment and an earlier tax deadline this year boosted receipts sharply, even as COVID-19 pandemic-related outlays grew, the US Treasury said. Receipts for May rose 167% to USD464bn, an increase partly attributed to last year’s delay of the Internal Revenue Service income tax filing deadline until July 15. (Reuters)

US: Consumer prices rise 0.6% in May, more than expected. A highly anticipated report released by the Labor Department showed consumer prices in the US increased by more than expected in May. The Labor Department said its consumer price index rose by 0.6% in May after climbing by 0.8% in April. Economists had expected consumer prices to increase by 0.4%. About one-third of the increase in consumer prices was due to a 7.3% spike in prices for use cars and trucks. (RTT)

US: Jobless claims edge down to lowest level since March 2020. First-time claims for US unemployment benefits showed a modest decrease in the week ended June 5th, according to a report released by the Labor Department. The report showed initial jobless claims edged down to 376,000, a decrease of 9,000 from the previous week's unrevised level of 385,000. Economists had expected jobless claims to dip to 370,000. With the slight drop, jobless claims once again fell to their lowest level since hitting 256,000 in the week. (RTT)

EU: ECB lift growth forecasts, sees underlying inflation ‘subdued’. The European Central Bank raised EU’s growth forecasts for this year and next and said the risks to the outlook were balanced. Policymakers also raised the inflation forecast for the two years, but expect underlying inflationary pressures to remain subdued. The bank's rate-setting body, the Governing Council, avoided signaling a tapering of its asset purchases. (RTT)

UK: House prices continue to rise on strong demand – RICS. UK house prices continued to increase in May driven by robust demand and shortfall of new instructions, survey results from the Royal Institution of Chartered Surveyors, or RICS, showed. The house price balance rose to 83% in May from 76% in April. This was the fourth successive month in which upward pressure on house price seemingly intensified, RICS said. (RTT)

China: Bank lending exceeds expectations in May. Chinese bank lending exceeded expectations in May, data from the People's Bank of China revealed. Banks extended CNY1.5trn new loans in May, almost unchanged from the previous month's CNY1.47trn. The expected level was CNY1.4trn. Total social financing increased marginally to CNY1.9trn in May but remained below the economists' forecast of CNY2trn. The broad M2 money supply grew 8.3%, faster than the 8.1% increase seen in April. (RTT)

Japan: Producer prices climb 0.7% MoM in May. Producer prices in Japan were up 0.7% MoM in May, the Bank of Japan said. That exceeded expectations for an increase of 0.5% and was down from 0.9% in April. On a yearly basis, producer prices climbed 4.9% - again beating forecasts for 4.5% and up from 3.6% in the previous month. Export prices were up 1.0% MoM and 11.0% YoY last month, the bank said, while import prices rose 2.2% MoM and surged 25.% YoY. (RTT)

Markets

Kossan (Trading Buy, TP: RM6.10): To settle payment for migrant workers remediation fees this month . Kossan Rubber Industries Bhd said it will make the full payment of RM25m in remediation fees to its migrant workers by the end of this month. The payment was originally targeted to be completed in March 2022. Kossan announced that it has finalised the remediation of recruitment fees to migrant workers of RM54m. (StarBiz)

Serba Dinamik (Neutral, TP: RM1.39): Co-founder Awang Daud and EPF dump shares amid audit issues. Serba Dinamik Holdings’ co-founder Datuk Awang Daud Awang Putera has disposed of 8.5m shares in the group, which has been in the limelight since May 25 over some audit issues. Awang Daud, who is also the group's non-independent non-executive director, sold the shares in the open market on 9 th June 2021, reducing his stake to 1.8% from 2.24%. Besides Awang Daud, the Employees Provident Fund (EPF) has also disposed of Serba Dinamik shares in the open market. (The Edge)

Microlink Solutions: Proposes three-for-one bonus issue . Microlink Solutions has proposed to undertake a bonus issue on the basis of three bonus shares for every one existing ordinary share on an entitlement date to be determined later. Microlink said that the proposed bonus issue will involve the issuance of up to 863.98m bonus shares. (The Edge)

Southern Cable: Shareholders give nod to Main Board transfer . Southern Cable Group has secured shareholders' approval for the proposed amendments to its constitution, paving the way for the transfer of its listing to Bursa Malaysia's Main Board. Group MD Tung Eng Hai said the listing transfer would be a landmark in Southern Cable's journey to become a leading provider of cables and wires. Tung said the company was aiming for the transfer to take place in the 4Q of 2021, pending approvals from the Securities Commission and Bursa. (New Straits Times)

Prestar Resources: Plans three-for-five bonus issue . Prestar Resources has proposed to undertake a bonus issue of up to 135.48m shares on the basis of three bonus shares for five existing shares on an entitlement date to be determined later. (The Edge)

Asia Poly: Disposes of shares, rights shares in Ta Win for RM8.33 m . Asia Poly Holdings has disposed of 39m ordinary shares and 36m rights shares in Ta Win Holdings for RM8.33m. Asia Poly said the shares were disposed of on the open market between May 7 and June 9, 2021, after reviewing the overall market conditions. “The sale of proceeds from the disposal will be used for working capital and other investment. (Bernama)

CBIP: Posts higher 1Q earnings on palm oil and engineering income . CB Industrial Product Holding (CBIP) posted a higher net profit in the 1Q, boosted by increased revenue from its palm oil plantations and improved margin at its equipment and engineering business. Net profit in the three-ended March 31 surged 51% to RM18.6m compared with RM12.3m made a year ago. (StarBiz)

Market Update

The FBM KLCI might open higher today after stocks on Wall Street hit a high and core government debt was steady as investors brushed aside the biggest jump in US inflation since the financial crisis. The yield on the 10-year Treasury edged down 0.05 percentage points to 1.44% after the labour department reported that headline consumer price inflation accelerated 5% in the 12 months to May — the largest year-on-year leap since 2008 and above the 4.7% pace expected by economists polled by Bloomberg. Equity investors took the news in their stride, helping send the blue-chip S&P 500 index up 0.5% to a fresh record. The tech-heavy Nasdaq Composite climbed 0.8%. The Cboe’s Vix index, Wall Street’s so-called fear gauge that tracks expected volatility on the S&P 500, slid to 16.1 points, far below the intraday mark of 85 hit during the height of the coronavirus crisis in March 2020 and beneath its long-run average of about 20. Across the Atlantic, the region-wide Stoxx Europe 600 index closed flat, clinging on to the high hit a day earlier, while London’s FTSE 100 gained 0.1%.

Back home, the FBM KLCI closed down 1.58 points or 0.1% at its intraday low of 1,579.90 on profit taking in the final trading hour as global investors waited for the US inflation data and the European Central Bank's (ECB) interest rate decision. The regional markets closed broadly higher. The Shanghai Composite Index ended the day up 0.5%, while Japan’s Nikkei 225 edged up 0.3%.

Source: PublicInvest Research - 11 Jun 2021