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Author: PublicInvest   |   Latest post: Tue, 20 Aug 2019, 9:34 AM

 

PublicInvest Research Headlines - 14 Aug 2018

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US: Economy seen strong in 2018, to slow in 2019, CBO says. US economic growth will probably accelerate this year before slowing in 2019 to well below the Trump administration’s 3% target as a fiscal stimulus fades, congressional researchers projected on Monday. In an updated economic outlook, the nonpartisan Congressional Budget Office (CBO) projected that inflation adjusted or real GDP would grow 3.1% this year, exceeding 2.2% growth in 2017 due to lower income taxes, increased government spending and private investment. The government slashed corporate and personal income taxes in January in a USD1.5trn package and the US Congress passed a USD1.3trn spending bill in March. (Reuters)

US: Consumers' one-year inflation outlook steady in July, NY Fed survey. US consumers’ one-year inflation expectations held steady in July at near 3%, while their three-year outlook on price growth eased toits lowest level since Feb, according to a Federal Reserve Bank of New York survey published on Monday. The survey of consumer expectations, which the Fed considers along with other data on US price pressures, showed consumers’ one-year inflation outlook stood at 2.98% in July for a fourth consecutive month. The survey’s three-year inflation measure declined to 2.88% from 3% in June. The New York Fed survey is done by a third party that taps a rotating panel of about 1,200 household heads. (Reuters)

UK: British employers see difficulty in filling vacancies. More UK employers found it difficult to fill their job vacancies, according to Labor Market Outlook from the Chartered Institute of Personnel and Development. About two-third of employers report at least some of the vacancies are proving hard to fill since last summer. The survey showed that the supply of labor is more constrained compared with previous years, especially for low and medium-skilled occupations. The number of applicants for a vacant job decreased compared to the summer 2017. Increasing salaries is the most obvious reaction to these challenges. A majority of employers responded by increasing salaries for their vacancies. According to the survey data, employers' median basic pay increase expectations in the 12 months stood at 2%. (RTT)

China: July new loans ease to CNY1.45trn, above forecasts. Chinese banks extended CNY1.45trn (USD210.7bn) in net new yuan loans in July, above analysts’ expectations, as a growing trade battle with the US threatens to pile more pressure on the slowing economy. Analysts polled by Reuters had predicted new yuan loans of CNY1.2trn, down sharply from June’s CNY1.84trn but well ahead of the tally in July last year. Broad M2 money supply grew 8.5% in July from a year earlier, data from the PBOC showed on Monday, beating forecasts for an expansion of 8.2% and compared with 8.0% in June. (Reuters)

India: Inflation slows in July. India's consumer price inflation slowed in July, the Central Statistics Office reported Monday. Consumer price inflation slowed to 4.2% in July from 4.9% in June. In the same period of 2017, inflation was 2.3%. Economists had forecast the annual rate to ease to 4.5%. Similarly, food price inflation came in at 1.4%, down from 2.9% a month ago. Overall inflation remained above the central bank's medium-term target of 4%. The Reserve Bank of India forecast 4.8% inflation for the 2H of 2018-19. On a monthly basis, consumer prices gained only 0.9% and food prices by 1.6% in July. (RTT)

Indonesia: Bank Indonesia may hike rates as Turkish lira crisis adds pressure on rupiah. Indonesia may feel the biggest impact from the Turkish lira crisis, among Asian countries, as a high level of foreign currency debt makes it vulnerable to sharp falls in the rupiah, Capital Economics economist Gareth Leather said Monday. Consequently, the Bank Indonesia is likely to raise its key rate by 25 basis points during its scheduled meeting on Wednesday, the economist said. That would follow a cumulative 100 basis points hike in May and June to support the rupiah. For most Asian countries, the sharp falls in financial markets seem like an overreaction given their limited trade and financial ties to Turkey, Leather noted. (RTT)

Singapore: GDP growth slows on weaker construction. The Singapore economy grew at a slower pace in the 2Q on notable contraction in construction, data published by the Ministry of Trade and Industry showed Monday. Despite forecasting a moderation in growth going forward in the 2H of this year, the government maintained its economic outlook for 2018. GDP grew a revised 3.9% YoY in the 2Q, easing from the 4.5% growth in the previous three months. Nonetheless, the estimate for the June quarter was revised up from 3.8%. (RTT)

Markets

Vivocom: Secures contract worth RM12.6m from CRCC. Vivocom International Holdings has secured a RM12.6m project from CRCC Malaysia to supply labour, tools and equipment for the construction and completion of the reinforced concrete structure and structural steel works for an office tower. Vivocom said its unit, Vivocom Enterprise Sdn Bhd, has received and accepted the letter of award (LOA) from CRCC for the proposed project. (Bernama)

Mynews: Sells former corporate office to director's sons. Mynews Holdings is disposing of two units of property in Kepong to the sons of its non-independent and non-executive director Dang Tai Hock for RM3.4m. Tai Hock is the elder brother of MyNews CEO Dang Tai Luk and deputy CEO Dang Tai Wen. The properties comprise a piece of freehold land with built up area of 2,750 sq ft and land area of 2,002 sq ft consisting of two units of one-and-a-half storey terrace factory lot. Mynews said that the sale proceeds are to be used as working capital for Mynews Retail's growth and expansion plan. (The Edge)

MAHB: Over 75% of airports we handle not commercially viable. More than 75% of the 39 airports operated by Malaysia Airports Holdings (MAHB) are not commercially viable, said the airport operator. “These airports are managed on a cross-subsidisation model in order to provide the Malaysian people with the required connectivity among its smaller towns and rural outposts. Maintaining this network of airports has involved a huge outlay of both capital and operational expenses,” it said. MAHB manages a network of 39 airports in Malaysia, comprising five international airports, 16 domestic airports and 18 short take-off and landing ports. (SunBiz)

Guan Chong: Improved margins push 2Q profit to record high. Guan Chong has reported record 2Q earnings with net profit nearly doubling to RM43.0m from RM22.9m a year ago, due to improved margins. Revenue for the quarter ended June 30, 2018 rose 1.9% to RM491.6m, from RM482.0m previously, thanks to an increase in the sales volume of cocoa products, which was up by 28%. Guan Chong declared a first interim dividend of two sen per share, payable on Sept 28. (The Edge)

Oil and Gas (Overweight): Petronas to explore new O&G reserves, says Economic Affairs Ministry. National oil company Petroliam Nasional (Petronas) will continue its efforts and cooperation in exploring for new oil and gas (O&G) reserves locally and internationally, especially on deepwater, said the Ministry of Economic Affairs. "However this (the exploration) will involve high costs due to the complexity and risks that Petronas has to face. The discovery of new reserves will hopefully extend the country's O&G reserves duration and ensure the supply of resources is guaranteed," the ministry said. (The Edge)

Rubber Gloves (Neutral): June natural rubber output up 16.3%. Malaysia’s natural rubber production in June 2018 increased by 16.3% to 41,578 tonnes from 35,761 tonnes in the previous month, according to Department of Statistics. For YoY, the production decreased by 17.9%, it said. It said the average price of latex concentrate was recorded at 439.83 sen per kilogramme (kg) whereas the average price of Standard Malaysian Rubber 20 was 545.2 sen per kg, both diminished at 9.7% and 2.8% respectively from May 2018. (SunBiz)

MARKET UPDATE

The FBM KLCI might trend lower at the opening today after Turkey continued to dominate the market headlines yesterday, with concern over contagion from the country’s currency crisis making for a nervous session. An opening rally for the S&P 500 equity index — after it suffered its biggest one-day fall in a month on Friday — turned into a moderate loss by the close in New York, while European stocks ended lower, albeit well off the day’s worst levels. The Turkish lira itself remained vulnerable after falling as much as 11 percent against the dollar in Asian trade to a fresh record low, although it later trimmed its decline, as did several other emerging market currencies caught up in the early sell-off. On Wall Street, the S&P 500 fell 0.4% to 2,821, having risen as much as 0.4% earlier in the session. It was the fourth successive decline for the benchmark US index — its longest losing run for five months. The Nasdaq Composite slipped 0.2% to 7,820 — after hitting 7,888 earlier in the day — while the Dow Jones Industrial Average shed 0.5%. In Europe, the pan-regional Stoxx 600 ended down 0.3%, having been 0.6% lower in early trade. The Xetra Dax in Frankfurt fell 0.5% and the FTSE 100 in London closed 0.3% lower.

Back home, the FBM KLCI index lost 22.41 points or 1.24% to 1,783.34 points on Monday. Trading volume decreased to 2.07bn worth RM2.21bn. Market breadth was negative with 213 gainers as compared to 764 losers. The regional markets finished broadly lower today with shares in Japan leading the region. The Nikkei 225 was down 1.98% while Hong Kong's Hang Seng lost 1.52% and China's Shanghai Composite gave away 0.34%.

Source: PublicInvest Research - 14 Aug 2018

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