Economy

US: Banks say conditions for loans to businesses and consumers will keep getting tougher. Lending conditions at US banks are tight and likely to get tighter, according to a Fed survey. While credit conditions got stricter, demand declined as well. Those results are important as economists who expect a recession believe that the most likely source will be from the banking system, which has had to respond to a series of 11 interest rate hikes as well as a momentary crisis in March when three midsize institutions failed. (CNBC)

US: Treasury to borrow USD1.007trn in Q3. The US Treasury expects to borrow USD1.007trn in the Q3, higher than the May estimate by USD274bn, due to a lower cash balance at the beginning of the quarter, a higher end-of-quarter cash balance and expectations of lower receipts and higher outlays for the period. The third-quarter financing estimate assumes an end-Sept cash balance of USD650bn. If the Treasury borrows the amount it expects, it will be the largest net debt issuance during a Q3 period. (Reuters)

EU: Eurozone GDP growth tops expectations, inflation slows. Regardless of the impact of interest rate hikes, the euro area economy expanded more than expected in the second quarter, underpinned by the outperformance of the Irish and French economies. Separate data revealed that headline inflation slowed for the third straight month in July on falling energy prices, while the core measure held steady. GDP registered a sequential growth of 0.3% after remaining unchanged in the Q1. GDP was forecast to advance 0.2%. (RTT)

EU: Portugal economy grows 2.3%, inflation eases to 3.1%. Portugal's economy expanded at a slightly slower pace in the second quarter. CPI eased further in July on the back of a fall in the prices of food products. GDP advanced 2.3% YoY in the June quarter, slower than the previous quarter's increase of 2.5%. On a quarterly basis, GDP remained flat in the Q2 versus a 1.6 increase in the preceding quarter. (RTT)

UK: Mortgage approvals unexpectedly rise. Despite the rising interest rates and weak economic activity, UK mortgage approvals increased in June, and consumer credit grew at the fastest pace in more than five years. Mortgage approvals increased to 54,700 in June from 51,100 in May, the BoE reported. Economists had expected a fall to 49,400. Approvals were the highest since Oct 2022 but they remained below the monthly average of 62,700 in 2022. (RTT)

Japan: Consumer confidence rises to 37.1, highest in 19 months. Japan's consumer sentiment improved for the fifth straight month in July to the highest level in more than one-and-a-half years. The seasonally adjusted consumer confidence index climbed to 37.1 in July from 36.2 in June. Further, the latest reading was the highest since Dec 2021, when it was 38.8. (RTT)

Hong Kong: Economy expands 1.5% in Q2. Hong Kong's economy expanded for the second straight quarter in the three months ended June, largely due to the sustained solid growth in private consumption and service trade. GDP advanced 1.5% YoY in the Q2, though slower than the 2.9% growth in the Q1, which was the first expansion since the Q1 2022. (RTT)

Markets

Avillion: Auditor raises doubts over Avillion’s ability to continue as a going concern . Avillion said its auditor has raised concerns about the loss-making property and hospitality group’s ability to continue operating as a going concern in its audited financial statements for FY2023. Its external auditor Messrs Baker Tilly Monteiro Heng PLT said Avillion incurred net losses of RM5.4m at the group level and RM4.84m at the company level in FY2023, although the group’s hospitality, property, and travel divisions have recovered after the Covid-19 pandemic. (The Edge)

Favell Favco: Secures contracts valued at RM92m . Favelle Favco’s subsidiaries, Favelle Favco Cranes Pty Ltd and Favelle Favco Cranes (M) SB, have received purchase orders and letters of intent totalling RM92m. The crane manufacturer said it had received contracts for the supply of a tower crane and three offshore cranes, with deliveries estimated between the end of 2023 and early 2025. “The contracts are expected to contribute positively to the earnings and net assets of Favelle Favco for the financial year ending Dec 31, 2023 and beyond. The contracts do not have any impact on the share capital and shareholding structure of the company. (StarBiz)

Cengild: Enters into JV to establish oncology centres in Klang Valley . Cengild Medical's has entered into a joint venture with Curie KL SB and OnCocare Holdings SB to establish oncology centres in the Klang Valley. Cengild said it will hold a 25% stake in the JV company, Curie Oncology KL SB, while Curie KL will own a majority 65% stake and OnCoCare, the remaining 10%. The joint venture company will establish its first oncology centre and carry out its operations at Cengild GI Medical Centre at Nexus@Bangsar South. (StarBiz)

DXN: Explores collaboration to develop field of traditional medicine in Utar . DXN Holdings is exploring a partnership with Universiti Tunku Abdul Rahman (Utar), Hospital Universiti Tunku Abdul Rahman (Utar Hospital) and Yayasan Prihatin Nasional to facilitate several collaboration programmes between the parties. The group said it had inked a MoU with the parties to support Utar in natural products research, and Utar Hospital in setting up medical services for traditional and complementary medicine treatment to parties. (StarBiz)

Titijaya: Signs deal with state agency to reclaim and develop 20.8-acre land in Penang. Titijaya Land has entered into a deal for the reclamation and development of 20.8 acres of land next to the Bayan Lepas WaterFront development site on the Penang island. The property developer said its wholly-owned unit City Meridian Development SB signed the reclamation and development agreement with state-owned Penang Development Corporation (PDC) on Monday (July 31). (The Edge)

Green Ocean: Proposes 10-to-1 share consolidation. Green Ocean Corp is planning to consolidate every 10 of its existing shares held by shareholders at an entitlement date to be determined, into one consolidated share. It currently has 2.11bn shares for an issued share capital of RM143.5m, no treasury shares, and 621.4m outstanding warrants B. Green Ocean that the actual number of consolidated shares will be determined later, after taking into consideration any new shares that may be issued arising from the exercise of its outstanding warrants B. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks have recorded their longest monthly winning streak in two years, as optimism about falling inflation and resilient growth encourages increasingly broad market gains. The S&P 500 rose 3.1% in July, including a 0.2% gain during the final session of the month on Monday. The increase marked the fifth consecutive month higher for the blue-chip index and the longest such run since the summer of 2021. The tech-dominated Nasdaq Composite closed up 0.2% on Monday, bringing its gain since the end of June to 4%. European stocks also enjoyed a decent month, with the continent-wide Stoxx 600 adding 1.9% for its second consecutive monthly gain. That included a 0.2% increase on Monday following better than expected economic growth data. France’s Cac 40 rose 0.3% and Germany’s Dax traded flat, having touched a record high earlier in the session.

Back home, Bursa Malaysia recouped last week's losses to close in positive territory on Monday, in line with the strong performance of regional peers, amid improved regional market sentiment. At the closing bell, the FBM KLCI had improved by 9.08 points or 0.63% to 1,459.43, from 1,450.35 at last Friday’s close. In the region, Chinese stocks notched their biggest monthly gain since January as a series of weak data points spurred hopes officials and policymakers could announce economic stimulus in an effort to boost growth and avoid the possibility of succumbing to a bout of deflation. Japan’s broad Topix index rose 1.5% in July, a seventh straight month of gains for its longest winning streak in a decade. Hong Kong’s Hang Seng index gained 0.8% on Monday, while the benchmark CSI 300 rose 0.6%, as both reached their highest levels since early May. Japan’s Topix rose 1.4%.

Source: PublicInvest Research - 1 Aug 2023