PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 23 Jul 2019, 9:20 AM


PublicInvest Research Headlines - 25 Jul 2018

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Global: Entrenched trade imbalances risk curbing global growth, IMF says. Global trade imbalances are showing little sign of narrowing, a trend that could inflame tensions and curb growth. Current-account balances amounted to 3.25% of the world’s GDP last year, roughly unchanged from the previous year, which assesses the trade position and exchange rates of the world’s biggest economies. The IMF found that about 40% to 50% of last year’s current-account balances are excessive, meaning they can’t be justified by a nation’s economic fundamentals and ideal policies. Tax cuts and increased government spending in the US are fuelling a rise in borrowing rates, a stronger U.S. dollar and a growing American current-account deficit. (Bloomberg)

US: Trump administration plans to offer USD12bn in emergency aid for farmers hurt by tariffs. The Trump administration plans to offer up to USD12bn in aid to farmers hit by tariffs on their goods, an emergency bailout intended to ease the pain caused by Trump's escalating trade war in key electoral states, Secretary of Agriculture Sonny Perdue told reporters. "President Trump has promised since day one that he had the back of every farmer and rancher," Perdue said. He said the assistance was a short-term solution, but that it would offer "Trump and his administration time to work on long-term trade deals." The announcement came Tuesday afternoon, hours after the president proclaimed on Twitter that "Tariffs are the greatest!”. (CNBC)

US: Ahead of big GDP report, Trump says US has best financial numbers on the planet. With the release of 2Q growth numbers just three days away, President Donald Trump is enthusiastic about growth, to say the least. While not mentioning the upcoming GDP report from the Bureau of Economic Analysis, Trump indicated in a tweet that the economy is powering along. Economists expect GDP to have grown 3.8% in the 2Q, after a 2% increase for the first three months of the year and a 2.3% gain for all of 2017. If the FactSet estimate is correct, that would be the fastest growth since the 3Q of 2014, when GDP rose 5.2%. The Trump administration has set at least 3% growth as a target. (CNBC)

US: ‘Tariffs are the greatest’ Trump tweets before Juncker meeting. President Donald Trump proclaimed that “Tariffs are the greatest!” in warning US trade partners that he’ll impose more sanctions unless they negotiate a "fair deal" as negotiations with European officials are to get underway at the White House. Trump’s tweet comes as he’s scheduled to meet with European Commission President Jean Claude Juncker for talks aimed at heading off a trade war, and as he continues to deal with domestic fallout from his deference to Vladimir Putin last week over Russian meddling in the 2016 US presidential election. "Either a country which has treated the US unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs,” Trump said. (Bloomberg)

EU: PMI says business growth flagging as trade fears rise. Eurozone business growth slowed more than expected this month as fears over a trade war with the US and a weaker global expansion put another dent in optimism, a survey showed. But growth remained robust and as it was accompanied by rising prices the survey is unlikely to concern policymakers at the European Central Bank too much as they look to move away from their ultra-loose monetary policy. IHS Markit’s Euro Zone Composite Flash PMI, seen as a good guide to economic health, dipped in July to 54.3 from June’s 54.9, coming in below all forecasts of 54.8. If maintained, the latest PMIs point to 3Q economic growth of 0.4% in the euro zone. (Reuters)

China: Unveils measures to boost economic growth. China has announced a mix of tax cuts and infrastructure spending citing “uncertainty”, as it ramps up efforts to stimulate demand and counteract a weakening economy. The move came the same day as an injection of USD74bn into the banking system by the People’s Bank of China through its Medium-term Lending Facility — the central bank’s largest ever, single-day cash injection using that tool. The fiscal measures provide growing evidence that policymakers are concerned about how the trade war with the US will exacerbate a domestic slowdown and follow a recent series of monetary loosening actions. (Financial Times)

Malaysia: Mahathir pushes back against China for better economic deals. Malaysian Prime Minister Mahathir Mohamad is pushing back against China’s dominance in the economy, stalling billions of dollars of contracts as he tries to renegotiate them. He’s heading to China in August -- specific dates haven’t been disclosed yet -- to discuss those projects and try to win deals that he says should be more favorable to Malaysia. China has USD34bn worth of infrastructure projects underway in Malaysia negotiated by the previous government of ousted leader Najib Razak. Among his concerns are the large sums that the government has borrowed from China and contractors that use Chinese labor and equipment. (Bloomberg)


WCT (Neutral, TP: RM1.00): Wins final appeal in suit filed by Dubai firm. The highest civil appeal court in Dubai has ruled in favour of WCT Holdings in a civil suit brought against it by Dubaibased Meydan Group LLC. Meydan had filed the suit against WCT (Dubai Branch), as well as Arabtec Construction LLC, for a sum of UAE3.5bn (RM3.9bn). It said the Dubai Court of Cassation (COC) has dismissed the appeal filed by Meydan in respect of the earlier Court of First Instance and Court of Appeal’s rejections of the civil suit. WCT added however, that efforts to ratify and thereafter enforce an arbitral award, remains ongoing. (The Edge)

JAKS (Neutral, TP: RM1.30): Files injunction in Court of Appeal to halt RM50m payment to Star. JAKS Resources filed a fresh injunction in the Court of Appeal today to restrain two banks from releasing a RM50m guarantee to Star Media Group. This comes after the High Court dismissed a similar injunction application, filed by the group through its subsidiary JAKS Island Circle SB (JIC). “The solicitors of JIC has on 24 July 2018 filed notices of motion for Erinford injunction with the Court of Appeal,” the group said. (The Edge)

MAHB: AirAsia gained RM376m from airport incentives till 2017. AirAsia Group has benefited about RM376m from the various incentive programmes up until 2017, says Malaysia Airports Holdings (MAHB). The airport operator's acting group CEO Raja Azmi Raja Nazuddin said it has supported low-cost travel growth through a series of incentive programmes since 2002. These incentive programmes included the Infancy Support Programme from 2002- 2007 and the Enhanced Incentive Programme from 2007 to 2009, which were given exclusive to AirAsia. (The Edge)

DNeX: Launches online halal platform in the Philippines. Dagang NeXchange (DNeX) has launched its GoHalal platform in the Philippines through its wholly-owned subsidiary Global Market eCommerce SB (GMeC). This is a key initiative after an agreement signed last month between the company and the Local Government of Naga City of the Philippines, and the Department of Education Division of Naga City. Under the agreement, DNeX will be given the opportunity to implement overall initiatives for a halal hub in the Philippines, including the development of blueprint, systems and framework for the halal hub. (The Edge)

Nextgreen: Terminates MoU with China Nuclear. Nextgreen Global has terminated its MoU with China Nuclear Industry Huaxing Construction Co Ltd to develop and manage the second and third phases of its Green Technology Park. Nextgreen, formerly known as BHS Industries, said it has not entered into any definitive or cooperative agreement with China Nuclear pursuant to the MoU. “Both parties will continue to explore cooperation opportunities in the foreseeable future,” the printing firm added. (The Edge)

Caring: Lifts payout on higher profits. Caring Pharmacy Group said aggressive promotional campaign boosted sales and net profit growth in the 4QFY18, lifting its full year results. “The higher revenue was mainly contributed by the higher sales generated from existing outlets due to aggressive and extensive promotional campaign launched during quarter under review,” it said. This lifted Caring’s full year net profit to RM18.6m, or 8.53 sen a share. The company has proposed a final dividend payout of 5 sen share. (StarBiz)

Market Update

US markets advanced on the day, with technology and healthcare based companies driving benchmarks higher as better-than expected earnings re-ignited optimism. Investors are currently brushing aside noises surrounding tariffs, a flattening yield curve and tighter monetary policy. Second-quarter GDP will be released on Friday with economists polled expecting annual growth of 3.8%. The Dow Jones Industrial Average and S&P 500 gained 0.8% and 0.5% respectively meanwhile. Carmakers and banks were amongst the biggest winners in Europe, also on stronger earnings reports. The Pound recovered after Prime Minister Theresa May reasserted control over Brexit talks. Donald Trump is set to meet with European Commission President Jean-Claude Juncker later today where the two will negotiate the US president's tariffs on EU imports. Benchmarks in Italy, Germany and France climbed 1.3%, 1.1% and 1.0% while UK and Spain’s rose 0.7% and 0.5% respectively. Markets in Asia were lifted by news of the Chinese government taking steps to boost growth, which among others include infrastructure spending and tax cuts. The Shanghai Composite Index posted its biggest 3-day rally in 2 years, up 1.6% on the day. Elsewhere, the Hang Seng and KOSPI indices rose 1.4% and 0.5% though the Straits Times Index slipped marginally (-0.03%). The FBM KLCI was up 0.3% overnight.

JAKS Resources has filed a fresh injunction in the Court of Appeal today to restrain two banks from releasing a RM50m guarantee to Star Media Group Bhd after the High Court dismissed a similar injunction application earlier. The highest civil appeal court in Dubai has ruled in favour of WCT Holdings in a civil suit brought against it by Dubai-based Meydan Group LLC, with the court dismissing the appeal filed by Meydan. SCH Group has seen the emergence of a new substantial shareholder with Tan Sri Koh Kin Lip and related parties disposing a 13.2% stake in the company to Hextar Holdings, the latter now with a controlling stake of 24.8%.

Source: PublicInvest Research - 25 Jul 2018

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