PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 24 May 2019, 11:10 AM


PublicInvest Research Headlines - 8 Aug 2018

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US: Job openings increased to 6.6m in June. US job openings edged higher in June, providing evidence of a job market that’s still tight with Americans feeling confident enough to leave their positions for other work, Labor Department data showed Tuesday. Number of positions waiting to be filled increased by 3,000 to 6.66m in June, according to the Job Openings and Labor Turnover Survey. The elevated number of job postings shows companies are still expanding though having trouble finding employees from a shrinking pool or because of a skills mismatch. It’s another sign, in line with other employment data, that shows a robust labor market. (Bloomberg)

US: Consumer credit rose less than estimated in June. US consumer debt rose less than estimated in June as revolving debt outstanding fell for the second time in four months, Federal Reserve figures showed Tuesday. The drop in revolving debt, which includes credit cards, signals consumers took a breather after such borrowing in May jumped by the most in six months. Meanwhile, non-revolving debt, which includes loans for education and automobiles, remained robust, in part reflecting healthy demand for vehicles. The results are consistent with 2Q data that showed household spending rebounded to the fastest pace of growth since 2014, after a weak start to the year. (Bloomberg)

US: To slap duties on USD16bn of China goods on Aug 23. The US said it will begin imposing 25% duties on an additional USD16bn in Chinese imports in two weeks, escalating a trade war between the world’s two biggest economies. Customs will begin collecting the duties on 279 product lines, down from 284 items on the initial list, as of Aug 23, the US Trade Representative’s Office said. The new list covers products ranging from motorcycles to steam turbines and railway cars. It will be the second time the US slaps duties on Chinese goods in about the past month, despite complaints by American companies that such moves will raise business costs and eventually consumer prices. (Bloomberg)

EU: German factory and jobs figures point to modest 2Q growth. The German economy is set for modest growth in the 2Q after industrial output edged up and job vacancies hit a record high, underlining labor market strength that is fuelling a consumer-led upswing. Europe’s biggest economy saw vacancies surge by 25,000 on the quarter and 115,000 on the year to reach 1.2m in the April-June period, a survey by the IAB labor office research institute found. Separate data on Tuesday from the Economy Ministry showed industrial output rose 0.4% on the quarter in the April-June period despite a weaker-than-expected reading for June. (Reuters)

China: July FX reserves rise to USD3.12trn despite trade tensions. China’s foreign exchange reserves unexpectedly rose in July even as worries over escalating trade tensions between the US and China have caused market volatility. Reserves rose USD5.8bn in July to USD3.12trn, compared with a rise of USD1.5bn in June, central bank data showed on Tuesday. Economists polled by Reuters had expected reserves to drop by USD12.1bn to USD3.10trn. On Friday, China’s central bank said it would set a reserve requirement ratio of 20% from Monday for financial institutions settling their forward foreign exchange sales to clients, a move to stabilize the yuan. (Reuters)

Malaysia: International reserves drops USD100m to USD104.5bn. Bank Negara’s international reserves dipped USD100m to USD104.5bn as at July 31 from USD104.6bn two weeks earlier. The main components of the international reserves were foreign currency reserves (USD98.2bn), International Monetary Fund reserves position (USD900m), Special Drawing Rights (USD1.2bn), gold (USD1.5bn) and other reserve assets (USD2.7bn). According to the Bank Negara, the US dollar-ringgit reference rate stood at 4.0611 as at July 31 as compared to 4.0388 on July 13. (StarBiz)

Philippines: Biggest rate increase in a decade on the cards. The question facing policy makers in the Philippines is not whether to raise interest rates for a third time in a row, but by how much. A booming economy, surging inflation and pressure on the currency are setting the stage for a 50 basis-point increase in the benchmark rate to 4% on Thursday, according to most of the 17 economists surveyed by Bloomberg. That would be the biggest hike since 2008 and follows a similar move by Indonesia as central banks in emerging markets take more aggressive steps to curb the fallout from rising US rates and a stronger dollar. (Bloomberg)


Gaming (Neutral): Number of special draws for NFOs to be reduced next year, says Guan Eng. Finance Minister Lim Guan Eng says the government plans to reduce the number of special draws for all number forecast operators (NFOs) beginning 2019, to reduce social problems related to gambling activities. The new policy would be announced in Budget 2019 on Nov 2. (Bernama). Comment: We reckon that this is not an ideal solution to tackle social problems as there are more pertinent issues for the government to review i.e. the proliferation of illegal gaming activities. Gaming activities, which also include casino operations, have been criticized to have caused social problems but in our opinion, reducing the number of special draws is not likely to have any material impact on the society. Nevertheless, based on our sensitivity analysis, Magnum and Berjaya Sports Toto’s earnings will be reduced by 0.3% and 0.7% respectively for every 1 special draw reductions. We maintain our Neutral rating on both NFOs.

Inta Bina: Bags RM63m job to build Eco Majestic homes. Inta Bina Group has bagged a RM62.64m contract to construct 79 units of bungalow, two units of Tenaga Nasional substation and two guard houses in Beranang, Hulu Langat, Selangor for Eco Majestic SB. With this contract, the group’s unbilled order book stands at RM826m. Inta Bina said its wholly-owned subsidiary Inta Bina SB (IBSB) has agreed and accepted the letter of award from DTLM Design Group SB for the proposed project. IBSB is principally involved in the business of construction works. The contract period will be for 20 months, commencing Aug 15. (The Edge)

Advancecon: Bags RM27m river upgrading job. Advancecon Holdings has bagged a RM27.39m contract to upgrade two rivers in Klang, Selangor. The group's wholly-owned subsidiary received and accepted the letter of award on Aug 6 from Sime Darby USJ Development SB, it said. The work scope of the one-year contract that begins on Aug 20 includes the upgrading of the rivers, namely Sungai Puloh and Sungai Parit Enam, using permanent concrete sheet pile with capping beam, as well as the creation of a diversion channel and temporary earth drains, a sediment fence and related works. (The Edge)

Metronic Global: Bags RM6m contract to supply audio visual system for KLCC convention centre. Metronic Global (MGB) has bagged a RM6.04m contract to supply, deliver, install, test and commission audio visual system for Lot 91 Convention Centre Podium at Kuala Lumpur City Centre. MGB said its wholly-owned subsidiary Metronic Engineering SB (MESB) has received a letter of award from Impian Bebas SB, a JV company between KLCC (Holdings) SB and Sapura Resources, for the proposed job. The works will commence on Aug 6, with completion targeted for May 2, 2019. (The Edge)

CI Holdings: Ventures into Nigeria's edible oils market. CI Holdings has set up a new subsidiary to venture into Nigeria's edible oils market. The group said that its 60%-owned sub-subsidiary Palmtop Vegeoil Products SB together with PNC Oil Factory (Malaysia) SB, a subsidiary of Palmtop had on July 24 incorporated a new subsidiary, namely Tradekey PT Foods Nigeria Ltd in Nigeria. Following the incorporation, Tradekey has become a wholly owned subsidiary of Palmtop, which in turn is a 60%-owned subsidiary of CI Holdings. (SunBiz)

Market Update

The FBM KLCI might open higher today after global equities staged an impressive advance as a fresh rise for oil prices and some optimism about corporate earnings helped participants put trade war concerns on the back burner, for now at least. The S&P 500 closed just 0.5 per cent short of the record high it set in January, with the energy sector leading the way as oil prices rallied further, supported by concerns about Iranian supply. The Nasdaq also neared its record peak. In Europe, weak German Industrial production data had little impact on markets, even as they fuelled worries in some quarters about the impact of the recent escalation of global trade tensions. On Wall Street, the S&P 500 rose 0.3% at 2,858 — just 14 points shy of January’s record intraday and closing high of 2,872. The Dow Jones Industrial Average ended 0.5% higher and the Nasdaq Composite rose 0.3% to end just 0.6% short of its own all-time peak. In Europe, the Stoxx 600 index ended 0.5% higher as the Xetra Dax in Frankfurt gained 0.5% and the UK’s FTSE 100 rose 0.7%.

Back home, the FBM KLCI index gained 11.34 points or 0.64% to 1,791.09 points on Tuesday. Trading volume increased to 2.53bn worth RM2.33bn. Market breadth was positive with 576 gainers as compared to 328 losers. In China, the Shanghai Composite index jumped 2.7% and the CSI 300 gained 2.9%. Tokyo’s Topix index rose 0.8%.

Source: PublicInvest Research - 8 Aug 2018

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