Automation – Read-across from China‘s July Manufacturing PMI

Research evidence excerpt

Automation – Read-across from China‘s July Manufacturing PMI

Update

August 2, 2026 10:53 PM GMT

Morgan Stanley Taiwan Limited+MGreater China Technology Hardware | Asia Pacific Derrick Yang

Equity Analyst

Automation – Read-across from Derrick.Yang@morganstanley.comVivi Huang +886 2 2730-2862

Research Associate

Vivi.Huang@morganstanley.com +886 2 2730-2860

China's July Manufacturing PMI Morgan Stanley Asia Limited+

Andy Meng, CFA

In this report, we focus on China's manufacturing PMI, which we Equity Analyst

Andy.Meng@morganstanley.com +852 2239-7689

see as a potential catalyst for Airtac's and Hiwin's share prices.

China's manufacturing PMI dropped to 49.2 in July from 50.3 in June:

• This came in lower than both our estimate and consensus of 50.1.

• The major drag was from the production (-1.5ppt MoM to 49.9) and new

orders (-2.7ppt MoM to 48.5), while export was relatively resilient (new Greater China Technology Hardware

Asia Pacific

export orders (-0.5ppt MoM to 49.6). Industry View In-Line

• Our macro team pointed out that there might be room for broader easing

this fall, if the July-August growth disappoints, since the government has

urged faster execution of the Rmb2tn fiscal impulse in 2H26.

Our view:

• We think the softer Chroma manufacturing PMI might weigh on the near

term sentiment toward the names in the industrial automation space,

especially those with high exposure to China, though we will closely monitor

whether this develops into a trend in the coming months.

• In the automation group in Taiwan, we like Airtac and Hiwin as they got their

company specific drivers on top of the overall market dynamics:

° Airtac (1590.TW, OW) should continue to benefit from its own share

gains and incremental contribution from linear guides. Valuation appears