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PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 14 Dec 2017, 11:14 AM

 

PublicInvest Research Headlines - 3 Nov 2017

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Economy

US: Consumer comfort advances to seven-week high on finances. US consumer comfort advanced to a seven- week high as Americans’ confidence in their personal finances increased by the most since February, Bloomberg Consumer Comfort Index figures showed Thursday. Main index rose to 51.7 from 51. Measure of personal finances increased to 60.6 from 58.1. The surge in sentiment about personal finances to a five- month high probably reflects stock prices that keep hitting records, a drop in gasoline prices since a Sept peak and higher property values. Comfort among respondents who are homeowners advanced last week to the strongest level in almost 17 years. (Bloomberg)

US: Productivity rises by most in three years as output jumps. Worker productivity in the US rose in the 3Q by the most since 2014 as the world’s largest economy expanded at a solid pace, a Labor Department report showed Thursday in Washington. Measure of nonfarm business employee output per hour increased at 3% annualized rate after 1.5% pace in previous three months. Unit labor costs rose at 0.5% annualized rate following 0.3% pace. Among manufacturers, productivity fell at 5% pace -- biggest drop since 1Q 2009, when the economy was in recession -- after rising 3.4% in 2Q. (Bloomberg)

US: Trump says he’ll nominate Jerome Powell to lead Federal Reserve. President Donald Trump said Thursday he would nominate Jerome Powell to be the next Federal Reserve chairman, saying he had won the respect of colleagues at the central bank and members of Congress for his judgment and intelligence. “Jay will bring extensive private-sector experience and real-world perspective to our government,” Trump said. “As a result he understands what it takes for our economy to grow, and just as importantly, he understands what truly drives American success.” (Bloomberg)

US: Small-business job openings match second-highest on record. The share of US small companies with open positions in Oct matched the second-highest on record and more businesses said they plan to boost compensation, signs that a tight labor market could soon translate into bigger pay raises. 35% of small-business owners surveyed said that they had jobs to fill, matching July as the second-highest in records to 1973, according to data released Thursday by the National Federation of Independent Businesses. Job postings last month were most prevalent in construction, with 49% reporting availability, and in manufacturing with 48%. (Bloomberg)

UK: BOE raises interest rate for first time in more than decade. Bank of England policy makers raised interest rates for the first time in a decade, yet expressed concern for Britain’s Brexit-dented economy by indicating that another increase isn’t imminent. Led by Governor Mark Carney, the Monetary Policy Committee voted 7-2 on Thursday to increase the benchmark rate to 0.5% from 0.25%. The minutes of their meeting underscored worries that the economy is fragile as the 2019 split with the European Union nears. (Bloomberg)

UK: BOE sees relief for British workers as wage growth accelerates. Better times are around the corner for British workers if the Bank of England is to be believed. In its Inflation Report Thursday, the BOE predicted annual wage growth will average more than 3% over the next three years. That would mark a return of real spending power for consumers after pay packets failed to keep pace with inflation this year. Behind the forecast is a belief that Britain’s dismal productivity will finally improve as investment picks up, and as the lowest unemployment in more than 40 years forces employers to yield to wage demands. (Bloomberg)

UK: Companies are betting on a Brexit deal, Carney says. Most UK companies aren’t making preparations for a no-deal Brexit, Bank of England Governor Mark Carney said. Just under half of firms are affected by the UK’s exit from the European Union, and about half of those see a “material effect,” Carney said. While even the UK government is preparing in case talks collapse acrimoniously -- and says it needs the walkout option as a negotiating tool -- companies are betting on a deal. Talks are deadlocked over the politically toxic issue of the divorce bill, and the clock is ticking down to the exit in March 2019 -- with or without a deal. (Bloomberg)

UK: Carney sees slow approach on rates after first hike in a decade. Mark Carney stressed that any further interest-rate hikes are some way off as he pointed to the fastest inflation in five years to justify the Bank of England’s first increase since 2007. While inflation is now at 3%, a full percentage point above the central bank’s target, some economists have questioned whether tightening policy in the midst of negotiations with EU leaders is a good idea. Crucially, policy makers omitted language from previous statements saying that more hikes could be needed than financial markets expect. (Bloomberg)

China: Xi’s anti-graft campaign could end up boosting economy. China’s drive to clamp down on corruption might be bad for profits at upscale restaurants and casinos, but ultimately it is going to help the nation's economy, a recent study claims. President Xi Jinping's signature campaign since taking office in 2012 stands to improve allocation of resources and help small companies -- the backbone of the entrepreneurial economy -- obtain easier access to finance, according to the research led by Mariassunta Giannetti, finance professor at Stockholm School of Economics. (Bloomberg)

Markets

Daya Materials (Neutral, TP: RM0.07): Signs MoU with Huawei to tender for future ICT projects. Daya Materials has entered into a MoU with Huawei Technologies (M) SB for future project collaboration. Daya Materials said the MoU’s purpose is for both parties to cooperate in the development of relevant infrastructure for joint submission of tender by them for any relevant information and communication technology projects which they intend to participate. (The Edge) Comments: This MoU marks Daya’s second collaboration with a technological partner, following its previous announcement early September with MIMOS, a government funded research and development organisation. We understand that this plan is part of the Group’s restructuring strategy to shift its focus on expanding its technical services segment. We continue to maintain our Neutral view however while we wait on the finalisation of confirmed prospects which we believe will boost the potential of the Group going forward. Our TP of RM0.07 is premised on an 8x multiple to its FY18F EPS of 0.9sen.

DiGi (Neutral, RM5.00): Appoints MOLPay, iPay88 as mobile payment service partners. DiGi.Com has appointed online payment networks MOLPay SB and iPay88 SB as partners for its mobile payment service called "vcash". DiGi said vcash will be made available as a payment option for merchants under MOLPay and iPay88's online payment gateway networks, enabling customers to transact using vcash with thousands of merchants with online shopfronts nationwide. vcash is a mobile payment application that provides an easy, more convenient way to pay, send, request and store money, said DiGi. (The Edge)

Sasbadi: Bags distribution deal from Singapore firm. Sasbadi Holdings has inked a distribution agreement with Marshall Cavendish Education Pte Ltd (MCE), which is principally involved in providing K- 12 educational solutions in Singapore. Under the agreement, MCE grants Sasbadi’s wholly-owned unit Malaysian Book Promotions SB the exclusive right to market and sell, including by way of direct marketing, certain titles published by MCE, in Malaysia. The agreement will take effect from Nov 1 and will last till Sept 30. (The Edge)

Insas: Buys 19.9% stake in Diversified Gateway for RM12.8m. Insas has acquired a 19.91% stake in Diversified Gateway Solutions (DGSB) via direct business transaction from Omesti for RM12.83m cash or 4.75 sen per DGSB share. Insas said the acquisition of 270m shares in DGSB was made through its wholly-owned subsidiary Insas Technology. It will fund the acquisition via internal funds. (The Edge)

BSL Corp: Forms JV to explore property acquisition, development opportunities. BSL Corp is establishing a 51:49 JV with Wong Sze Chien to explore acquisition, investment and development opportunities in properties. It said it intends to diversify its income stream and the proposed JV will provide it with a new business opportunity, of which it is expected to provide an additional revenue stream to BSL Group and diversify its earning base. (The Edge)

Market Update

The FBM KLCI might open flat today after US and European equity indices lacked a clear direction overnight, in spite of strength for financials on both sides of the Atlantic. Energy stocks put in mixed performances even as Brent oil held above USD60 a barrel for the fifth day in a row. Sterling’s sharp fall against the dollar following the Bank of England’s “dovish rate hike” may have grabbed the headlines but the US currency was soft elsewhere as participants digested Republican plans for tax reform and confirmation of Jerome Powell’s nomination by President Trump for Federal Reserve chair. On Wall Street, the Dow Jones Industrial Average reversed an earlier drop to rally 81.25 points, or 0.4%, to 23,516.26, marking its 55th record close of 2017. The S&P 500 index rose 0.49 point, or less than 0.1%, to finish at 2,579.85 and meanwhile, the Nasdaq Composite Index saw a slight decline, off 1.59 point, or less than 0.1%, to end at 6,714.94. In Europe, Germany’s DAX 30 index gave up 0.2% to end at 13,440.93 following its all-time closing high logged on Wednesday. The UK’s FTSE 100 charged up 0.9% to 7,555.32 and France’s CAC 40 slipped 0.1% to 5,510.50.

Back home, the FBM KLCI pared losses for a 2.88-point or 0.2% drop to end at 1,741.05 points. Across Bursa Malaysia, 2.91bn shares valued at RM2.09bn exchanged hands. Decliners led gainers by 518 to 339 respectively. Elsewhere, Asian share markets closed mixed as strong earnings prospects lifted Japan’s Nikkei 225 by 0.53%. Hong Kong’s Hang Seng dipped 0.26% while South Korea’s Kospi slipped 0.4%.

Source: PublicInvest Research - 3 Nov 2017

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