KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
Malaysia's manufacturing sector experienced a slight moderation in July due to muted demand conditions, according to S&P Global Market Intelligence.
Key Points:
- PMI Reading: The seasonally adjusted S&P Global Malaysia manufacturing purchasing managers’ index (PMI) dipped to 49.7 in July from 49.9 in June, indicating a slight decline in the sector's health.
- Demand Conditions: There were slowdowns in new orders, output, employment, and stocks. However, firms reported firmer conditions overseas, leading to increased new export orders.
- Input Costs and Prices: Input cost inflation edged higher to an eight-month high, resulting in the steepest rise in output prices since September 2022.
- GDP Impact: The PMI and GDP data suggest continued growth in the second quarter of 2024, though with a slight slowdown in manufacturing production on an annual basis.
- New Orders: Eased for the first time in three months due to weak domestic demand, although the reduction was slight. International markets saw growth for the fourth consecutive month, driven by demand in Asia and Oceania.
- Production and Employment: Production softened to the greatest extent in three months, and employment was scaled back for the first time in four months due to non-replacement of voluntary leavers. The rate of job shedding was slight.
- Backlogs and Stocks: Increase in backlogs of work for the first time since May 2022. Purchasing activity, stocks of inputs, and inventories of finished goods were scaled back, with stocks of purchases seeing a quicker rate of moderation.
- Delivery Times: Longer delivery times for the third month in a row, with lead times lengthening significantly due to severe port congestion.
- Inflationary Pressures: Input cost inflation ticked up slightly, driven by higher raw material and transportation costs. Prices charged for manufactured goods were raised at the steepest rate since September 2022 as firms passed additional costs to clients.
- Outlook: Optimism regarding the 12-month outlook for output improved to the highest level since March, though it remained below the long-run average. Firms are hopeful for an improvement in demand but concerned about the timing of a domestic demand recovery.
Economist Commentary:
- Usamah Bhatti, S&P Global Market Intelligence: "Malaysian manufacturers remained under pressure in July, as the latest PMI data signaled that the sector saw a slightly steeper moderation in operating conditions. New orders, output, and employment all softened, with incoming new business falling for the first time in three months. The subdued environment was largely limited to the domestic economy, while new export orders rose for the fourth month in a row. Inflationary pressures remained prevalent, contributing to the strongest rise in output charges since September 2022."
The overall picture suggests that while the Malaysian manufacturing sector is facing challenges domestically, there is some resilience in international demand, providing a mixed but cautiously optimistic outlook.
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