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PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 26 Mar 2019, 11:19 AM

 

PublicInvest Research Headlines - 15 Mar 2018

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Economy

US: As mortgage rates rise, refinancing falls to two-month low. A rise in US mortgage rates to a more than four-year high reduced refinancing activity on existing home loans in the latest week to the weakest level since December, Mortgage Bankers Association data released on Wednesday suggested. But home buyers have not been deterred by the higher borrowing costs, with an increase in applications for loans to purchase homes, according to the latest mortgage application figures from the Washington-based industry group. MBA’s index on refinancing applications in the week ended March 9 fell 2.2% to 1,159.3, the lowest level since the week of Dec 29. (Reuters)

US: Atlanta Fed's US 1Q GDP growth view drops below 2%. The US economy is on track to expand at a 1.9% annualized rate in the first quarter, a slower rate than previously estimated, following Feb’s data on domestic retail sales and consumer prices, the Atlanta Federal Reserve’s GDPNow forecast model showed on Wednesday. The regional Fed reduced its projection on personal consumption expenditure growth in the first three months of 2018 to 1.4% from 2.2%. The latest estimate on GDP was slower than the 2.5% growth pace calculated on March 9, the Atlanta Fed said. (Reuters)

US: Retail sales falter, inflation creeping higher. US retail sales fell for a third straight month in Feb as households cut back on purchases of motor vehicles and other big-ticket items, prompting analysts to downgrade their 1Q economic growth forecasts. Despite signs of cooling in consumer spending, inflation pressures are steadily building, which should allow the Federal Reserve to raise interest rates next week. Other data on Wednesday showed underlying producer prices rose solidly in Feb, driven by strong gains in the cost of services such as hotel accommodation, airline fares and hospital inpatient care. (Reuters)

US: Regulator approves pilot program to cut exchange fees, rebates. The US Securities and Exchange Commision (SEC) on Wednesday agreed to a long-awaited experiment to test the effects of lowering stock exchange fees following criticism the current pricing system ultimately hurts investors. The pilot would force exchanges to lower the fees they charge for matching buy and sell orders and the size of rebates they pay market makers, allowing the SEC to analyze if the current system distorts traders’ decisions about where to send orders. Consumer advocates say the current pricing regime creates conflicts of interest by giving incentives for brokers to send their customers’ orders to the exchanges with the biggest rebates rather than to exchanges that would obtain the best result for the end clients. (Reuters)

US, China: US pressing China to cut trade surplus by USD100bn, says White House. The Trump administration is pressing China to cut its trade surplus with the United States by USD100bn, a White House spokeswoman said on Wednesday, clarifying a tweet last week from President Donald Trump. Last Wednesday, Trump tweeted that China had been asked to develop a plan to reduce its trade imbalance with the United States by USD1bn, but the spokeswoman said Trump had meant to say USD100bn. The United States had a record USD375bn trade deficit with China in 2017, which made up two thirds of a global USD566bn US trade gap last year, according to US Census Bureau data. (Reuters)

US, India: US challenges Indian export subsidies at WTO. The US launched a challenge to Indian export subsidies at the World Trade Organization on Wednesday, saying they hurt US companies by letting Indian exporters sell goods more cheaply, U.S. Trade Representative Robert Lighthizer said. India provides exemptions from certain duties, taxes and fees that benefit numerous Indian exporters, including producers of steel products, chemicals, pharmaceuticals, textiles and information technology products, Lighthizer’s office said. The office of the USTR said export subsidies provide an unfair competitive advantage to the companies that receive them and are prohibited under WTO rules. (Reuters)

EU: French finance minister presses Germany on euro zone reforms. French Finance Minister Bruno Le Maire on Wednesday urged Germany and other European countries to stop holding up tough decisions about the euro zone’s banking and capital market regulations. Euro zone finance ministers failed to make a breakthrough on Monday on an EU-wide deposit guarantee scheme, even though the European Central Bank said risks for banks have already been reduced enough. Germany along with other northern countries say euro zone banks must first reduce exposure to risks before such a project can be launched. (Reuters)

EU: German diesel ban to hit vehicle resale values, sales, says Moody's. A German ruling to legitimize bans on high-polluting diesel cars will hit second-hand values and cause inventory levels of used vehicles to rise, ratings agency Moody’s said on Wednesday. “Falling demand for diesel vehicles will mean that residual values may fall substantially short of initial expectations,” Moody’s said. Diesel registrations as a percentage of the German auto market dropped from 48% in 2015 to 32.5 in Feb 2018, Moody’s said. (Reuters)

EU: ECB to end bond buys only when inflation is on sustainable path. The ECB needs further evidence that inflation is rising toward its target and will end asset buys only when it is satisfied that price growth is on a sustained path toward its objective, two of the ECB’s top officials said on Wednesday. After dropping a long-standing pledge last week to increase its bond buying if needed, investors are looking for clues to the ECB’s next move. They expect policymakers to end lavish stimulus later this year, satisfied that economic growth has become self-sustaining and that inflation will slowly rise. Tempering market expectations for a speedy exit, ECB President Mario Draghi and chief economist Peter Praet both argued that inflation was not yet on a sustained path, requiring patience, even if the bank’s confidence in the trend for consumer prices is firming. (Reuters)

UK: Devolved nations see potential deal over post-Brexit power sharing. Scotland and Wales are within reach of a deal with the central government over power-sharing, Scotland’s Nicola Sturgeon said on Wednesday, easing the pressure on the British government as it negotiates its exit from the European Union. Speaking after a meeting with Prime Minister Theresa May in London, Scotland’s First Minister struck a more positive tone than she had in recent weeks. The talks were aimed at unblocking a stalemate over post-Brexit powers as written into the European Union (Withdrawal) Bill, which is now going through the British parliament. The sides have yet to agree on how powers should be split up after Brexit. (Reuters)

Markets

VS Industry (Trading Buy, TP: RM3.11): Withdraws listing, quotation for 397.58m bonus shares, submits new application. VS Industry has withdrawn its previous application that was submitted to Bursa Securities for approval on Feb 27 in relation to the listing of and quotation for the bonus shares to be issued under a proposed 1-for-4 bonus issue. It did not give a reason for the move, except to say that a new application for the listing of and quotation for the bonus shares has been submitted to Bursa on March 14. (The Edge)

MAHB: No plans to develop KLIA3, MD was referring to main terminal expansion. Malaysia Airports Holdings (MAHB) has clarified that there are no plans yet to develop a third terminal at the KLIA. "We wish to clarify a misunderstanding with regard to news reports on KLIA3," it said. "There are no immediate plans to build a third terminal for KLIA as stated by several leading newspapers on March 14." MAHB clarified that Badlisham was referring to the "KLIA Main Terminal expansion, modification and systems upgrade that are being planned and slated to be built in the next five years". (The Edge)

T7 Global: Signs new MoU with EPIC and CMC on ECRL project, Chinese firm excluded. T7 Global has entered into a new MoU with Terengganu state-linked corporation Eastern Pacific Industrial Corp (EPIC) and CMC Engineering SB, a wholly-owned bumiputera company, to form a consortium to undertake the construction of the RM60bn East Coast Rail Line (ECRL) project's Terengganu parcel. However, China State Construction Engineering (M) SB (CSCEM), a subsidiary of China State Construction Engineering Corp Ltd, is excluded from the new MoU. T7 said it has terminated the previous MoU and will enter into a new MoU to implement the project. (The Edge)

Denko: Plans to buy land in Johor for new warehouse. Denko Industrial Corp has proposed to acquire a piece of land measuring 62,127 sq ft in Johor for RM4.26m to construct a warehouse. Denko indicated the proposed plot is located closer to ATA Industrial's main manufacturing base and that upon completion of the warehouse, Denko would shift from some of its existing rented warehouses. (The Edge)

Bina Darulaman: Forms business continuity management panel following MD's demise. Following the passing of its MD Datuk Izham Yusoff, Bina Darulaman has appointed its group financial officer Fakhruzi Ahmad to manage its day-to-day business operations. Bina Darulaman said it has activated a business continuity management (BCM) committee. Based on the committee's recommendation, Fakhruzi, as the chairman of the committee, will be responsible for managing the group's day-to-day business operations, it said. (The Edge)

MK Land: Income tax becomes due as court disallows appeal. MK Land Holdings said the RM80.8m in income tax and penalties, claimed from its unit Saujana Triangle SB (STSB) by the Inland Revenue Department (IRB), has become due after the Court of Appeal upheld the High Court's decision. The High Court had disallowed STSB's application for leave and stay to commence judicial review, which was made in respect of the IRB's notices of assessment. MK Land said the decision by the courts was based on the availability of an alternative remedy via an appeal to the Special Commissioners of Income Tax, which was lodged by STSB on June 1, 2017. (The Edge)

Market Update

The FBM KLCI could open lower today after sovereign bonds around the world gained ground while stocks suffered fresh losses, with industrials leading the way lower as the latest upheaval in the Trump administration fed into concerns over the possibility of a global trade war. Disappointing US retail sales figures added a further layer of uncertainty, while mounting tensions between the UK and Russia heightened the nervous mood — overshadowing the release of encouraging economic data out of China. Recent events in Washington remained the key driver for equities, as the ousting on Tuesday of Rex Tillerson, US secretary of state, continued to reverberate around the markets. On Wall Street, the Dow Jones Industrial Average fell 248.91 points, or 1%, to 24,758.12. Meanwhile, the S&P 500 index slid 15.83 points, 0.6%, to 2,749.48 and the Nasdaq Composite Index shed 14.20 points, or 0.2%, to 7,496.81. In Europe, France’s CAC 40 index ended 0.2% lower at 5,233.36, while the UK’s FTSE 100 index fell 0.1% to 7,132.69. Germany’s DAX 30 rose 0.1% to 12,237.74.

Back home, the FBM KLCI index lost 6.97 points or 0.37% to 1,857.06 points. Trading volume increased to 2.32bn worth RM2.06bn. Market breadth was negative with 332 gainers as compared to 635 losers. The regional markets finished lower with shares in Japan leading the region. The Nikkei 225 was down 0.87% while China's Shanghai Composite gave away 0.57% and Hong Kong's Hang Seng was lower by 0.53%.

Source: PublicInvest Research - 15 Mar 2018

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