PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 19 Apr 2019, 10:04 AM


PublicInvest Research Headlines - 3 Jul 2018

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Global: Global trade-war threat is bringing anxiety to factory floor. Donald Trump’s protectionism is taking its toll on confidence, with companies around the world getting more worried about the damage a full-blown trade war could do to business. Reports on Monday showed optimism at euro-area factories fell to the lowest in 2 1/2 years in June, while sentiment at Japan’s large manufacturers cooled for a second quarter. In China, a measure of factory activity fell last month, as did similar gauges for the euro area and its two largest economies, Germany and France. In the US, tariffs and a variety of transportation issues are dogging American manufacturers, extending lead times for production materials. (Bloomberg)

US: Factory activity accelerates; construction spending up. A measure of US manufacturing activity surged in June likely as steel and aluminum tariffs caused disruptions to the supply chains, resulting in factories taking longer to deliver goods. The Institute for Supply Management (ISM) said its index of national factory activity jumped to a reading of 60.2 last month from 58.7 in May. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12% of the US economy. "Demand remains robust, but the nation's employment resources and supply chains continue to struggle," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee. "Respondents are overwhelmingly concerned about how tariff- related activity is and will continue to affect their business." (Reuters)

UK: Manufacturing growth steadies in June but mood dips – PMI. British factories kept up a steady pace of growth in June but worries about global trade and Brexit knocked confidence about the outlook to a seven-month low, a survey showed. The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index (PMI) inched up to 54.4 from a downwardly revised 54.3 in May, beating the consensus of 54.0 in a Reuters poll of economists and above the 50 mark that separates growth from contraction. Still, June capped the weakest quarter for the British manufacturing PMI in one and a half years, and survey compiler IHS Markit said prospects for the sector, which accounts for a tenth of economic output, looked doubtful. (Reuters)

Malaysia: Government to table mid-term review of 11th Malaysia plan mid-Oct. The Ministry of Economic Affairs is in the midst of preparing the mid-term review of the Eleventh Malaysia Plan and it is scheduled to be tabled in mid-Oct 2018, says its Minister Datuk Seri Mohamed Azmin Ali. He said that besides reviewing the achievements in the first two years, issues and development challenges will be identified and steps to tackle them will be proposed. “While the current macroeconomic indicators seem to exhibit strong performance on the back of robust GDP growth, stable and low inflation as well as full employment, the situation behind the headline indicators indicates a different situation. (StarBiz)

Malaysia: World Bank forecasts Malaysia’s GDP growth to remain steady. The World Bank sees Malaysia as having a strong expanding economy, but the key to maintaining its success is to put more emphasis on developing its healthcare and education system. The World Bank, in its latest report on the country, has forecast growth to remain steady at 5.4% this year. “What we continue to emphasize in this report (Malaysia Economic Monitor) is the importance of looking at the quality of growth -- looking at the inclusiveness of growth going forward and how every Malaysian can benefit from the economic success that the country has. We see that Malaysia has a very strong economy, and is moving towards becoming a high-income economy,” its country director for Brunei, Malaysia, the Philippines and Thailand, Dr Mara Warwick, said. (The Edge)

Indonesia: Favours rupiah stability. Indonesia’s central bank is showing its willingness to sacrifice economic growth for currency stability in its latest aggressive move on interest rates. Bank Indonesia surprised economists with a bigger-than-forecast 50 basis-point hike last Friday, on top of two rate increases in May aimed at halting a currency rout. That takes the benchmark rate to 5.25%, with analysts betting there’s more tightening to come. The rupiah has slumped more than 5.7% against the dollar this year. Before the market turmoil, Bank Indonesia had been cutting interest rates to spur spending, lowering the key rate eight times since 2016, but with little success in boosting economic growth much higher than 5%. (Bloomberg)

Vietnam: Central bank willing to intervene after dong hits record low. Vietnam's central bank is willing to intervene in the foreign exchange market to ensure stability, its governor said on Monday after the dong currency fell to a record low last week. The dong hit 22,965 to the dollar on Friday, a drop that the central bank attributed to the US currency's rise on global markets and recent falls on the Vietnamese stock market. "The State Bank of Vietnam (SBV) stands ready to intervene in the foreign exchange market. Currently we have all necessary tools and plans to intervene in the foreign exchange market, ensuring the control of macroeconomic stability," the central bank quoted governor Le Minh Hung as saying in a statement." (Reuters)


Selangor Dredging: To buy 17 Singapore land plots for RM180m. Selangor Dredging (SDB) announced its associate company plans to buy 17 parcels of adjacent properties in the prime District 13 in Singapore for SGD60.26m (RM180.06m), where the latter intends to develop exclusive mid-rise apartments. Tiara Land Pte Ltd, a wholly owned subsidiary of Champsworth Development Pte Ltd has accepted options to acquire the properties, which are close to Potong Pasir MRT, Woodleigh MRT and Boon Keng MRT. (The Edge)

Parlo: PAT fell short of profit guarantee due to higher expenses. Parlo, formerly known as Cybertowers, said its wholly-owned unit Parlo Tours SB profit guarantee for the FY17 fell short of RM1.26m due to increased expenses. A profit guarantee of RM4.8m for FY17 was provided by Yap Fu Fah, the co-beneficiary owner of Thirty Keystone SB, a major shareholder of Parlo. The shortfall, due to higher expenses, was a result of staff cost, advertisement programmes and marketing, as well as trade fair expenses incurred specifically as part of Parlo Tours' efforts to promote new travel destinations in the People's Republic of China and Europe. (The Edge)

Pasdec: Shares to be suspended tomorrow pending material announcement. Pasdec Holdings, a 37.2%-owned unit of Pahang State Development Corp, said trading in its shares will be suspended on July 3 pending the release of a material announcement. The stock exchange regulator has approved its request for the 9am-5pm suspension. The group returned to the black in the FY17, posting a net profit of RM6.5m compared with a net loss of RM22.76m in the previous year, on the back of a 17% increase in revenue to RM143.73m from RM122.84m in FY16. However, Pasdec slipped back into the red in the 1QFY18. (The Edge)

KPS: Bags pipeworks contract worth RM20m from Air Selangor. Kumpulan Perangsang Selangor (KPS) has secured a contract worth RM20m from Pengurusan Air Selangor SB to replace existing pipeworks in Hulu Langat and Kuala Lumpur. Its indirect 60%-owned subsidiary SmartPipe Technology SB had accepted the letter of award for the work from Air Selangor. The contract works will cover 16.3km and will be implemented in 7 areas. (The Edge)

UMW: Forms JV with Japan's Komatsu under heavy equipment business. UMW Corporation SB, a wholly-owned subsidiary of UMW Holdings, has agreed to form a JV with Japan's Komatsu Ltd under its heavy equipment business. Under the proposed JV, UMW and Komatsu expect to further strengthen and expand market penetration of Komatsu's products in Malaysia, Brunei, Singapore, Myanmar and Papua New Guinea. UMWC and Komatsu inked a transaction agreement today to establish a JV company for the purpose, which will be looking to capture new growth areas and firming up Komatsu's existing presence. (The Edge)

MyEG: To market CIMB Bank Philippines' products soon. My E.G. Services (MyEG) will market CIMB Bank Philippines Inc's (CIMBPH) financial products on its associate I-Pay MYEG Philippines Inc's (IPMPI) digital services and platforms to eligible individuals in the Philippines soon. IPMPI has entered into a memorandum of agreement (MoA) with CIMBPH for the purpose. The MoA will be effective for 3 years from the date CIMBPH commences its banking operations, which is expected to be in the near future. The MoA has no fixed value and is dependent on the customer take-up of CIMBPH's financial products through IPMPI's channels. (The Edge)

Market Update

The FBM KLCI might open with a positive bias today as global stocks started the second half of the year on a cautious note — although Wall Street overcame an early bout of weakness as tech stocks gained — while the dollar rallied strongly against the euro as persistent worries over global trade combined with uncertainty on the political situation in Germany. Concern about a potential trade war intensified over the weekend after the EU warned that President Donald Trump’s threat to hit car imports with tariffs risked fuelling global retaliation against up to USD300bn of US goods. On Wall Street, the S&P 500 ended 0.3% higher at 2,726, having dropped as much as 0.7% earlier in the day. The Dow Jones Industrial Average edged up 0.1%, while the tech-heavy Nasdaq Composite rose 0.8%. But the mood was more pessimistic elsewhere. The FTSE All World index was down 0.4%, as the pan European Stoxx 600 fell 0.8% and the Xetra Dax in Frankfurt shed 0.6%. The FTSE 100 in London ended 1.2% lower, despite sterling’s weakness against the dollar.

Back home, the FBM KLCI index lost 6.45 points or 0.38% to 1,685.05 points on Monday. Trading volume decreased to 1.70bn worth RM1.62bn. Market breadth was negative with 342 gainers as compared to 505 losers. The regional markets finished mostly in the red with Shanghai Composite led the Nikkei 225 lower. They fell 2.52% and 2.21% respectively.

Source: PublicInvest Research - 3 Jul 2018

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