Economy

US: Manufacturing slump deepens, factory gate price pressures subdued. US manufacturing slumped further in June, reaching levels last seen when the nation was reeling from the initial wave of the COVID-19 pandemic, but price pressures at the factory gate continued to deflate, a silver lining for the economy. Shrinking activity left factories resorting to layoffs, the survey from the Institute for Supply Management (ISM) showed. ISM Manufacturing Business Survey Committee Chair Timothy Fiore described the practise as happening "to a greater extent than in prior months." (Reuters)

US: Yields edge higher after manufacturing data. US Treasury yields rose modestly in light trading, reversing course after briefly losing ground following economic data that showed the manufacturing sector continues to slump. Yields moved lower after the Institute for Supply Management (ISM) said that its manufacturing PMI dropped to 46.0 last month, the lowest reading since May 2020, from 46.9 in May. The reading marked the eighth straight month below the 50 level, indicating contraction, the longest streak since the Great Recession from 2007 to 2009. (Reuters)

EU: Sweden manufacturing downturn eases in June. Sweden's manufacturing sector contracted further in June, though the pace of decline has eased since May, survey data from Swedbank and the logistics association SILF showed. The purchasing managers' index for the manufacturing sector rose to 44.8 in June from 40.7 in May. However, any reading below 50 indicates contraction. Thus, the Swedish manufacturing sector remained in decline for the eleventh successive month. (RTT)

EU: Poland's manufacturing downturn deepens in June. Poland's manufacturing contraction worsened in June amid a marked fall in output, new orders, and purchasing activity, survey data from S&P Global showed. The manufacturing purchasing managers' index, or PMI, dropped to 45.1 in June from 47.0 in May. A PMI reading below 50 suggests contraction in the sector. Among the five components of the headline index, new orders, output, employment, and stocks of purchases contributed most negatively. Germany was cited as a major source of weakness in export new business in June.

UK: Manufacturing contracts again as uncertainty weighs on demand. Despite easing price and supply chain pressures, the UK manufacturing activity shrank further in June amid an uncertain outlook for both domestic and foreign orders, final survey results from S&P Global and the Chartered Institute of Procurement & Supply showed. The CIPS Purchasing Managers' Index, or PMI, for manufacturing declined to 46.5 in June from 47.1 in the previous month. The score was above the flash estimate of 46.2, but remained the lowest since last December. A reading below 50 suggests contraction in the sector. The survey showed that the manufacturing sector has contracted in each of the past eleven months. (RTT)

China: Manufacturing sector slows in June, Caixin. The manufacturing sector in China continued to expand in June, albeit at a slower pace, the latest survey from Caixin revealed with a manufacturing PMI score of 50.5. That's down from 50.9 in May although it remains above the boom-or-bust line of 50 that separates expansion from contraction. After rising at the quickest rate in 11 months in May, Chinese manufacturing output expanded only slightly in June. Where production increased, companies often linked this to firmer demand conditions and greater intakes of new work. Total new business expanded modestly in June, with the pace of growth slowing slightly from May. Data suggested that the upturn was largely driven by improved domestic sales, as new export business was broadly unchanged. There were a number of reports that relatively weak global economic conditions had dampened foreign demand. (RTT)

India: Manufacturing growth remains strong on robust demand. India's manufacturing activity continued to expand strongly in June, thanks to greater demand for India-made products both domestically and internationally, the results of the purchasing managers' survey from S&P Global showed. The manufacturing Purchasing Managers' Index, or PMI, dropped to 57.8 in June from 58.7 in May. However, a reading above 50 indicates expansion in the sector. The expected score was 58.0. In June, a strong demand environment led to an upturn in sales, production, stock building, and employment. The rate of growth in new orders was among the strongest seen since February 2021. Further, new export orders also increased solidly, though at a slower pace compared to May. (RTT)

Indonesian: Inflation eases to 3.52%, lowest in 14 months. Indonesia's inflation rate slowed more-than-expected in June to reach the lowest level in more than a year, largely due to lower food prices, data from the statistics bureau showed. The consumer price index climbed 3.52% YoY in June, slower than the 4.00% increase in May. Economists had expected inflation to ease to 3.64%. The latest inflation was the lowest since April last year, when prices had risen 3.47%. Moreover, the inflation rate has remained within the central bank's target range of 2-4%. Core inflation also moderated to 2.58% in June from 2.66% a month ago. Economists had forecast a growth rate of 2.60%. (RTT)

Markets

Uzma (Outperform, TP: 1.10): Uzma and Malaysia Marine Heavy to work together to service O&G industry. Uzma has partnered with Malaysia Marine and Heavy Engineering Holdings (MHB) to explore potential collaborations, develop innovative solutions and provide comprehensive services in the oil and gas industry. Uzma’s subsidiary, Uzma Engineering SB (UESB) today entered into a MoU with Malaysia Marine and Heavy Engineering SB (MMHE), a subsidiary of MHB for the projects. (New Straits Times)

UEM Group: To issue RM7bn sukuk for green foray, seeks organic growth and potential M&As. UEM Group, the green investment platform of Khazanah Nasional, plans to issue RM7bn sustainable sukuk, seeking to grow its assets organically as well as explore mergers and acquisitions over the next five years. UEM Group is also seeking strategic partnerships as it takes a proactive approach to further develop green industry in the country under its newly-formed, wholly-owned UEM Lestra. (New Straits Times)

G Capital: Inks renewable energy purchase agreements with TNB. G Capital via its wholly-owned Northern Star Hydropower SB has inked a renewable energy power purchase agreement (REPPA) with Tenaga Nasional (TNB), in relation to two small hydropower plants in Pahang. NS Hydropower was named as Feed-In Approval holder by the Sustainable Energy Development Authority Malaysia (SEDA) last December, in respect to the 12.5MW hydropower plant in Hulu Dong and 13.5MW hydropower plant in Batu Talam. (The Edge)

LYC Healthcare: Advances towards listing subsidiary on SGX. LYC Medicare Singapore Limited, a subsidiary of LYC Healthcare Group, has made significant progress in its plan to go public by lodging its preliminary offer document with the Singapore Exchange Securities Trading Limited on 30 June 2023. The document submission marks a crucial step in the proposed IPO and listing of LYC Medicare Singapore’s ordinary shares on the catalist board of the SGX-ST. (The Edge)

Tropicana: Redeems RM465.5m Islamic bond. Tropicana Corp has redeemed the Sukuk Wakalah Programme tranche of RM465.5m due on 30 June. In a statement, the property developer said this Sukuk Wakalah Programme was part of the RM1.5bn Islamic medium term notes programme issued by the group. (StarBiz)

SunCon: Receives RM253m refurbishment contract from Sunway REIT. Sunway Construction Group (SunCon) has received a RM253m contract from Sunway REIT for the main building works for the refurbishment of a shopping complex and commercial centre in Seberang Perai Tengah, Penang. SunCon’s wholly owned subsidiary Sunway Construction SB accepted the letter of award from Sunway REIT. (The Edge)

Haily Group: Secures RM53.80m contract for residential units in Johor Bahru. Construction specialist Haily Group has secured a RM53.80m construction contract from Tasek Maju Realty SB to build 170 residential units for the Taman Mutiara Maju township in Johor Bahru. This contract, which is the fourth major job clinched by the Group this year, brings the total contract value of its ongoing projects to RM713.56m. (BusinessToday)

MARKET UPDATE

US markets started off the second half of the year positively as key benchmarks ended a shortened trading session higher. Markets closed earlier ahead of the Independence Day holiday, which will also see it remain closed today. Data on the day showed the ISM manufacturing purchasing managers’ index (PMI) reading remaining below the 50-point threshold, indicating contraction in economic activity. The Dow Jones Industrial Average ended the day fractionally higher as the S&P 500 and Nasdaq Composite added on 0.1% and 0.2% respectively. European markets were lower however, with sector performances mixed. Mining stocks gained ~2% though healthcare fell ~2%, the former lifted by rising base metal prices and improved sentiment on China. UK’s FTSE100 slipped 0.1%. Germany’s DAX and France’s CAC 40 fell 0.4% and 0.2% meanwhile. Asian markets were mostly higher despite numerous manufacturing activity reports showing slowing output in the region. The Hang Seng and Shanghai Composite indices jumped 2.1% and 1.3% higher. Japan’s Nikkei 225 rose 1.7%. The FBM KLCI also rebounded strongly from last Friday’s weak finish to end 1.4% higher on the day.

Source: PublicInvest Research - 4 Jul 2023