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PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 19 Mar 2019, 09:22 AM

 

PublicInvest Research Headlines - 4 Apr 2018

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Economy

Global: Any NAFTA deal in principle would focus on auto rules. The US, Canada and Mexico could soon announce a deal in principle to update NAFTA that would likely tackle the key issue of autos content while leaving other contentious chapters to be dealt with later, three sources familiar with the matter said on Tuesday. After more than eight months of slow-moving talks to update the North American Free Trade Agreement (NAFTA), Washington is keen to settle the process quickly, citing the need to finish before Mexico’s July 1 presidential election. (Reuters)

Global: US-China trade tensions unlikely to hurt growth, says Brazil central bank. Escalating trade tensions between the US and China are unlikely to hurt global economic growth, Brazilian central bank chief Ilan Goldfajn said on Tuesday. Emerging markets sold off on Monday after China announced retaliatory tariffs against US President Donald Trump’s protectionist efforts. Goldfajn said he expects global trade tensions to generate short-term uncertainty, but they should eventually be resolved through new trade deals. (Reuters)

US: Unveils tariffs on USD50bn worth of Chinese imports. The Trump administration on Tuesday raised the stakes in a growing trade showdown with China, announcing 25% tariffs on some 1,300 industrial technology, transport and medical products to try to force changes in Beijing’s intellectual property practices. The US Trade Representative’s office unveiled a list of mainly non-consumer products representing about USD50bn of annual imports that would nonetheless hit supply chains for many US manufacturers. The list ranges from chemicals to light-emitting diodes, motorcycles and dental devices. (Reuters)

US: Fed watching for financial shocks as risks build, says Brainard. High asset prices and growing economic pressure from US fiscal stimulus mean financial markets may be particularly vulnerable to an unexpected shock, an influential Federal Reserve governor said on Tuesday, warning the central bank could respond with stronger requirements on banks as needed. Fed Governor Lael Brainard said that for now risks to the US financial system are “moderate” thanks in part to guard rails adopted in the wake of last decade’s crisis and recession. But with tax cuts and government spending risking a “booming” economy, she said the Fed would raise banks’ capital buffers if vulnerabilities are shown to grow. (Reuters)

US: Strong economy, discounts boost automakers March sales. Major automakers on Tuesday reported higher new vehicles sales for March on the back of a strong US economy and big consumer discounts, sending shares in Detroit’s automakers up. Industry sales in March rose 2.5% to 1,653,529, according to Autodata, which said the seasonally adjusted annual rate for the month was a better-than expected 17.5m versus 16.8m a year ago. Analysts polled by Reuters had expected a March SAAR of 16.9m. (Reuters)

UK: Shop prices fall at fastest pace in over a year, says BRC. British shop prices dropped in March at the fastest pace in more than a year, adding to signs that inflation pressure caused by the pound’s post Brexit drop is fading away, an industry survey showed on Wednesday. Shop prices fell 1.0% YoY in March, marking the fastest rate of deflation since Feb 2017 and following a 0.8% decline in Feb this year, the British Retail Consortium (BRC) said. Britain’s economy slowed in 2017 as higher inflation - caused by the pound’s drop after the 2016 Brexit vote - squeezed household spending. Renewed signs of cooling cost pressures will be of interest to Bank of England officials, who last month said “ongoing tightening” of monetary policy would be needed to return inflation back to target. (Reuters)

China: Formally notifies the WTO of retaliatory tariffs against US. China has notified the World Trade Organization it is imposing USD611.5m worth of retaliatory tariffs on USD2.75bn worth of US imports including pork, nuts and ethanol in response to US duties on aluminum and steel, a WTO document showed. The document, dated last Thursday but posted only after the Easter public holidays, came after China said late on Sunday it has increased tariffs by up to 25% on 128 US products, escalating a dispute between the world’s biggest economies. (Reuters)

China: Alarming debt pile could finally stabilize this year. With President Xi Jinping prioritizing control of financial risks, China’s massive debt pile may finally stabilize this year, according to economists. Total debt will be 260% of GDP at the end of 2018, the same as it was 12 months earlier, according to the median estimates of 21 economists surveyed by Bloomberg in March. In nominal terms, that would mean the growth in debt is slowing to roughly the same pace as the economy. (Bloomberg)

Malaysia: Employment grew 2.1% in 2017. Labour market conditions in Malaysia improved in 2017 with an employment growth of 2.1% or net employment gains of 295,000 persons, three times higher than in 2016 (0.7%) or 96,000 persons. According to Bank Negara Malaysia's Factwatch.my website, the retrenchment of 35,000 persons in 2017 was still above the long-run average of 30,000 persons. The long-run average is the average annual layoffs from 2000-2016, excluding the period of the Global Financial Crisis which took place between 2008 and 2009. In Jan 2018, employment recorded a net gain of 30,400 persons from Dec 2017. (Bernama)

Markets

MAHB: Appeal Court allows contractor to continue RM44m suit against MAHB. The Court of Appeal allowed Penang International Airport 2010 and 2011's upgrading works main contractor Syarikat Pembinaan Anggerik SB (SPASB) to continue its legal action in relation to a RM43.99m claim against Malaysia Airports Holdings (MAHB). MAHB said SPASB's appeal was allowed on the ground, inter alia, that there is no arbitration agreement in the contract within the meaning of section 9 of the Arbitration Act 2005 and therefore in essence, SPASB is right in commencing a legal action in court. (The Edge)

Vertice: Bags RM218.5m contract, its biggest to-date win. Vertice, formerly Voir Holdings, has been awarded a sub-contract job valued at RM218.48m in relation to upgrading works of the federal road from Gambang, Pahang, to Segamat, Johor. Construction of the project will take about 13 months, starting from April 9 this year to April 30, 2019, Vertice said. (The Edge)

Bina Puri: Seeks collaboration with Sabah state investment arm to build hydropower plants. Bina Puri Holdings plans to work with Sabah state investment arm Warisan Harta Sabah SB to build two small hydropower sites in Tuaran and Kota Belud, Sabah. Bina Puri said collaborating with Warisan Harta Sabah will give it an advantageous platform to venture into the development of hydropower plants in the state. Bina Puri said its wholly-owned subsidiary BP Energy SB had on March 29 signed a MoU with Warisan Harta Sabah to collaborate on the proposed development of the hydropower sites, which are expected to have capacity of 5 megawatts (MW) and 3.5 MW respectively. (The Edge)

MYEG: Mull potential lease or purchase of Muar Furniture Park land. MyEG Services has inked a preliminary agreement with Johor's state investment firm, Johor Corp, to explore the possibility of buying or leasing a piece of land located within the state's Muar Furniture Park. MyEG said its sub-subsidiary MY EG Lodging SB (MYEL) entered the MoU with Johor Corp. "MYEL and JCorp wish to discuss the terms and conditions of the proposed option to purchase or lease a piece of land situated in Muar Furniture Park," MyEG said. The MoU is valid for three months from today, MyEG added, but may be extended by mutual agreement. (The Edge)

Tien Wah: Seeks shareholders' nod to diversify into property development. Tien Wah Press Holdings is seeking shareholders' approval to provide financial assistance of up to RM250m to a joint venture company (JVco), and to diversify its business into property development and investment. The JVco is Lum Chang Tien Wah Property SB (LCTWP), which Tien Wah set up with Lum Chang Holdings Ltd (LCH) on a 50:50 ownership basis to undertake the proposed redevelopment of its factory site along Jalan Semangat in Petaling Jaya, Selangor, into a mixed-use commercial project. The JVco was formerly known as Sterling Model SB. (The Edge)

Lee Swee Kiat: Adopts minimum 30% dividend payout policy. Lee Swee Kiat Group is adopting a dividend payout policy of not less than 30% of its net profit for FY17 onward. The company said the payment would be in the form of cash or share dividend in equivalent market value. "However, such payments will depend upon a number of factors, including amongst others, the earnings, capital commitment, general financial conditions, distributable reserves as well as the solvency test," it said. (The Edge)

Market Update

The FBM KLCI might open with a positive bias today after Wall Street recouped a big chunk of the previous session’s steep losses although price action was volatile as persistent concern over trade tariffs and problems within the technology sector kept participants on edge. On Monday, the main US equity indices ended more than 10% down from the record highs reached earlier this year — the usual definition of a correction — with the S&P 500 also closing below its 200-day moving average. The unsettled mood spread to Asian and European stock markets on Tuesday, although there were few signs of a deeper flight to safety, with the yen and Swiss franc losing ground to the dollar, and gold and Treasury prices falling. On Wall Street, the Dow Jones Industrial Average rose 389.17 points, or 1.7%, to finish at 24,033.36. The S&P 500 rose 32.57 points, or 1.3%, to end at 2,614.45 The Nasdaq Composite Index added 71.16 points, or 1%, to close at 6,941.28. Across the Atlantic, Germany’s DAX 30 closed down 0.8% at 12,002.45, France’s CAC 40 index ended lower by 0.3% at 5,152.12 and the UK’s FTSE 100 index fell 0.4% to end at 7,030.46.

Back home, the FBM KLCI index lost 7.57 points or 0.41% to 1,850.78 points. Trading volume decreased to 1.89bn worth RM1.90bn. Market breadth was negative with 236 gainers as compared to 699 losers. In the region, Tokyo’s Topix index closed down 0.3% — well off the day’s lowest point — while Seoul’s Kospi fell 0.1%. Australia’s S&P/ASX 200 touched a fresh six-month intraday low before climbing to end 0.1% softer. Meanwhile, the Hang Seng gained 0.29%, while the Shanghai Composite fell 0.84%.

Source: PublicInvest Research - 4 Apr 2018

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