HEADLINES

Economy

Global: Factories struggled in July as demand waned, PMIs show. Manufacturers across Europe and Asia turned in a weak performance last month as factories grappled with tepid demand, surveys showed, raising the risk of an underpowered global economic recovery. It was a broadbased downturn in the euro zone while a slump in China's manufacturing activity suppressed its Asian neighbours. British factories bucked the trend and recorded their best month for two years, with output and hiring rising. HCOB's final euro zone manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, held at June's 45.8 in July. It has been below the 50 mark separating growth from contraction for over two years. (Reuters)

US: Weekly jobless claims highest in nearly a year; productivity accelerates. The number of Americans filing new applications for unemployment benefits increased to an 11-month high last week, suggesting a softening in the labour market, though claims tend to be volatile around this time of the year. The report from the Labor Department also showed the number of people on jobless rolls swelling in mid-July to the highest level since late 2021. The data could fan fears of a rapid labour market deterioration, which surfaced last month when data showed the unemployment rate rose to a 2-1/2-year high of 4.1% in June. It was supportive of a September interest rate cut. (Reuters)

US: Manufacturing gauge drops to eight-month low. A measure of US manufacturing activity dropped to an eight-month low in July amid a slump in new orders, but that likely exaggerates the industry's struggles as production at factories rebounded sharply in the second quarter. The Institute for Supply Management (ISM) said on Thursday that its manufacturing PMI dropped to 46.8 last month, the lowest reading since November, from 48.5 in June. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.3% of the economy. (Reuters)

EU: Manufacturing activity continues to shrink. The euro area manufacturing sector continued to contract on steep reduction in orders and output in July, final data from S&P Global showed. Further, official data showed that the unemployment rate in the currency bloc edged up in June as firms scaled back their staffing capacity amid weak economic activity. The HCOB manufacturing Purchasing Managers' Index posted 45.8 in July, unchanged from June and above the flash estimate of 45.6. There was a marked reduction in the health of the euro area's goods-producing economy, the survey showed. (RTT)

EU: Jobless rate rises in June. The euro area unemployment rate rose slightly in June, data from Eurostat showed. The unemployment rate posted 6.5% in June, up from 6.4% in May. The rate was unchanged from June 2023. Economists had forecast the jobless rate to stay stable at 6.4%. The number of people out of work increased by 41,000 from May and by 81,000 from the previous year. Meanwhile, the youth unemployment rate dropped slightly to 14.1% from 14.2%. The jobless rate in the EU27 remained unchanged at 6.0% in June, data showed. (RTT)

UK: Bank of England cuts rates from 16-year high, will be 'careful' on next moves. The BoE cut interest rates from a 16-year high after a tight vote by its policymakers who were split over whether inflation pressures had eased sufficiently. Governor Andrew Bailey led the 5-4 decision to reduce rates by a quarterpoint to 5% and he said the BOE would move cautiously going forward. It was the central bank's first cut since March 2020, at the start of the Covid-19 pandemic, giving Britain's new government a boost as it seeks to speed up the pace of economic growth. But Bailey stressed the BOE was not committing to a series of quick reductions in borrowing costs. (Reuters)

South Korea: Inflation climbs 2.6% on year in July. Consumer prices in South Korea were up 2.6% on year in July, Statistics Korea said - above forecasts for 2.5% and up from 2.4% in June. On a seasonally adjusted monthly basis, consumer prices rose 0.3% - in line with expectations following the 0.2% contraction in the previous month. Food and non-food products rose 3.4% and 2.7% on year, respectively. (RTT)

Markets

Nova MSC: Two Singapore firms agree to invest RM81m in Nova MSC subsidiaries. Singapore-based firms Jostar Investment VCC and Mark Investment Group VCC have signed share subscription agreements with Nova MSC for investments in two of the company’s subsidiaries totaling RM81.1m. Jostar and Mark Investment will invest a total of RM34.6m in Nova MSC’s 60%-owned subsidiary, Dex-Lab Pte Ltd, and another RM46.5m in EyRIS Pte Ltd, which is 42% indirectly owned by Nova MSC, the company said in an exchange filing. (The Edge)

Pekat Group: To purchase 60% stake in Apex Power. Pekat Group’s wholly owned subsidiary Pekat Teknologi SB (PTSB) is proposing to buy a 60% stake in Apex Power Industry SB for RM96m cash as part of a diversification of the group’s business into the power distribution equipment business. In a filing with Bursa Malaysia, Pekat, a solar energy solution provider, noted that PTSB will enter into a conditional share sale agreement with sole Apex Power shareholder Low Khek Heng (also known as Low Choon Huat) for the acquisition of 75,000 shares. (StarBiz)

MN Holdings: Wins RM86m job from TNB. MN Holdings’ (MNHB) wholly-owned subsidiary, MN Power Transmission SB has secured a contract worth RM86m from Tenaga Nasional. In a filing with Bursa Malaysia, MNHB said the contract involves the supply, erection, and commissioning of a 132/11-kilovolt Kg Awah GIS, including remote end substations work, complete with relevant secondary and ancillary equipment, as well as associated civil works. (StarBiz)

Mitrajaya: Bags RM37.91m construction job in KL. Mitrajaya Holdings has clinched a contract worth RM37.91m for the construction of a four-storey building with one level of subbasement car park in Kuala Lumpur. The company, through its wholly-owned Pembinaan Mitrajaya SB, accepted the letter of award (LOA) from a local company. The contract is slated for completion within 21 months from the commencement date of October 30, 2024. (The Edge)

Asdion: Classified as GN3 company, given 12 months to submit regularisation plan. Software developer Asdion has been classified as a Guidance Note 3 (GN3) company. This comes after its external auditors, CAS Malaysia PLT, flagged material uncertainty that would affect the company’s ability to continue as a going concern. According to the auditors’ report, Asdion's current liabilities exceeded its current assets by RM5.56m and RM6.38m at the group and company level respectively as at end-March 2024. (The Edge)

GHL Systems: To be delisted next week after NTT Data Japan's takeover. After 21 years on Bursa Malaysia, payment service provider GHL Systems is set to be delisted next week, following a successful takeover by NTT Data Japan Corp (NTTD Japan). In a filing with the local bourse, GHL announced that it had received a letter from Bursa Securities stating that its shares will be removed from the official list effective 9am, Aug 6. The company wishes to announce that Bursa Securities has, via a letter dated Aug 1, 2024, informed that pursuant to Paragraph 16.07(a) of the Main Market Listing Requirements, the entire issued share capital of GHL will be removed from the Official List of Bursa Securities with effect from 9am on Tuesday, Aug 6, 2024. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today as US stocks tumbled Thursday after weak data raised worries the Fed may have missed its window to do so before undercutting the economy’s growth. The S&P 500 sank 1.4% after a report showed US manufacturing activity is still shrinking, and its contraction is accelerating. Manufacturing has been one of areas of the economy hurt most by high rates, and the report from the Institute for Supply Management helped extinguish what had been gains for US stock indexes early in the morning. The Dow Jones Industrial Average dropped 494 points, or 1.2%, and had been down more than 700 points earlier in the day, while the Nasdaq composite sank 2.3%. Across the Atlantic, the Bank of England cut interest rates for the first time since the onset of the COVID-19 pandemic in early 2020. The FTSE 100 in London fell 1% after erasing an earlier gain, and stock indices were also weaker across much of Europe and Asia. Japan’s Nikkei 225 fell 2.5%. A day earlier, the Bank of Japan raised interest rates, a move that helps push up the value of the yen against the US dollar. Back home, shares on Bursa Malaysia closed broadly lower on Thursday after a lacklustre trading session in tandem with the downbeat performance in regional markets. At the closing bell, the FBM KLCI eased 1.32 points or 0.08% to 1,624.25 from yesterday's close of 1,625.57.

Source: PublicInvest Research - 2 Aug 2024