PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 17 Jun 2019, 12:08 PM


PublicInvest Research Headlines - 6 Jun 2018

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Global: Global growth set to ebb as expansion shows age, World Bank says. Global growth is set to slow over the next two years as central banks raise borrowing rates and US fiscal stimulus starts to fade, the World Bank said. The world economy will grow 3.1% this year and 3% in 2019, the development lender said in its latest Global Economic Prospects report. Both forecasts were unchanged from Jan, the last time the Washington-based bank updated its projections. About half the world’s economies are accelerating, underscoring the breadth of the upswing. Growth will further slow in 2020 as the world economy approaches full output, trade and investment growth wanes, and financial conditions tighten, the World Bank said. Risks are tilted to the downside, and include the threat of a sudden contraction in global credit and a spike in protectionism. (Bloomberg)

US: Service industries expand at faster rate than forecast. US service industries expanded in May at a faster pace than forecast on stronger orders and sales, while a gauge of materials prices continued to advance, a survey from the Institute for Supply Management showed. The index remains close to the Jan reading of 59.9, which was the highest since Aug 2005, signaling solid expansion in sectors that account for about 90% of the economy. The figures are consistent with a report last week that showed faster growth at manufacturers. Like their factory counterparts, more service providers are experiencing rising input costs: A measure of prices for purchased materials and services advanced to the second-highest level since Sept 2012. (Bloomberg)

US: Job openings rise to record, exceeding number of unemployed. Job openings unexpectedly rose to a fresh record in April, with vacancies increasingly exceeding the number of unemployed workers amid a robust labor market, Labor Department data showed. The gains reinforce the view that the economy is creating jobs at a pace that can absorb any remaining labor-market slack. The report follows data released last week that showed payrolls increased more than forecast in May, the unemployment rate fell to 3.8%, matching April 2000 as the lowest since 1969, and wages also picked up. (Bloomberg)

UK: BOE gets big signal UK economy is starting to bounce back. The biggest part of the UK economy grew more than forecast in May, backing up the BOE’s view that a recent slump was temporary and keeping it on track for an interest-rate increase in the summer. A measure of services jumped to a three-month high of 54 from 52.8, beating the reading of 53 predicted in a Bloomberg survey. Taken with manufacturing and construction, it suggests the economy is on course for growth of 0.3-0.4% this quarter, said IHS Markit, which publishes the indexes. Expansion slowed to just 0.1% in the first three months of the year. (Bloomberg)

China: May export, import growth seen slowing slightly. China’s exports and imports are expected to have grown at a firm pace in May but slightly slower than the previous month, according to a Reuters poll of economists, as the country deals with tense trade negotiations with Washington. A flurry of data in coming weeks is expected to show the pace of expansion of economic activity was steady in May, with exports maintaining double-digit growth and factory prices showing some new upward momentum. The world’s second-largest economy has performed better-than-expected this year on the back of robust consumer spending and a solid manufacturing sector even as home sales slow and the government battles against financial risks and pollution. (Reuters)

China: Shows faster pace of economic restructuring, a credit positive, says Moody's. China’s economic restructuring is picking up pace, with its manufacturing sector showing signs of a shift to higher value-added areas - a credit positive, analysts at Moody’s Investors Service said. China has been cutting excess capacity in heavy industry in recent years to revive profitability in the sector and reduce high debt levels, while encouraging factories to shift to higher-value production such as robotics and aerospace under its Made in China 2025 initiative. (Reuters)

Japan: US economy could force BOJ’s hand on rates, Kuroda Ally says. The BOJ’s next policy move may end up being raising its bond yield target to keep the yen from weakening too much, according to a Kuroda associate and BOJ adviser. While the yen has strengthened this year, Masahiro Kawai said that the central bank needs to be prepared for a possible overheating of the US economy that could quickly weaken the Japanese currency. “The BOJ would want to stop that before the yen gets too weak," said Kawai, a longtime associate of BOJ Governor Haruhiko Kuroda, adding that such a move wouldn’t indicate a policy exit. "The limit is maybe 125 per dollar -- 130 is obviously excessive.” (Bloomberg)


Daya Materials (Neutral, TP: Under Review): Signs master agreement with Schlumberger in Russia. Daya Materials has signed a master agreement with Schlumberger in Russia for the provision of non-explosive radical cutting torch, perforating torch cutter (PTC Puncher) and related energetic and thermite based solutions services. Its subsidiary Daya Maxflo SB has entered into the agreement with Schlumberger Logelco Inc, Schlumberger's operating branch and representative office in Russia. It noted that the contract will be effective from June 5, 2018 until Dec 31, 2020. (The Edge)

Bina Puri: To launch two projects worth RM500m in 2018. Bina Puri Holdings is set to launch 2 projects worth RM500m this year, said group ED Datuk Matthew Tee. "We have not stopped on our rollers. We are still launching and planning. I think it the outlook for the property market this year should be good because it cannot get any worse already. "There has not been much upside in the sector since 2012, so we hope that with the abolition of the Goods and Services Tax, the sentiment will improve. (The Edge)

Matrix Concepts: Mulls affordable housing venture in Indonesia. Matrix Concepts Holdings is considering tapping into Indonesia’s affordable housing market within 3 years. Datuk Lee Tian Hock said the company is now in talks with a property developer based in Jakarta to explore the potential opportunity. “Indonesia is an up-and coming country in Asean, we Malaysians and Indonesians speak the same language. Their population is 8 times more than Malaysia’s and their per capita income is on the rise. (The Edge)

SCH: To sell unused property for RM4.6m for working capital. SCH Group is disposing of a 1½ storey semi-detached factory in Balakong, Selangor for RM4.6m, proceeds of which will be used for working capital. The proposed disposal will result in a net gain of about RM2.3m for SCH Group. (The Edge)

DBE Gurney: To buy land for property development in Kinta, Perak for RM5.39m. Integrated poultry DBE Gurney Resources plans to acquire a piece of leasehold land in Kinta, Perak for RM5.39m, in line with its diversification strategy into property development. DBE Gurney said its wholly-owned subsidiary DBE Development SB has entered into a conditional sale and purchase agreement with Glitter Holdings SB. “The Proposed Land Acquisition is in line with the group’s strategy to diversify into property development. (The Edge)

Ekovest: Ekovest-Samling JV for RM2.1bn Pan Borneo highway job is now void. Ekovest’s joint venture agreement with Samling Resources SB to jointly undertake the development and upgrading of the Pan Borneo Highway in the state of Sarawak (Phase 1) for work package contract WPC-02 (Semantan to Sg Moyan Bridge and KSR Interchanges) with a total contract value of RM2.1bn, is now void. The latest development will not have any material impact on the operations and financials of the Ekovest Group. (The Edge)

AWC: To complete Trackwork stake buys when sellers settle customer claim. AWC will proceed with completion of its proposed acquisition of a 60% equity interest in Trackwork & Supplies SB for RM43.5m, when Trackwork is able to achieve settlement or resolution of a defect-machine claim by a customer. The Trackwork stake acquistion is in line with AWC's plan to diversify into rail-related works. Trackwork and one of its international principals received a demand letter from a customer. (The Edge)

Market Update

The FBM KLCI might open higher today as the main global equities ended mostly higher overnight. A rally for the technology sector is taking New York’s Nasdaq Composite to record highs and pared losses for European bourses, as wider sentiment stays cautious while investors track the trade dispute between Washington and Beijing. The tech-heavy US index followed Monday’s record closing high with another one on Tuesday. Europe’s Stoxx technology index rose 1.5% — taking it to its highest level since 2001 — and outperformed a 0.3% slide for the wider Stoxx 600 by the close. Wall Street’s S&P 500 closed up 0.1%, while US small-caps reached a new closing high after the Russell 2000 index rose 0.6%. Stronger US services sector data offered some early support to the dollar index, though the currency later reversed course lower. The S&P 500 index closed 1.92 points, or less than 0.1% higher to 2,748.79, as gains in consumer discretionary, materials and technology sectors were counterweighed by losses in financials, utilities and consumer staples shares. Dow Jones Industrial Average closed marginally lower, down 13.71 points, or less than 0.1%, to 24,799.98. Frankfurt’s Xetra Dax 30 closed 0.1% higher while London’s FTSE slipped 0.7%, hit by a rising pound after upbeat UK economic data.

Back home, the FBM KLCI index lost 0.03 of a point lower at 1,755.14 points. Trading volume decreased to 2.73bn worth RM2.69bn. Market breadth was positive with 534 gainers as compared to 369 losers. The regional markets finished higher with shares in China leading the region. The Shanghai Composite was up 0.74% while Hong Kong's Hang Seng added 0.31% and Japan's Nikkei 225 rose 0.28%.

Source: PublicInvest Research - 6 Jun 2018

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