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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 13 Oct 2017, 09:34 AM

 

PublicInvest Research Headlines - 28 Jun 2017

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Economy

US: IMF cuts US growth forecasts, cites Trump fiscal plan uncertainty. The IMF cut its growth forecasts for the US economy to 2.1% for both 2017 and 2018, dropping its assumption that President Donald Trump's tax cut and fiscal spending plans would boost growth. The IMF, after a review of US economic policy, said the Trump administration was unlikely to achieve its goal of annual GDP growth of 3% over a sustained period, partly because the labor market is at a level consistent with full employment. The US economy grew 1.6% last year. (Reuters)

US: Yellen keeps rate hikes on track amid ‘rich’ asset prices. Federal Reserve Chair Janet Yellen gave no indication her plans for continued monetary policy tightening had shifted while acknowledging that some asset prices had become “somewhat rich.” “We’ve made very clear that we think it will be appropriate to the attainment of our goals to raise interest rates very gradually,” she said. In her first public remarks since the US central bank hiked rates on June 14, Yellen said that asset valuations, by some measures “look high, but there’s no certainty about that.” (Bloomberg)

US: Job market boosts US consumer confidence as expectations ease. An unexpected rebound in US consumer confidence reflects a buoyant labor market and improved business conditions, though Americans are slightly less optimistic about where things will be in six months, data from the New York-based Conference Board showed. Confidence index rose to 118.9 from 117.6 in May. Present conditions measure increased to 146.3, highest since July 2001, from 140.6. (Bloomberg)

EU: Draghi sees room for paring stimulus without tightening policy. Mario Draghi hinted at how he may sell a gradual unwinding of ECB stimulus. The ECB president repeated his mantra that the Governing Council needs to be patient in letting inflation pressures build in the euro area and prudent in withdrawing support. At the same time, there’s room to tweak existing measures. (Bloomberg)

UK: Banks brace for USD14.5bn capital demand from BOE. The BOE plans to increase capital requirements for UK lenders by GBP11.4bn (USD14.5bn) to tackle risks posed by the recent rapid growth in consumer credit and prepare for the uncertain outcome of Brexit talks. (Bloomberg)

China: Li says China to meet growth goals, vows free trade support. Premier Li Keqiang said China remains on track to meet its main economic goals for this year while warning of rising geopolitical risk and threats to the global upswing. Anti-globalization voices are emerging and world geopolitical risks are increasing, Li said. Li’s speech was a robust defense of globalization and a thinly veiled rebuttal of the narrative adopted by US President Donald Trump, who has accused trading partners, including China, of unfair trading practices. (Bloomberg)

Japan: BOJ keeps snapping up bonds as foreigners grab T-bills. The BOJ continued its spending spree on Japan’s government debt, although the pace of increase has slowed dramatically since the introduction of yield-curve control in Sept 2016. The central bank owned 39.5% of Japan’s bonds and Treasury bills, up from 13.1% when Haruhiko Kuroda took over as governor in March 2013, according to its quarterly Flow of Funds statistics released Tuesday. (Bloomberg)

Markets

Global Oriental, Malton: In JV for mixed development. Global Oriental is teaming up with Malton for a mixed development project on 38.34 acres of land in Cheras. Global Oriental's wholly-owned subsidiary Fame Action SB signed the deal with Malton's whollyowned unit Layar Raya SB. The seven plots of freehold land are to be developed as a mixed development at the absolute discretion of Fame Action as the developer, said Global Oriental. Layar Raya is entitled to 18% of the net development value of the project, "which shall not be less than RM65m", it said. (The Edge)

Microlink: Bags RM38m contract to implement loan management system. Microlink Solutions has bagged a government contract worth RM38m for the implementation of a loan management system. The company said its wholly-owned subsidiary Microlink Systems SB was awarded the contract by the Public Sector Home Financing Board. "The duration of the project is for a period of 16 months' implementation followed by three years' maintenance and support," Microlink said. (The Edge)

MCE: Bags contracts worth RM60m to supply Perodua parts.MCE Holdings announced it has secured contracts to supply various electronic and mechatronic components and parts for a new Perodua model. It said the RM60m contracts for the supply of parts is expected to commence in the 1QFY18, and is for a duration of six years, with an estimated total investment cost of RM1m. Going forward, it said collaboration between DRB-Hicom and Zhejiang Geely Holding Group Co Ltd for Proton Holdings may be positive for MCE, as MCE is an existing Proton vendor. (The Edge)
 

Leweko: Units sell asset at a loss to repay loans. Leweko Resources said its indirect subsidiaries are planning to sell a plot of land in Ipoh, together with a supermarket-cum-car park, for RM13m, the bulk of which will be used to repay loans. The group stands to incur a loss of about RM2.93m or 0.91 sen per share from the sale, as the audited net book value of the property was RM15.93m as at June 30 last year, according to Leweko Resources. It intends to use RM10.7m of the sale proceeds to repay bank borrowings within three months, while the remainder RM2.3m will be used as working capital. (The Edge)
 

Carimin Petroleum: Bags RM60m civil engineering job. Carimin Petroleum’s subsidiary Carimin Bina SB has been appointed as the exclusive subcontractor for a RM60m civil engineering job in relation to a flood mitigation project in Jalan Temerloh, Taman Tasik Titiwangsa, here. The two-year job, awarded by Urban Masterpiece SB, is expected to contribute positively to its earnings during the duration of the contract, Carimin said. Carimin said work is expected to begin on Oct 16, 2017 and be completed on Oct 15, 2019. (The Edge)

Berjaya Land: 4Q net profit at RM88.57m on lower investment expenses. Berjaya Land (BLand) posted a net profit of RM88.57m in its 4QFY17, compared with a net loss of RM458.58m a year ago, as it recorded significantly lower investment-related expenses. This marks its third profitable quarter in a row, after the group returned to the black in 1QFY17. Its 4QFY17 investment-related expenses was down 98% to RM13.27m, from RM560.57m a year ago. Its quarterly revenue, however, slipped 2% to RM1.68bn, from RM1.7bn in 4QFY16, on lower contribution from both Sports Toto Malaysia SB — which had lower number of draws — and its property development and investment business. (The Edge)

Market Update

The FBM KLCI is set to open within a tight range today after global equity indices ended mostly lower overnight. Upbeat remarks from Mario Draghi at the European Central Bank’s annual conference in Portugal triggered a strong reaction from the financial markets, with a speech in London by Janet Yellen, US Federal Reserve chair, having little initial impact. Meanwhile, the mood on Wall Street was not helped by news that Senate Republican leaders had delayed a vote on healthcare legislation until after the July 4 recess. Oil prices continued to recover following a steep sell-off last week, although concerns remained over whether OPEC-led production cuts would be sufficient to reduce a global glut of crude. On Wall Street, the Dow Jones Industrial Average dropped 98.89 points, or 0.5%, to finish at 21,310.66, the S&P 500 slid 19.69 points, or 0.8%, to close at 2,419.38 and the Nasdaq Composite Index which is heavily weighted toward the technology sector, skidded 100.53 points, or 1.6% to 6,146.62. In Frankfurt, the export-heavy DAX 30 was down 0.8% to end at 12,671.02. In London, the FTSE 100 declined 0.2% to close at 7,434.36, while France’s CAC 40 index slumped 0.7% to 5,258.58.

Back home last Friday, the FBM KLCI index gained 2.02 points or 0.11% to 1,779.45 points. Trading volume decreased to 1.31bn worth RM1.54bn. In Tokyo yesterday, the Topix index rose 0.4%, helped by the yen’s weaker tone. Hong Kong’s Hang Seng index slipped 0.1%, while the Shanghai Composite edged up 0.2%. Energy stocks moved higher on both sides of the Atlantic as the broadly weaker tone of the dollar helped oil prices extend their recent rally from multi-month lows. Brent settled 1.8% higher at USD46.65 a barrel — its best level in a week — while US West Texas Intermediate was 2% firmer in late trade at USD44.24.

Source: PublicInvest Research - 28 Jun 2017

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