Economy

China: Holds off on major stimulus as it signals property Easing. China’s top leaders signalled more support for the troubled real estate sector alongside pledges to boost consumption and resolve local government debt, though fell short of announcing large-scale stimulus to support the slowing economic recovery. The ruling Communist Party’s 24-member Politburo — its top decision making body led by President Xi Jinping — promised “counter cyclical” policy. (Bloomberg)

Eurozone: Private sector downturn raises recession risk. Signalling the risk of a recession, the euro area private sector activity declined at the fastest pace in eight months in July as the downturn gathered pace at the start of 3Q. The HCOB composite output index dropped to an eight-month low of 48.9 in July from 49.9 in June. A reading below 50 suggests contraction in the private sector that combines manufacturing and services. This was the lowest score since last Nov. (RTT)

UK: Private sector logs weakest growth in 6 months. The UK private sector expanded at the slowest pace in six months in July as rising interest rates, high inflation and uncertain economic outlook pose strong headwinds to business activity. The flash composite output index dropped to a six-month low of 50.7 from 52.8 in the previous month. Although the score has remained above the crucial 50.0 no-change threshold in each of the past six months, the reading was the weakest in the current sequence of expansion. (RTT)

South Korea: GDP climbs 0.6% in Q2. South Korea's GDP expanded a seasonally adjusted 0.6% on quarter in the 2Q2023. That exceeded expectations for an increase of 0.5% and was up from 0.3% in the previous three months. Private consumption fell by 0.1%, as expenditure on services such as restaurants and accommodations declined while expenditure on goods maintained the previous quarter's level. On an annualized basis, GDP was up 0.9% - unchanged from the first quarter and beating forecasts for a gain of 0.8%. (RTT)

Singapore: Inflation eases to 16-month low. Singapore's CPI moderated in June to the lowest level in more than a year, primarily due to a slowdown in private transport charges. The CPI, climbed 4.5% YoY in June, slower than the 5.1% increase in the previous month. That was in line with economists' expectations. Moreover, this was the slowest inflation rate since Feb 2022, when prices had grown 4.3%. (RTT)

Taiwan: Industrial output continues to fall sharply, retail sales growth eases. Taiwan's industrial production continued to decrease sharply in June, primarily due to a plunge in manufacturing output. Separate official data showed that retail sales expanded markedly, though at a slower pace, at the end of 2Q. Industrial production fell 16.63% YoY in June, faster than the revised 15.71% slump in the previous month. (RTT)

Taiwan: Jobless rate falls to 3.45%. The unemployment rate in Taiwan dropped marginally in June. The unemployment rate fell to a seasonally adjusted 3.45% in June from 3.50% a month ago. In the same period last year, the rate was 3.70%. On an unadjusted basis, the jobless rate was 3.49%, compared to 3.46% in the previous month. (RTT)

Markets

Betamek: Bags RM436.5m supply contract from Perodua. Betamek’s wholly-owned subsidiary Betamek Electronics (M) SB has secured a RM436.5m contract to supply various electronics parts to Perusahaan Otomobil Kedua SB’s (Perodua) new car model. The electronics manufacturing services (EMS) provider said its unit had received a letter of instruction from Perodua for the order, which is expected to commence in the fourth quarter of the financial year ending March 31, 2025. The group said the contract is expected to contribute positively to the group's earnings over a six year period, starting from FY25. (StarBiz)

JAG: Wins RM150m waste management services contract from Infineon. JAG’s wholly owned subsidiary, Jaring Metal Industries SB (JMI) has secured a total waste management services contract worth a total of RM150m from Infineon Technologies (M) SB. JAG said under the agreement, JMI will be providing total waste management services to Infineon, where JMI will manage all types of waste or by-products generated from Infineon's production activities, including scheduled waste, non-scheduled waste and critical scrap. (StarBiz)

EATech: Withdraws regularisation plan after calling off share subscription agreement. - PN17 company EA Technique (M) Bhd (EATech) said it has withdrawn the regularisation plan it had submitted to the stock exchange in April. This came after the oil tankers and port marine services provider agreed to mutually terminate the share subscription agreement it entered in March with Eco Offshore Services SB (EOSSB) and two individuals, namely Tan Sri Abdul Halim Ali and Khiruddin Ibrahim Said. (The Edge)

Catcha Digital: GN2 status set to be lifted following completion of rights issue. Catcha Digital said its GN2 status is expected to be lifted after the group raised RM29.7m via a rights issue for growth and expansion. The rights issue also marked the completion of the digital media and advertising group’s regularisation plan, Catcha said. At the close of acceptance on July 14, Catcha had received valid acceptances and excess applications for 126.43m rights shares, which accounted for 72.40% of the 174.64m rights shares available for subscription. This number of shares applied for was 102.77m (or 58.85% of the total shares available) with excess applications making up 23.66m shares (13.55% of the total shares available). (The Edge)

KIP REIT: Holds positive outlook on back of strong property portfolio performance. KIP REIT holds a favorable outlook, considering the positive performance of its existing property portfolio. “As a result, the manager anticipates the ability to sustain a stable performance throughout the fiscal year 2024,” KIP REIT said. “The manager will continue to manage the existing portfolio and exercise prudent capital management in order to deliver sustainable distributions per unit (DPU) to unitholders. (StarBiz)

United Plantations: Navigates challenges amidst global uncertainties. United Plantations is mindful of the challenges which the second half of 2023 will bring, especially amidst the uncertainties of high inflation and recession fears coupled with the ongoing Russia-Ukraine war and its continued impact on global supply chains. “Whilst costs of energy, fertilisers, chemicals, building materials and spare parts have come down from earlier highs, they are still above levels experienced a few years ago, resulting in our cost base increasing to its highest levels ever,” the plantation group said in the notes. (StarBiz)

Market Update

The FBM KLCI might open higher today after US stocks and bond yields rose on Monday ahead of a busy week of central bank meetings and corporate earnings reports. Wall Street’s benchmark S&P 500 closed 0.4% higher, led by energy and financial stocks. The rise came after a closely watched business survey pointed to slower than expected growth in the US in July. The flash composite purchasing managers’ index came in at 52 — above the 50 mark that indicates economic expansion, but lower than June’s reading and weaker than economists had forecast. Signs of an economic slowdown have sometimes been counter-intuitively welcomed by US stock investors in recent months, as they decrease the likelihood that the Federal Reserve will make further interest rate rises. The US central bank is widely expected to raise interest rates by 0.25 percentage points following the conclusion of its policy meeting on Wednesday, but investors are divided over whether there will be additional increases later this year. In Europe, stocks edged higher even after separate data pointed to a contraction in manufacturing and services activity, with the continent-wide Stoxx 600 gaining 0.1%.

Back home, Bursa Malaysia's key index rallied to close higher for a third straight session on Monday on continuous foreign buying support mainly for banking stocks. At the closing bell, the benchmark FBM KLCI had risen 0.79% or 11.17 points to settle at its intraday high of 1,424.69, from 1,413.52 at last Friday’s close. Elsewhere, China’s benchmark CSI 300 index dropped 0.4% while Hong Kong’s Hang Seng lost 2.1%.

Source: PublicInvest Research - 25 Jul 2023