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Author: PublicInvest   |   Latest post: Tue, 19 Feb 2019, 10:13 AM

 

PublicInvest Research Headlines - 28 May 2018

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Economy

US: Consumers expect smaller gains in income than a year ago. US consumer sentiment came in weaker than expected on Friday in the final reading of May. The University of Michigan's survey of consumer attitudes reached 98 in the latest reading. Economists surveyed by Reuters expected it to hit 98.8, the same from a month earlier. "The May survey, however, found that consumers anticipated smaller income gains than a month or year ago, even though they anticipate the unemployment rate to stabilize at its current 18-year low," chief economist Richard Curtin said in a statement. Consumer references to discounted prices on items such as vehicles and homes fell to decade lows, according to Curtin. "The pace of growth in personal consumption will remain at about 2.6% during the year ahead," Curtin said. (CNBC)

US: Durable goods orders fell 1.7% in April, vs 1.4% drop expected. New orders for key US-made capital goods increased more than expected in April and shipments rebounded, suggesting business spending on equipment was picking up after slowing down at the end of the 1Q. The Commerce Department said on Friday that orders for non defense capital goods excluding aircraft, a closely watched proxy for business spending plans, jumped 1.0% last month. The increase in the so-called core capital goods orders reversed March's 0.9% drop. Economists polled by Reuters had forecast core capital goods orders rising 0.7 percent last month. Core capital goods orders increased 6.6 percent on a year-on-year basis. Shipments of core capital goods rose 0.8 percent last month after falling 0.7 percent in March. (CNBC)

US: Commerce Secretary Wilbur Ross to visit China for trade talks in early June. US Commerce Secretary Wilbur Ross will visit China early next month for another round of talks amid on-going trade frictions between the world's two largest economies. Ross will visit China from June 2 to June 4, the official Xinhua news agency reported on Friday, adding that Vice Premier Liu He, China's chief negotiator in the trade dispute, had spoken with Ross over the phone. It gave no further details. The trade dispute took on added complexity this week when US President Donald Trump announced a national security investigation into imports of cars and trucks, a probe that could lead to tariffs against China as well as key US allies such as Canada, Mexico, Japan, and Germany. (CNBC)

EU: ECB tests flavors of inflation as big policy discussion looms. Figures this week are forecast to show consumer-price growth in the euro area could have reached its fastest since early 2017 on the back of more expensive oil and a rebound in travel costs. The cost of crude and a weaker euro are also set to bolster a more significant set of numbers out in June -- new ECB projections that will help policy makers determine whether the time has come to scale back asset purchases. Some Governing Council members have signaled their confidence in the inflation path is sufficient to consider ending bond buying this year. An upward revision in forecasts may convince other officials who so far haven’t seen enough progress to start discussing an exit strategy. (Bloomberg)

EU: Merkel pledges USD7bn to ease Germany's housing squeeze. Germany is seeking to counter surging rents and real estate prices with a pledge to invest more than 6 billion euros ($7 billion) to build new homes. The program targets the construction of 1.5m apartments and houses over the next 4 years, Chancellor Angela Merkel’s said in her weekly video address on Saturday. The plan involves EUR2bn in federal funds for social housing projects as well as tax incentives to promote the development of affordable homes for mid-income earners. The government is also making money available to help families afford their own homes. The surging cost of housing has threatened to tear at Germany’s social fabric. In Berlin, rents have climbed by an average of almost 60% since 2009. (Bloomberg)

China: industrial profit growth accelerates on higher output. Profit growth at Chinese industrial companies accelerated, snapping a streak of slowing expansion since October, as factory output remained robust. Industrial profits advanced 21.9% in April from a year earlier, versus a 3.1% increase in March and 16.1% in January and February combined. Total profits for the month were Y576.03bn (USD90.1bn), the National Bureau of Statistics said Sunday. The acceleration was bolstered by higher output, rebounding factory inflation and improved profit margins particularly in the steel, chemical and auto industries, the bureau said in a separate statement. Industrial output climbed 7% last month, exceeding forecasts, though decelerating investment and retail sales signal a looming economic slowdown. (Bloomberg)

China: Tightens reins on debt, raises spectre of slowdown. Debt growth for Chinese companies has slowed to the lowest rate in more than a decade, which could provide relief for policymakers worried about the fallout from years of loose lending practices across the economy. But this growing caution about taking on new debt, along with tighter profit margins and slowing revenue growth, could point to rising risks facing the world’s second largest economy amid fears of a slowing growth. The overall debt levels of Chinese companies grew 3% in the 1Q of this year, the slowest pace in at least 13 years. Combined total debts - including borrowing via loans and bond issuances - amounted to Y13.2 trn (USD2.1trn) at the end of March, the slowest pace of growth year-on-year since at least 2005. (Reuters)

Markets

MISC: Gets 10-year charter contract from Petrobras. MISC has secured a 10-year term charter contract to own and operate four specialist DP2 Suezmax size Shuttle Tankers from Petróleo Brasileiro SA (Petrobras). MISC said that the contract was secured by its wholly-owned subsidiary AET Tanker Holdings SB (AET) for operations in international and Brazilian waters. (The Edge)

Asian Pac: Buys Petaling Jaya land for RM300m. Asian Pac Holdings has proposed to buy 74 acres of land in Petaling Jaya for RM300m, for the purpose of future property development. “The sizable lands will fit a wider mix of products when being developed. Furthermore, the lands are easily accessible via major highways like New Pantai Expressway and KESAS (Klang-Shah Alam Expressway),” it said. (The Edge)

MyEG: Not subject of any corruption investigation by MACC. My EG Services (MyEG) has clarified that neither the company nor any of its directors was the subject of any investigation by the Malaysian Anti-Corruption Commission (MACC). "The board reiterates that the company is not the subject of any investigation whatsoever, past or present, being carried out by MACC on it or on any of its directors," MyEG said. "The BOD wishes to clarify that all information in the article pertaining to rumours of alleged action being taken by MACC are completely baseless and fictitious," added MyEG. (The Edge)

Notion VTec: Gets RM20m in insurance claim for plant fire. Notion VTec's subsidiary Notion Venture SB has received a payment of RM20m as part of the insurance claim for a fire at its main manufacturing plant in Klang, Selangor in Oct last year. Notion VTec said the payment received was the remaining settlement of its third interim claim totalling RM50m. "As of to-date, Notion Venture has received a cumulative amount of RM80m from the insurers being partial settlement for the material fire loss," the group said. (The Edge)

Inta Bina: Eyes double-digit growth. Construction firm Inta Bina Group is targeting a double-digit growth in revenue this year, armed with a robust tender book and supported by a more optimistic outlook in the 2H of the year. MD Paul Lim Ooi Joo tells StarBizWeek that the property sector generally is expected to see a slow recovery this year. “We expect to see more building and construction activities in the 3Q and 4Q this year. (StarBiz)

CCM: 1Q net profit up 21%, pays 3 sen dividend. Chemical Co of Malaysia's (CCM) net profit rose 21.3% to RM9.98m in the 1QFY18 from RM8.2m a year ago, which it attributed to improved sales and positive impact from operational efficiency initiatives. This resulted in higher EPS of 5.95 sen for 1QFY18 compared with 1.8 sen for 1QFY17. The group also declared an interim dividend of 3 sen per share for the FYE Dec 31, 2018, payable on June 29. (The Edge)

Power Root: Slips into the red in 4Q, proposes 0.5 sen dividend, 1-for-5 bonus issue. Power Root has slipped into the red in its 4QFY18 with a net loss of RM9.5m, bringing its full FYE March 31, 2018 earnings sharply lower. The group registered a net profit of RM9.3m in 4QFY17. The group proposed a fourth interim single tier dividend of 0.5 sen per share, in respect of FY18. Separately, Power Root has proposed to undertake a 1-for-5 bonus issue, and free warrants, of up to 71.2m new shares. It estimated that the proceeds raised from the exercise of warrants later on could range between RM95.0m and RM104.6m. (The Edge)

Market Update

The FBM KLCI may start the week weaker as mounting concerns about political developments in Spain and Italy drove equity and bond prices sharply lower in both countries and helped push the euro below $1.17 to its lowest level against the dollar in six months. The nervous mood fuelled demand for “core” government debt in the US, UK and Germany — with the yield on the 10-year Treasury stuck below 3 percent — while participants also kept a wary eye on communications between President Donald Trump and North Korea as well as watching a renewed slide for oil prices. Madrid grabbed the headlines after the main opposition party called a motion of no confidence in the government following the convictions of high-level officials in a corruption case — heightening expectations for early elections. The developments came as the markets continued to get to grips with the potential implications of a populist coalition government in Italy. On Wall Street, the S&P 500 ended 0.2% lower — with energy stocks down 2.7% but the defensive utilities sector up 0.5% — leaving it up 0.3% for the week. Techs outperformed, helping the Nasdaq Composite edge 0.1% higher for a five-day gain of 1.1%. The Dow ended the day 0.2% lower at 24,753.09, which trimmed its weekly advance to 0.15%. Across the Atlantic, the Euro Stoxx 600 edged up 0.1% as German stocks outperformed and the FTSE 100 in London added 0.2%, even as BP and Royal Dutch Shell fell sharply.

Back home, the FBM KLCI index gained 21.74 points or 1.22% to 1,797.4 points. Trading volume decreased to 2.20bn worth RM2.95bn. Market breadth was positive with 506 gainers as compared to 397 losers.The regional markets were mixed in cautious Friday, after President Donald Trump canceled his upcoming summit with North Korean leader Kim Jong Un. Japan’s Nikkei closed up 0.1% but had declined earlier in the session as the dollar pushed above ¥109.70 at one point from ¥109.30 late Thursday. Hong Kong’s Hang Seng lost 0.6% while South Korea’s KOSPI gave away 0.2%.

Source: PublicInvest Research - 28 May 2018

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