Economy

Global: IMF lifts world GDP outlook on US stability but risks linger. The International Monetary Fund raised its outlook for the world economy this year, estimating that risks have eased in recent months after the US averted a default and authorities staved off a banking crisis on both sides of the Atlantic. Global gross domestic product will expand 3% in 2023, the IMF said in an update to its World Economic Outlook released Tuesday. While that’s still a slowdown from 3.5% growth last year, it’s faster than its 2.8% projection in April. (Bloomberg)

US: Consumer confidence rises to a two-year high on job market. US consumer confidence advanced in July to a two-year high, bolstered by a strong job market and easing inflation. The Conference Board’s index rose to 117 this month from 110.1 in June. The group’s gauge of current conditions improved to the strongest level since March 2020. A measure of expectations — which reflects consumers’ six-month outlook — advanced to the highest since the start of last year. A gauge of expected inflation ticked down. Greater confidence was evident across all age groups, and among both consumers earning incomes less than USD50,000 and those making more than USD100,000. (Bloomberg)

Eurozone: Banks tighten credit standards; loan demand falls in Q2. Eurozone lenders tightened their credit standards, while demand for loans from both firms and households declined in 2Q. Credit standards applied by banks for loans or credit lines to enterprises as well as loans to households for house purchase, and consumer credit and other lending to households were tightened further in the 2Q. The survey provided early indications about the weakening in lending dynamics seen since last autumn. Banks cited higher risk perceptions, lower risk tolerance and higher cost of funds contributed to the tightening of credit standards. (RTT)

UK: Manufacturers' confidence improves for first time in 2 years. UK manufacturers' confidence improved for the first time in two years in three months ended July and domestic selling price pressures softened. The business sentiment index rose to +6% in three months to July from -2% in the preceding period. This was the first positive score since July 2021. Export optimism also rose for the first time since October 2021. Ending five consecutive rolling quarters of decline, output volumes increased in three months to July. (RTT)

China: Growth forecasts cut into next year despite likely support. China’s economic outlook is deteriorating into next year, with no clear consensus from analysts that the business environment will improve despite Beijing’s push to restore confidence and its efforts to foster US ties. That’s the takeaway from a new Bloomberg survey of economists, who downgraded their growth projections for 2023 to 5.2% from an earlier median estimate of 5.5%. GDP is seen expanding 4.8% in 2024, slightly below an earlier median expectation of 4.9%. (Bloomberg)

Hong Kong: Trade gap narrows to HKD56.6bn. Hong Kong's trade deficit decreased in June from a year ago, as imports fell faster than exports. The visible trade deficit fell notably to HKD56.6bn from HKD68.5bn in the same month last year. However, this was well above May's shortfall of HKD26.4bn. The expected deficit was HKD42.4bn. (RTT)

Markets

Able Global (Outperform, TP:RM1.60): Sells land in Klang for RM34.68m. Able Global Bhd (AGB) is disposing of six lots of freehold industrial land in Klang, Selangor, to Hond Tat Polymer SB for RM34.68m. AGB said the proposed disposal provides an opportunity to unlock and realise the value of the property. “The proposed disposal will not have any effect on the existing business operations of the company.” AGB said the proceeds from the disposal shall be utilised for repayment of borrowing incurred for the purchase of the land and general working capital requirement. (StarBiz)

InNature (Outperform, TP RM0.62): To enter beauty, retail business in Taiwan. The Body Shop retailer InNature is planning to enter the beauty and retail business in Taiwan. InNature said it signed a MOU with Taiwan-based Top Wisdom Investment Co Ltd for a potential acquisition of an equity interest of Mayfair House Co Ltd from Top Wisdom. InNature managing director Datin Mina Cheah-Foong said Mayfair has been in the Taiwan beauty market for more than three decades, with a sizeable network of retail points of sale as well as having a robust presence in online retail channels. (The Edge)

KAB: Completes MSSB acquisition for RM5.3m. Kinergy Advancement Bhd (KAB) has completed the acquisition of Matahari Suria SB (MSSB) for RM5.3m. It said the acquisition was completed by its wholly-owned subsidiary, KAB Energy Holdings Sdn Bhd, thus further expanding its sustainable energy solutions segment’s portfolio. MSSB owns a solar photovoltaic system on the rooftop of Universiti Teknologi Malaysia Kuala Lumpur and has an ongoing renewable energy power purchase agreement to supply energy to Tenaga Nasional Berhad under a feed-in tariff concession until 2037. (StarBiz)

Sentral REIT: Acquires Menara CelcomDigi for RM450m; proposes share placement. Sentral REIT has signed a conditional sale and purchase agreement (SPA) with a unit of its major unitholder Malaysian Resources Corp Bhd (MRCB) to acquire the 27-storey office building known as Menara CelcomDigi in Petaling Jaya, Selangor for RM450m. Sentral REIT said the acquisition of the building from MRCB’s wholly-owned subsidiary Puncak Wangi SB, will be satisfied with cash raised through a combination of equity and debt funding exercises. (The Edge)

CLMT: Expects strong consumer spending to support growth momentum for remaining of FY2023. CapitaLand Malaysia Trust (CLMT) expects its earnings momentum to sustain in the second half of this year, bolstered by strong consumer spending and positive rental reversion coupled with contributions from newly acquired assets. The real estate investment trust (REIT) said it had initially expected last year's strong recovery to taper off this year considering that there were no more special EPF withdrawals, and due to a higher cost of living which may dent consumers’ spending power. "Surprisingly, the data has not gone that way, as consumers’ spending for the first half (1H) of this year continues to be very strong. (The Edge)

MYMBN: To expand products to China. Birds nests processor MYMBN Bhd (MYMBN) is gearing up for a bright future ahead as it plans to expand its products into the China market, as well as acquire a company in China this year. Its CEO Lavernt Chen said the company will target a revenue growth of 10% to 12% next year, which will grow in line with its profit. (StarBiz)

Market Update

The FBM KLCI might move higher today after the S&P 500 reached its highest level in more than a year on Tuesday, ahead of the Federal Reserve’s policy meeting on Wednesday, at which the central bank is expected to raise interest rates by another quarter point. The blue-chip index rose 0.3% on Tuesday, reaching its highest closing level since April 2022, while the tech-heavy Nasdaq Composite rose 0.6%. After the bell tech giants Microsoft and Alphabet reported earnings, with both beating expectations. The Fed is expected to raise interest rates by 0.25 percentage points to bring the policy rate to a range of between 5.25% and 5.5%. In Europe, the region-wide Stoxx 600 closed 0.5% higher, lifted by basic materials stocks as investors took heart at the prospect of economic stimulus from Beijing. Germany’s Dax rose 0.1%, while London’s FTSE 100 advanced 0.2%.

Back home, Bursa Malaysia extended its gaining streak for a fourth consecutive day on Tuesday, in line with most key regional indices and persistent buying mainly for banking and commodity-related stocks. At the closing bell, the benchmark FBM KLCI had risen 0.85% or 12.10 points to 1,436.79, from 1,424.69 at Monday’s close. Mainland China’s CSI 300 rose 2.9%, while Hong Kong’s Hang Seng index rose 4.1%. There were also strong gains for the Hang Seng Mainland Properties index and the Hang Seng Tech index, which added more than 14% and 6%, respectively.

Source: PublicInvest Research - 26 Jul 2023