PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 13 Sep 2019, 9:48 AM


PublicInvest Research Headlines - 12 Jul 2018

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US, China: Trade talks said to stall as trade war escalates. High level trade talks between the US and China have ground to a halt as the Trump administration threatens to escalate a trade war that shows little sign of abating, according to five people familiar with the matter. The countries held three rounds of formal negotiations since May, led by US Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross and Vice Premier Liu He in China. But communications between senior members of the Trump and Xi administrations have petered out, and there’s no immediate plan to restart the formal talks, said the people, who spoke on condition of anonymity because the deliberations aren’t public. (Bloomberg)

US: Producer prices rise from year ago by most since 2011. US wholesale prices rose in the 12 months ended in June by the most since Nov 2011 as the costs of services accelerated, a Labor Department report showed. Producer-price index rose 3.4% YoY (est. 3.1%) after 3.1% gain in prior 12-month period. PPI rose 0.3% MoM (est. 0.2%) after 0.5% gain the prior month. Excluding food and energy, core gauge also rose 0.3% MoM (est. 0.2%) and was up 2.8% YoY (est. 2.6% gain). PPI excluding food, energy, and trade services, a measure some economists prefer because it strips out the most volatile components, increased 2.7% YoY. The figures, which measure wholesale and other selling prices at businesses, indicate that inflation pressures in the production pipeline are firming amid rising demand and tariffs on steel and other goods. The June index for final demand services climbed 0.4% from a month earlier, the most since Jan, and 2.8% from the same month a year ago. (Bloomberg)

US: Economy strong, risk-taking under control,says Fed's Williams. A struggle by employers to fill jobs shows the US economy is strong, and the rise in housing and stock prices is not a sign of a risky build-up in leverage in the financial system, the head of the New York Federal Reserve Bank said on Wednesday. “Employers are now struggling to fill job openings,” said New York Fed President John Williams, calling it a sign of an “overall strong economy...and a great time for businesses to step up” with internships, training programs and school partnerships. Even so, “We’re not seeing the kind of build-up in leverage in the financial system that was pretty obvious in the mid- 2000s,” said Williams, who became chief of the New York Fed less than a month ago. (Reuters)

US: Soaring cost of trucking threatens to stoke inflation. The tightest trucking market in years is testing the limits of an otherwise well-conditioned US economic expansion. It’s also tinder for accelerating inflation should the capacity constraints spark moves by companies to pass on those higher delivery costs. A shortage of drivers, new regulations and solid demand are driving up rates charged by trucking companies to haul loads over the country’s more than 46,000 miles of interstate highways. Combined with higher materials prices, partly due to the Trump administration’s tariffs, rising transportation costs are putting pressure on goods producers. (Bloomberg)

EU: France to ease finance, tax rules to attract Brexit bankers. France will pare back financial regulations to EU minimums and introduce new tax incentives to make Paris a more attractive finance hub, Prime Minister Edouard Philippe said. Philippe said most of the changes would be made by the end of the year, as countries across the EU battle to attract bankers from London amid uncertainty over the impact of Brexit on the region’s biggest financial centre. For asset managers coming to France, they will be able to have capital income known as carried interest taxed at 30% rather than higher income tax rates. The country will also make it possible to amortise goodwill, as in Germany, as part of a longer term European project to harmonise regulations for calculating corporate tax. (Reuters)

EU: France warns against rushing into tariff cut to defuse tensions. French Finance Minister Bruno Le Maire warned on Wednesday against rushing into an EU tariff cut on US car imports to appease Washington, saying France and Germany should look at the impact on the car industry first. With Germany’s powerful car industry facing the threat of higher US duties, Chancellor Angela Merkel said last Thursday she would back a lowering of EU levies on imports of US cars. “Before considering any solution, it’s important that France and Germany look together at the impact on the car industry and that’s what we are going to do in the coming weeks,” Le Maire said after a meeting with German Economy Minister Peter Altmaier. (Reuters)

UK: Politics is the wild card for BOE’s August rate hike. Political turmoil fanned by Brexit may be the last hurdle for a Bank of England interest-rate increase in August. With the UK economy bouncing back and consumers willing to spend again amid good weather and World Cup fever, politics is the big unknown three weeks before Governor Mark Carney and fellow officials announce their next policy decision. For now, investors are betting on a quarter-point hike. Prime Minister Theresa May appears to have survived the loss of two high profile ministers this week, but anger within the Conservative Party over Brexit is keeping alive the prospect of a leadership challenge or general election. (Bloomberg)


DKSH (Outperform, TP: RM5.00): To help Nabati food expands market. DKSH Business Unit Consumer Goods, a market expansion services provider for fast moving consumer goods (FMCG) in Asia, has signed an agreement with Nabati Food Malaysia SB to provide market expansion services for the latter food snacks in the modern trade channel in Peninsular Malaysia. DKSH will provide distribution, logistics, sales order processing and account receivables management services for Nabati Food's Richeese Cheese Wafer, Richoco Chocolate Wafer and Nabati Mine Bar in selected hypermarkets, supermarkets and convenience stores in the country. (StarBiz)

G3 Global: Teams up with US companies to venture into car cloud platform. Apparel manufacturer G3 Global has teamed up with two American companies to venture into a car cloud platform across Asean markets as part of its expansion into the Internet of Things (IoT). G3 Global said its wholly-owned subsidiary Atilze Digital SB has entered into a joint venture (JV) agreement with US-based Gosuncn Welink (USA) Technology Co Ltd and Prospect Industry LLC, and this would eventually lead to the incorporation of a JV company between the three parties in Malaysia. Under the agreement, Atilze will hold 55% of the JV company, while Welink and Prospect will own 30% and 15% respectively. (The Edge)

DNeX: Unit could face fine of RM17m for monopoly abuse. The Malaysia Competition Commission (MyCC) has proposed to fine Dagang Net Technologies SB, a subsidiary of Dagang NeXchange, RM17.4m for abusing its position as a monopoly in the provision of trade facilitation services under the National Single Window (NSW). MyCC said it has proposed to impose a financial penalty of RM17.4m, as well as to have Dagang Net cease and desist its infringing conduct and any future conduct which may disrupt competition in the present and future market. (The Edge)

Sentoria: Buys 150 acres in Morib for RM20.25m, plans theme park. Sentoria Group is buying 150 acres of land in Morib, Selangor from Seriemas Development SB for RM20.25m for a proposed theme park and recreation project. Sentoria announced it had signed the sale and purchase agreement for the purchase of the 150 acres. It plans to build a water theme park measuring 22 acres, a resort and convention centre on 38 acres, a safari park (comprising of river and night safari) spread out over 78 acres and a boutique hotel on a 12 acre site. (StarBiz)

Atta Global: Buys two property development companies for RM7.5m. Steel products maker Atta Global Group is proposing to acquire two property development companies, Eminent Potential SB and Scanrite SB, for RM7.5m, as part of its diversification into the property business. Atta Global said its wholly-owned subsidiary Atta Properties SB had entered into two share sale agreements with the joint owners of the two companies, Chan Kok Leong and Leng Mei Kuan, for the acquisitions. The agreements would see Atta Properties acquiring Eminent for RM4m, and Scanrite for RM2m. (The Edge)

Handal: To collaborate with Petronas Research on subsea tech. Handal Resources' 51%-owned unit, Handal Semiflexi SB, has received a letter of award from Petronas Research SB to jointly develop subsea technology. The duration of the contract, awarded by the research and development arm of Petroliam Nasional, is a fixed period from June 13 to Aug 12, 2018. (StarBiz)


The FBM KLCI might trade lower at the opening as mounting concerns over a global trade war returned to cast a shadow over world stock markets, putting the S&P 500 on course for its first decline in five sessions and driving industrial metal and oil prices sharply lower. The dollar rose moderately against most of its main peers — and jumped against the Turkish lira — although the Canadian dollar hit a one-month high versus its US namesake after the Bank of Canada raised interest rates, as expected. The US currency’s broad strength — which helped push gold back towards a recent six-month low — came in spite of falling Treasury yields. The gap between two- and 10-year US yields narrowed to a fresh 10-year low. Late on Tuesday, President Donald Trump began the process of imposing tariffs on a further $200bn of imports from China, marking a significant escalation in tension between the two countries. On Wall Street, the S&P 500 fell 0.7% to 2,774, having risen nearly 3% to a five-month high over the previous four sessions. The Dow Jones Industrial Average fell 0.9% while the tech-heavy Nasdaq Composite ended 0.6% lower. In Europe, the pan-regional Stoxx 600 ended 1.3% lower, with the Xetra Dax down 1.5% and the FTSE 100 shedding 1.3%.

Back home, the FBM KLCI index gained 1.64 points or 0.10% to 1,688.77 points on Wednesday. Trading volume increased to 2.08bn worth RM2.03bn. Market breadth was negative with 261 gainers as compared to 556 losers. The regional markets finished sharply lower with shares in China leading the region. The Shanghai Composite was down 1.76% while Hong Kong's Hang Seng was off 1.29% and Japan's Nikkei 225 was lower by 1.19%.

Source: PublicInvest Research - 12 Jul 2018

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