Highlights

PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 19 Jul 2019, 8:51 AM

 

PublicInvest Research Headlines - 16 Jul 2018

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Economy

US: Americans’ sentiment falls as worries multiply over tariffs. US consumer sentiment dipped to a six-month low in July as Americans became increasingly concerned about the fallout from an expanding trade war, a University of Michigan survey showed Friday. Sentiment index fell to 97.1 from 98.2 in June. Current conditions gauge, which measures Americans’ perceptions of their finances, dropped to 113.9 from 116.5. While sentiment remained relatively elevated as a tight labor market and tax cuts continue to buoy incomes in the world’s largest economy, Americans’ worries over tariffs “greatly accelerated in early July,” according to the report. (Bloomberg)

US: Fed sees further gradual rate hikes with economy close to goals. The Federal Reserve Board underscored its commitment to a gradual pace of interest-rate hikes in its semi-annual monetary policy report to Congress, which also addressed topics ranging from monetary policy rules to labor force participation. The Federal Open Market Committee “expects that further gradual increases in the target range for the federal funds rate will be consistent with a sustained expansion of economic activity, strong labor market conditions, and inflation near the committee’s symmetric 2% objective over the medium term,” the Fed said. (Bloomberg)

UK: PM May says Donald Trump told her to sue the EU over Brexit. British Prime Minister Theresa May said US President Donald Trump had previously advised her to sue the European Union as part of her Brexit strategy, disclosing a piece of advice Trump said last week she had ignored. "He told me I should sue the EU," May said. "Sue the EU. Not go into negotiations - sue them." May pointed out that Trump, who was visiting Britain, had also advised that now she was in a negotiation, she should not walk away. "I want us to be able to sit down to negotiate the best deal for Britain," May said. Trump said that May had not followed his advice on Brexit - one of a number of comments that were seen as a damning critique of her exit plans and added fuel to the raging debate over May's plans to leave the EU. (Reuters)

UK: Economy gets vital healthcheck before BOE’s Aug decision. BOE policy makers are getting a crucial glimpse of the health of the UK economy before their crunch Aug meeting. A deluge of numbers on wages, inflation, retail sales and public borrowing are coming over the next five days. While a similar run of reports prompted the bank to back away from an interest-rate increase in May, this time appears different, with recent indicators looking more positive. A Bloomberg survey Monday showed 71% of economists expect a rate hike on Aug 2, up from 55% last month, while investors are currently pricing in about an 80% chance of such a move. (Bloomberg)

China: GDP report set to show fitness to fight the trade war. A key economic data release Monday will show how well placed China’s economy is to withstand the trade war. The statistics authority will release China’s GDP growth for the 2Q. The economy expanded by 6.7%, according to economists surveyed by Bloomberg. That’s a notch lower than the 6.8% gain in the previous three-month period but still above the government’s full-year target of 6.5%. A look beyond the headline number will reveal more early signs of the size of the impact from the trade dispute, or where the tariffs could end up hurting. (Bloomberg)

China: Looks to get cozy with EU in annual talks as Trump tariffs bite. The EU will open an annual meeting with China on Monday, and will be looking to fend off overtures for an anti-US alliance as China seeks a European counterbalance to US tariffs. Premier Li Keqiang will host European Council President Donald Tusk and European Commission President Jean-Claude Juncker in Beijing, where the two sides could reinvigorate long-running investment treaty talks with the expected exchange of markets access offers for the first time. (Reuters)

Markets

Axiata (Neutral, TP: RM5.00): Unit to sell 89% shareholding in Multinet Pakistan. Axiata Group’s (Axiata) wholly owned unit Axiata Investments (Labuan) Ltd (AIL) has entered into an agreement with Adnan Asdar Ali (AAA) for the divestment of AIL’s 89% stake in Multinet Pakistan Pte Ltd for USD1 on a cash-free and debt-free basis. AAA is the current shareholder of the remaining 11% stake in Multinet, Axiata said. Axiata said that for the last few years, Multinet’s financial performance has been declining with accumulated losses of PKR754m (about RM25.6m) for the financial year ended Dec 31, 2017. (Bernama)

JAKS (Neutral, TP: RM1.30): Appeals bank guarantee release order. JAKS Resources is appealing the High Court's decision ordering the release of a RM50m bank guarantee to Star Media Group. JAKS said it filed the appeal at the Court of Appeal. The group also filed applications for a stay of execution on the High Court order and an injunction to restrain the two issuing financial institutions of the bank guarantee from releasing the proceeds to Star Media. Meanwhile, Star Media confirmed that it had been served with the notices of appeal by JAKS and the applications for stay of execution and the injunction. (The Edge)

Bintai Kinden: Secures RM50m job from Tenaga. Bintai Kinden Corp’s wholly-owned subsidiary Kejuruteraan Bintai Kindenko SB (KBK) has clinched a RM50.5m contract from Tenaga Nasional (TNB). The company said KBK has accepted the letter of award from TNB to become the contractor to establish a new 132kV GIS switching station in Selangor. The contract is non-renewable with a fixed contract period, it said. The construction of the switching station is expected to be completed within 540 days from the commencement date. (StarBiz)

MAHB: To finalise Hyderabad airport stake sale by year-end. Malaysia Airports Holdings (MAHB) expects to conclude the disposal of its stake in GMR Hyderabad International Airport Ltd in India by the end of this year. Acting CEO Raja Azmi Raja Nazuddin said negotiations are ongoing. On whether MAHB was eyeing new investments in India, Raja Azmi said it would assess any opportunities abroad, including in India, on a case-by-case basis. He said potential business models included major equity investment or small scale stakeholding and facility management services. (StarBiz)

Gabungan AQRS: Minimal impact from revised LRT3 project. Although Gabungan AQRS will be affected by a “scaled down” version of the Light Rail Transit 3 (LRT3), the impact on the company’s overall order book will likely be minimal. According to its vice-president for strategic planning & investment, Ridhwan Effendy, the mid-cap construction and property development company will likely see a reduction of only RM100m in its orderbook, following the cancellation of the Temasya station, which is one of the five aborted under the revised version of the LRT3 project. (StarBiz)

Scientex: Seeks to build 50,000 affordable homes by 2028. Scientex is targeting to deliver 50,000 units of affordable homes nationwide by 2028, said its MD Lim Peng Jin. To date, Scientex’s property division has delivered nearly 16,400 affordable homes priced below RM500,000 nationwide, of which some 70% are priced below RM200,000. (The Edge)

Market Update

The FBM KLCI might open higher today after weakness for financial stocks as the sector kicked off the quarterly earnings season could not keep the main US stock indices from ending the week on a mildly positive note, with the S&P 500 ending at a five month high and the Nasdaq Composite hitting a record peak. Results from Citigroup, JPMorgan and Wells Fargo were poorly received, putting their share prices under pressure. Energy was among the best-performing sectors as oil prices continued to recover from a heavy midweek sell-off, which was fuelled by fresh worries about the potential impact of a trade conflict between the US and China. On Wall Street, the S&P 500 rose 0.1% to 2,801 — giving it a weekly gain of 1.5% — its best finish since the start of February. The Dow Jones Industrial Average gained 0.4% on Friday while the Nasdaq Composite ended marginally higher after earlier hitting an intraday record peak of 7,843.53. Across the Atlantic, the pan-European Stoxx 600 index ended 0.2% higher as the Xetra Dax in Frankfurt rose 0.4% and the FTSE 100 in London edged 0.1% higher.

Back home, the FBM KLCI index gained 18.36 points or 1.08% to 1,721.93 points on Friday. Trading volume increased to 3.27bn worth RM2.83bn. Market breadth was positive with 605 gainers as compared to 315 losers. The regional markets finished mixed with the Nikkei 225 gained 1.85% and the Hang Seng rose 0.16%. The Shanghai Composite lost 0.23%.

Source: PublicInvest Research - 16 Jul 2018

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