Economy

Global: World factory outlook darkens with weakening from Europe to Asia. European factory activity plunged and Asian manufacturing output continued to weaken in July amid lingering supply-chain complications and a slowing global economy. Purchasing managers' indexes for the euro area's four largest members all indicated contraction, with shrinking confirmed for the region as a whole after an initial estimate on July 22. In Asia, it was China, South Korea, and Taiwan that took the biggest hit. The reports reflect the darkening outlook for the world economy that forced the International Monetary Fund to last week lower its global growth forecast for this year and next, warning an outright recession may be just around the corner. The euro area's prospects in particular look increasingly dire, despite a bumper second-quarter expansion of 0.7%. (Bloomberg)

US: Manufacturing expands at slowest pace in just over two years . US manufacturing activity continued to cool in July, as more factories dialed back production in the face of shrinking orders and rising inventories. The Institute for Supply Management’s gauge of factory activity eased to 52.8, the lowest level since June 2020, from 53 a month earlier, according to data released. Readings above 50 indicate expansion, and the latest figure compared with a median projection of 52 in a Bloomberg survey of economists. The group’s measure of production also fell to a more than two-year low, and its gauge of new orders remained in contraction territory for a second month. The figures highlight softer demand for merchandise as the economy struggles for momentum. (Bloomberg)

EU: Eurozone unemployment rate remains stable in June . The euro area unemployment rate remained unchanged at a record low in June, data released by Eurostat showed. The jobless rate came in at seasonally adjusted 6.6% in June, the same rate as seen in May and in line with expectations. The number of people out of work decreased 1.957m from the last year to 10.925m. In June, 2.073m young persons below 25 were unemployed. The youth jobless rate was 13.6%, down from 13.2% in May. The EU unemployment rate was 6.0% in June, also stable compared with May. At the same time, the youth unemployment rate rose to 13.6% from 13.3%. (RTT)

EU: German retail sales plunge most since 1980 as inflation bites . German retail sales plummeted in June as consumers cut spending on non-essential goods to cope with record inflation. Sales were down 9.8% from the previous year, the most since 1980 — before the country’s reunification. Non-food items such as furniture and household appliances or clothing and shoes registered even steeper declines. The data add to an already strained outlook. Europe’s largest economy is suffering like few others from surging inflation as a result of Russia’s war in Ukraine, supply-chain disruptions and the prospect that energy rationing in the winter will shut down some of the country’s factories. Output stagnated in the 2Q, and more and more economists argue that a recession later this year is inevitable. (Bloomberg)

UK: Manufacturing sector growth weakens to 25-month low . The UK manufacturing sector growth moderated to a 25-month low in July as the downturn in production and new work continued amid heightened uncertainty, the cost of living crisis and supply chain issues. The Chartered Institute of Procurement & Supply final manufacturing Purchasing Managers' Index declined to a 25-month low of 52.1 in July from 52.8 in June, the survey results published by S&P Global showed. The flash reading was 52.2. Nonetheless, the PMI held above the 50.0 no-change mark due to faster jobs growth, rising stocks of purchases and longer vendor lead times. Production declined for the first time since May 2020, reflecting downturns in the consumer and intermediate goods sub-industries. (RTT)

Hong Kong: Economy contracts unexpectedly in 2Q . Hong Kong's economy contracted unexpectedly in the second quarter on weak exports and investment, the advance estimates from the Census and Statistics Department showed. GDP contracted 1.4% from the last year, following a 3.9% fall in the 1Q. Economists had forecast an annual expansion of 0.6%. On the expenditure-side, private consumption remained unchanged annually versus a 5.8% drop a quarter ago. Meanwhile, government spending surged 13.0%, faster than the 6.7% rise in the 1Q. At the same time, gross fixed capital formation dropped 3.0% versus a 7.8% fall a quarter ago. The decline in exports of goods deepened to 8.6% from 4.5%. (RTT)

Indonesia: Inflation increases in July. Indonesia's consumer prices rose at a faster than expected rate in July, data from statistics bureau showed. The consumer price index increased 4.94% YoY in July, following a 4.35% rise in June. Economists had expected inflation to accelerate to 4.82%. Core inflation was 2.86% in July, while economists had forecast 2.85%. On a monthly basis, consumer prices rose 0.64% in July, following a 0.61% increase in the previous month. Economists had forecast a rise of 0.53%. Prices for food, beverages and tobacco grew the most, by 1.16% annually, and transportation costs increased 1.13% from the previous month. (RTT)

Markets

Rex Industry: Proposes 1-for-3 rights issue with warrants to raise up to RM16.44m. Rex Industry has proposed to undertake a renounceable rights issue of up to 164.42m new shares at the issue price of 10 sen apiece, coupled with free warrants to raise up to RM16.44m to expand its beverage business. The proposed exercise entails the issuance of one rights share for every three existing Rex shares held, together with 54.81m free detachable warrants in Rex on the basis of one warrant for every three rights shares subscribed by entitled shareholders. (The Edge)

Ivory Properties: Slips into PN17 as auditor expresses disclaimer on FY22 financials. Ivory Properties Group, whose external auditors have expressed a disclaimer of opinion on the company’s audited financial statements for the FYE March 31, 2022 (FY22), is now an affected listed issuer under PN17 after Messrs KPMG PLT flagged material uncertainties about Ivory Properties’s ability to continue as going concerns. (The Edge)

Ingenieur Gudang: To buy industrial land in Puncak Alam for RM30.45m. Ingenieur Gudang (IGB) has proposed to acquire 9.32 acres of leasehold industrial land for RM30.45m in Bandar Puncak Alam, Selangor. IGB intends to develop the said land into warehouse storage space targeting the courier and logistics market players in view of the strategic location of Puncak Alam. (StarBiz)

Willowglen MSC: Secures RM19m award from TRX management system. Willowglen MSC has secured a RM19.31m award for the design, supply, delivery, installation, configuration, testing and commissioning of the TRX integrated management system. Its wholly-owned subsidiary, Willowglen (M) SB, clinched the contract from TRX City SB. The contract, which is expected to commence on Aug 16, 2022, will conclude on Nov 15, 2023. (The Edge)

Seremban Engineering: Bags RM14m contract. Seremban Engineering has bagged a contract worth RM14.01m from Technip Energies (M) SB for the supply and delivery of a melamine silo and pressure vessel for the latter. The commencement date for the melamine silo was June 3 and it is slated to be delivered by March 24, 2023. (The Edge)

Menang: To dispose entire stake in Menang Finservices. Menang Corp (MCB) has entered into a share sale agreement with Chang Kim Fei and Lee Boon Kwong to dispose of its entire 100% stake in Menang Finservices (M) SB (MFSB) for RM100,000. MCB said its wholly owned subsidiary, Menang Leasing and Credit (M) SB entered into the agreement with the vendors for the disposal of 500,000 ordinary shares, representing 100% of the total issued shares of MFSB. (StarBiz)

IPO: Digital solutions specialist Agmo targets RM22.1m proceeds from IPO. ACE Market-bound Agmo Holdings aims to raise RM22.1m in proceeds from its IPO to fund its business expansion plans. At the launch of its IPO prospectus, the digital solutions and application development specialist said of the proceeds, RM9.47m will be allocated for setting up R&D, sales, marketing and business development teams as well as technical support and maintenance service teams. (StarBiz)

Market Update

US benchmarks ended lower overnight as investors took a pause following recent weeks’ gains to question if there was more room for markets to run. A better-than-expected manufacturing report helped lift sentiment nonetheless, to limit losses on the day. The Dow Jones Industrial Average and S&P 500 slipped 0.1% and 0.3%. The Nasdaq Composite fell 0.2% meanwhile. European markets were also lower as investors here assessed corporate earnings. On the data front, Eurozone manufacturing activity contracted in July, deepening concerns that the region could be sliding into recession. UK‘s FTSE 100 and France’s CAC 40 fell 0.1% and 0.2%. Germany’s DAX ended fractionally lower. Asian markets were mostly higher, led by Chinese shares after a private survey showed the country’s manufacturing activity expanding slightly in July, though this is in contrast to official numbers released over the weekend which showed a contraction. The Shanghai Composite Index inched 0.2% higher regardless. The Hang Seng Index pared earlier losses to end the day marginally higher. Japan’s Nikkei 225 gained 0.7% meanwhile. Back home, the FBM KLCI broke through the 1500pt barrier with a 9.84-pt gain on the day.

Source: PublicInvest Research - 2 Aug 2022