PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 19 Oct 2018, 09:00 AM


PublicInvest Research Headlines - 8 Nov 2017

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Asia: Rate hikes on the horizon as Southeast Asia debates Fed risk . For Southeast Asian central banks, monetary policy tightening is coming, but just not yet. Economists predict Thailand, the Philippines, and Malaysia will hold interest rates this week, though pressure is rising for policy makers to begin laying the groundwork for rate hikes. The Philippines and Malaysia are seen as among the first in the region to move in the face of higher US rates and strong economic growth. (Bloomberg)

US: Seven global hotspots set to dominate Trump’s first Asia summit. Donald Trump, Xi Jinping and Vladimir Putin are among 21 leaders meeting in Vietnam this week for the Asia-Pacific Economic Cooperation summit. Together they represent 40% of the world’s population and 60% of its economy. (Bloomberg)

US: Trump's Asia trip won’t push China out of sweet spot. US President Donald Trump's two-day visit to Beijing – starting Nov 8 - won't push China's economy out of its sweet spot. Despite an unusual volume of campaign trail bluster, Trump in office has been an almost unalloyed positive for China. A combination of low unemployment and limited protectionism has buoyed US demand for China's exports. For the first three quarters of the year, a weak dollar gave China an assist on managing the exchange rate and capital flows. North Korea has bubbled, but not boiled over. (Bloomberg)

US: Trump ditches swamp-draining playbook for do-no-harm Fed picks. President Donald Trump’s claim he’s “always been great with jobs” faces a real test as he continues to overhaul the leadership of the Federal Reserve. But if Jerome Powell, his choice announced Nov 2 to chair the central bank, is any indication of how he plans to fill other vacancies, the president is likely to play it safe in an attempt to preserve a booming stock market and the third-longest economic expansion in US history. For Trump, there’s too much at stake economically and politically to include the Fed in his “drain the swamp” approach. (Bloomberg)

US: Tax plan seen boosting growth a bit while denting housing. President Donald Trump’s planned tax overhaul is likely to boost US economic growth by about a quarter percentage point in 2018, yet it will also dent demand for housing and fail to lower the chances of a recession, according to a Bloomberg News survey. Three-quarters of 33 economists responding from Friday to Monday expect Congress to pass a version of the House tax bill announced last week. Of those expecting passage, all 22 responding predicted some boost from the USD1.5trn, 10-year proposal, with gains ranging from 0.05 to 0.9 percentage point and a median of 0.28 point. (Bloomberg)

EU: Key ECB Policy makers are said to have challenged QE pledge. Three of the European Central Bank’s top policy makers pushed last month to alter a commitment to keep buying bonds until inflation improves, signaling challenges ahead for President Mario Draghi as the bank seeks to slow quantitative easing. Board member Benoit Coeure, Bundesbank President Jens Weidmann and Bank of France Governor Francois Villeroy de Galhau were the heavyweights who recommended tying the overall level of monetary stimulus -- rather than just asset purchases -- to the outlook for prices, according to euro area central-bank officials familiar with the matter. (Bloomberg)

China: Plans easing foreign holding, partner choice for securities ventures - sources. China plans to allow global banks to take a stake of up to 51% in their onshore securities ventures for the first time and tie up with local non-financial firms, people familiar with the matter said. The move, if implemented, would form a key part of China’s pledge to ease foreign ownership curbs and would allow banks to bolster their presence in securities business – from underwriting to trading - in the world’s second-largest economy. Currently, Western banks can only own up to 49% of their Chinese securities joint ventures. That lack of control and limited contribution to revenue have long been a source of frustration. (Reuters)

Malaysia: BNM international reserves up 0.1% at USD101.5bn as at Oct 31. Bank Negara Malaysia says its international reserves grew 0.1% to USD101.5bn as at Oct 31, from USD101.4bn as at Oct 13. In ringgit terms, the central bank said it is equivalent to RM428.9bn, as opposed to RM428.7bn two weeks ago. "The reserves position is sufficient to finance 7.6 months of retained imports and is 1.1 times the short-term external debt," Bank Negara said. Foreign currency reserves comprised the biggest portion of reserves at USD95bn, while IMF reserves position was at USD800m. (The Edge)

India: Night lights and train trips help study impact of cash ban . With India still struggling to measure the impact of last year’s unprecedented clampdown on cash -- especially on the vast informal sector -- some analysts are using innovative indicators to assess the health of the USD2trn economy. About 90% of workers and 46% of output fall under the unorganized economy that isn’t fully captured by official data. (Bloomberg)


Astro (Outperform, TP: RM3.24), DiGi.Com (Neutral, TP: RM5.00): Astro’s e-commerce arm partners Digi for mobile payment services. Astro Malaysia Holdings’ Go Shop has partnered with DiGi.Com’s digital arm Digi-X to offer the latter’s e-Cash on Delivery (e-COD) solution, vcash. Astro said with vcash, Go Shop customers can have cashless payments and more convenience when shopping on Go Shop’s TV, online and mobile platforms. (The Edge)

ML Global: Bags RM270.5m housing development jobs. ML Global has secured two housing development projects totalling RM270.5m in Ijok, Selangor. ML Global said its wholly-owned MITC Engineering accepted the letters of award from Kemudi Ehsan SB to commence work this month. Completion is scheduled for Feb 2019. (The Edge)

O&C: To buy Petaling Jaya land from Tropicana for RM24.6m. O&C Resources is purchasing 4,101 sq ft or 1.01 acres of freehold land in Petaling Jaya for RM24.6m from Tropicana City SB (TCSB). O&C Construction SB, a wholly-owned subsidiary of O&C, had entered a sale and purchase agreement today with TCSB, wholly owned subsidiary of Tropicana Corp via Bakat Rampai SB. The price of RM557 per sq ft is deemed to be “reasonable” as the locality offers good capital appreciation potential, the property developer said. (The Edge)

GHL: To enter Vietnam with 31.2% stake purchase in mobile payment company. GHL Systems has proposed to buy a 31.2% stake in Vietnamese mobile payment company MPOS Global Ltd for USD3.3m (RM14.1m). MPOS Vietnam is the only non-bank in Vietnam that allows merchants to accept payments through a mobile point of sale (MPOS) system. (The Edge)

Naim Indah: Together with Lagenda cancel RM450m Gateway Klang project. Naim Indah Corporation and Lagenda Erajuta SB have mutually ended the proposed RM450m Gateway Klang mixed development project. Naim Indah said both parties had mutually agreed to terminate the letter of award for the project management consultancy in Feb 2015 due to the delay in obtaining approval for the land transfer and changing in land usage status matters from the local authorities by Lagenda. (The Edge)

Key Alliance: To sell to Kaspersky licence to cloud-based customers. Key Alliance Group has signed an exclusive reseller agreement with Digital Paper SB, a fully-licensed distributor of antivirus software Kaspersky, to sell the software licence to its cloud based customers. Key Alliance said the one-year agreement between its subsidiary Progenet Innovations SB and Digital Paper enables it to grow its cloud services business in Malaysia. (The Edge)

F&N: Restructuring costs, higher sugar prices weigh on FY17 earnings. Fraser & Neave Holdings (FNH) posted lower earnings of RM323.4m in the financial year ended Sept 30, 2017 due to restructuring costs in the 4Q and lower revenue in the Malaysian operations. It announced that FY17 earnings fell 16% from RM385.4m in FY16. FNH stated the operations were impacted by continuing weak consumer sentiment and intense pricing pressure. (StarBiz)

Market Update

The FBM KLCI might open within a tight range today after global equity indices closed mixed overnight. US stocks touched record peaks in early trade before going into retreat, as participants awaited fresh developments on US tax reform and kept a wary eye on escalating tensions between Saudi Arabia and Iran. Crude oil futures gave back some of the previous session’s impressive gains, although Brent stayed in sight of the US$64-a-barrel level that it breached on Monday for the first time in more than two years. On Wall Street, the Dow Jones Industrial Average ended with gain 8.81 points, or less than 0.1%, at 23,557.23. Meanwhile, the S&P 500 index closed less than a point lower at 2,590.64 and the Nasdaq Composite Index declined 18 points, or 0.3%, to 6,767.78. European markets finished lower today with shares in Germany leading the region. The DAX lost 0.66% while London's FTSE 100 was off 0.65% and France's CAC 40 gave away 0.48%.

Back home, the FBM KLCI index gained 8.65 points or 0.50% to 1,750.94 points. Trading volume increased to 3.02bn worth RM2.67bn. Market breadth was negative with 378 gainers as compared to 499 losers. The regional markets finished broadly higher with shares in Japan leading the region. The Nikkei 225 added 1.73% while Hong Kong's Hang Seng rose 1.39% and China's Shanghai Composite tacked on 0.75%.

Source: PublicInvest Research - 8 Nov 2017

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