Economy

US: Companies add far fewer jobs than forecast, ADP data show . US companies added far fewer jobs than expected in July, indicating persistent hiring obstacles despite broader improvement in the economy. Businesses' payrolls increased by 330,000 last month, the smallest gain since Feb, after a revised 680,000 gain in June, according to ADP Research Institute data. The figure fell short of all economists' estimates in a Bloomberg survey. The median estimate was for a 690,000 rise. The slowdown in hiring underscores the challenges of a full labour market recovery. Firms are trying to keep pace with an unleashing of pent-up demand, but it will take time to fill a now-record number of open positions. The ADP data showed a broad moderation in employment growth. (Bloomberg)

US: Service sector index jumps to all-time high in July . Growth in US service sector activity accelerated by much more than anticipated in the month of July, according to a report released by the Institute for Supply Management. The ISM said its services PMI jumped to an all time high of 64.1 in July after pulling back to 60.1 in June, with a reading above 50 indicating growth in the sector. Economists had expected the index to inch up to 60.4. The bigger than expected increase by the headline index came as the business activity index surged up to 67.0 in July from 60.4 in June. The new orders index also climbed to 63.7 in July from 62.1 in June, while the employment index rebounded to 53.8 in July from 49.3 in June. (RTT)

UK: Service sector recovery slows in July . UK service sector activity grew at the slowest pace since the end of the winter lockdown as staff shortages and supply issues weighed on business capacity, final survey results from IHS Markit showed. The Chartered Institute of Procurement & Supply services Purchasing Managers' Index declined to 59.6 in July from 62.4 in June. The index was the lowest since March. Nonetheless, the score was above the crucial 50.0 no change mark and also above the flash reading of 57.8. Staff shortages, supply chain issues and the end of the full stamp duty holiday for residential property sales were cited as factors leading to a slowdown since June. There was a substantial loss of momentum in new business growth in July. Meanwhile, new export orders returned to growth, helped by looser pandemic restrictions in overseas markets. (RTT)

China: Service sector activity rebounds in July . China's service sector activity logged a steeper growth in July as the successful containment of the recent uptick in COVID-19 cases led to greater customer numbers and boosted new order intakes, survey results from IHS Markit showed. At 54.9 in July, the Caixin Purchasing Managers' Index rebounded from June's 14-month low of 50.3 and signaled a sharp and accelerated expansion of services activity. New order growth accelerated in July as the containment of the virus domestically boosted customer numbers and demand. Nonetheless, new export business remained broadly stagnant. Although marginal, service sector employment returned to growth in July. (RTT)

Thailand: Central bank keeps rate at record low, cuts GDP outlook amid Covid-19 surge . Thailand's central bank left its key interest rate unchanged at a record low in a split vote and slashed its 2021 GDP forecast as the Southeast Asian country struggles with its biggest wave of Covid-19 infections to date. The worsening outbreak has hit economic activity, which is heavily reliant on tourism. Stricter containment measures imposed in July have been extended with lockdown areas expanded, though increased exports and fiscal measures have lent some support. The Bank of Thailand (BOT) said after a policy meeting that it was again downgrading its growth forecast for this year to 0.7% from 1.8% predicted in June, and now expects just 150,000 foreign tourists. (Reuters)

Singapore: Private sector accelerates in July – Markit . The private sector in Singapore picked up steam in July, the latest survey from Markit Economics revealed with a PMI score of 56.7. That's up from 50.1, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. A brief period of Phase 3 re opening, announced and implemented in July, boosted business activity and demand in the month. New orders and output growth both improved sharply to rates not seen since June 2018 according to the survey. (RTT)

Hong Kong: Private sector PMI eases to 51.3 – Markit. The private sector in Hong Kong continued to expand in July, albeit at a slower pace, the latest survey from Markit Economics revealed with a PMI score of 51.3. That's down from 51.4, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. The Output and New Orders indices both expanded in July, signaling the fourth consecutive month of growth across both gauges. Rates of expansion also improved in July with panelists noting better economic and consumer confidence, given the control of the COVID-19 virus, driving the increase in activity. Foreign demand for Hong Kong SAR private sector goods and services however eased for a second straight month and at a faster pace compared to June. (RTT)

Markets

Serba Dinamik (Neutral, TP: RM0.44): KPMG clears Nexia SSY to be new external auditor. Serba Dinamik Holdings says Nexia SSY has received professional clearance from KPMG to be its new external auditor. The appointment was effective from August 3 and was in accordance with Section 320 By-Law of the Malaysia Institute of Accountants. Serba Dinamik nominated Nexia as its new external auditor after the position was vacant following the resignation of KPMG. (BTimes)

Solarvest: Wins RM66m contract for development of LSSPV plant in Perak. Solarvest Holdings has secured a RM66m contract from Grooveland SB as the main engineering, procurement, construction and commissioning (EPCC) contractor for the development of large-scale solar photovoltaic plant (LSSPV) in Perak. Grooveland is principally an investment holding company and the project shall commence upon the execution of the EPCC agreement. (The Edge)

DNeX: Silterra bags USD400m deal from China's ChipOne. Dagang NeXchange’s subsidiary, SilTerra Malaysia SB (SilTerra) has won a more than RM1.6bn order from a Chinese technology giant. SilTerra had entered into a wafer supply and purchase agreement worth USD400m with ChipOne Technology (Beijing) Co Ltd. ChipOne is a leading driver integrated circuit (IC), touch controller and fingerprint sensor fabless integrated circuit design house based in Beijing, China. (BTimes)

Fast Energy: To expand energy footprint. Fast Energy Holdings is seeking to expand its footprint in the energy space by exploring opportunities within renewable energy. The company recently completed a name change from Techfast Holdings, following a re-branding exercise to better reflect its refreshed corporate strategy. The company was seeing demand for cleaner and sustainable energy gaining more traction from all quarters such as residential, commercial and industrial sectors. (BTimes)

Lay Hong: Warns of record high soybean meal, corn prices’ impact on profitability. Lay Hong has cautioned that record high prices of poultry feed ingredients soybean meal and corn may affect the chicken product and egg producer’s profitability in the coming years. To maintain its status as a leading producer of eggs and chicken products in Malaysia, the group will continuously seek new farming and chicken processing methods to reduce cost and increase efficiency. (The Edge)

Ge-Shen: Subsidiary stops operations for a few days on MoH order to sanitise premises. Ge-Shen Corp has received an official notice from the Ministry of Health (MoH) to stop its operations for a few days to sanitise its premises as part of Covid-19 prevention measures. The temporary closure is expected to delay deliveries for several orders. It is currently in discussion with the affected customers for the rescheduling of the delivery dates for those orders. (The Edge)

F&N: Reports marginal rise in 3Q net profit as sales rise from low base. Fraser & Neave Holdings (F&N) net profit grew marginally by 2.45% to RM96.16m for its 3QFY21 from a year earlier, on the back of higher sales and lower income tax expenses. Quarterly revenue rose 15.42% to RM1.06bn. EPS increased to 26.2sen from 25.6sen in 3QFY21. F&N attributed the higher sales to the low base effect last year and maiden contribution from its food business Sri Nona. (The Edge)

Market Update

The FBM KLCI might open lower today as US stocks slipped on Wednesday after a closely watched jobs report fell short of expectations and a top central banker issued a hawkish forecast. Wall Street’s blue-chip S&P 500 benchmark closed 0.5% lower, accelerating losses late in the New York day and easing back from an all-time high struck on Tuesday. The lacklustre move came as investors digested a report from the Institute for Supply Management that showed the rate of activity growth in America’s services sector picked up sharply last month. The headline number exceeded analysts’ expectations but details in the release noted “worsening labour and materials shortages”, feeding into investor fears over the fragility of the US economic recovery. In a contrast, technology stocks inched higher, with the tech-heavy Nasdaq Composite rising 0.1%. The sector has been a hide-out for investors doubtful of the strength of the economic recovery. Across the Atlantic, the region-wide Stoxx Europe 600 index gained 0.6% to reach another record high while the UK’s FTSE 100 advanced 0.3%.

Back home, the FBM KLCI settled lower again despite rises in regional markets, as investor sentiment continued to be dampened by rising Covid-19 infections and political uncertainty. The benchmark index finished 8.93 points or 0.6% lower at 1,491.33. Meanwhile, tech shares lifted up China’s main stock indices, as a private survey showed faster service sector growth, but worries over surging Covid-19 cases weighed on sentiment, keeping gains in check. The Shanghai Composite index closed 0.85% higher at 3,477.22, while Hong Kong’s Hang Seng Index added 0.88% to 26,426.55. South Korea’s KOSPI rose 1.34% to 3,280.38, but Japan’s Nikkei 225 finished 0.21% lower at 27,584.08.

Source: PublicInvest Research - 5 Aug 2021