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Author: PublicInvest   |   Latest post: Thu, 18 Jul 2019, 9:35 AM

 

PublicInvest Research Headlines - 21 Aug 2018

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Economy

US: Businesses warn Trump the next China tariffs are going to cost Americans from cradle to grave. A broad cross-section of US businesses has a message for the Trump administration: new tariffs on USD200bn of Chinese imports will force Americans to pay more for items they use throughout their daily lives, from cradles to coffins. Six days of public hearings on the proposed duties of up to 25% will start on Monday in Washington as part of President Donald Trump's and the US Trade Representative's efforts to pressure Beijing for sweeping changes to its trade and economic policies. Unlike previous rounds of US tariffs, which sought to shield consumers by targeting Chinese industrial machinery, electronic components and other intermediate goods, thousands of consumer products could be directly hit with tariffs by late Sept. (Reuters)

US: Trump is the unsung hero of the world economy. Washington's huge fiscal and monetary stimuli will give the world economy an estimated USD600bn shot in the arm this year. That amount represents the difference between the expected US purchases and sales of goods and services in world trade. Technically, you can call it the US current account deficit. Some people may recall that this is exactly the opposite of what President Donald Trump promised in 2015 and has repeated ever since. The data published earlier this month show that Trump is nowhere close to delivering on that promise. In fact, China, Japan and Europe are getting a big piece of his tax cut in their combined trade surplus of USD297.8bn during the first six months of this year. That is an 8.2% increase from what they got out of a more sluggish American economy a year ago. (CNBC)

US: Trump says he doesn't expect much from China trade talks this week. President Donald Trump does not expect much progress from trade talks with China this week in Washington, he told Reuters. Trump said in an interview that he had "no time frame" for ending the trade dispute with China. "I'm like them, I have a long horizon," he added. The talks this week come as new US tariffs on USD16bn of Chinese goods take effect, along with retaliatory tariffs from Beijing on an equal amount of US goods. The US Trade Representative's Office also is holding hearings this week on proposals for tariffs on further USD200bn of Chinese goods. Trump said Chinese negotiators would be arriving shortly, adding he did not "anticipate much" from the mid level discussions. (Reuters)

US: Trump takes another shot at Fed Chairman Jerome Powell for raising rates. President Donald Trump is grousing again about his Federal Reserve chairman, telling political donors that he was hoping for easier monetary policy. Speaking at a fundraiser in the Hamptons, Trump said he thought Fed Chairman Jerome Powell would favor cheaper money and not have such a heavy hand when it comes to interest rate hikes, which cited three sources who attended the event. The Fed has hiked its benchmark interest rate target five times since Trump took office in Jan 2017, compared with just once for his predecessor, Barack Obama. In addition, the Fed has indicated two more rate hikes before the end of the year and three more in 2019. "He was questioning why it was happening," one person at the event said, according to a Dow Jones report. (CNBC)

EU: Greek current account surplus shrinks in June, tourism revenues rise. Greece's current account balance showed a smaller surplus in June compared to the same month a year earlier on the back of a wider trade deficit. Central bank data showed the surplus fell to EUR210m (USD240.18m) from a surplus of EUR737m in June 2017. Tourism revenues increased to EUR2.33bn from EUR2.007bn in the same month a year earlier. In June the current account was down by EUR527m YoY, as a result of deterioration principally in the balance of goods and to a lesser extent in the primary income account. The trade gap rose by EUR535m as imports outstripped exports, mainly the result of a worsening in the oil balance. In Jan to June, Greece's current account showed a deficit of EUR3.8bn, up by EUR555m YoY as the trade deficit widened. (Reuters)

UK: Bank of England's chief economist warns A.I. could threaten ‘large’ amount of jobs. The Bank of England's Chief Economist Andy Haldane warned on Monday that the rise of artificial intelligence (AI) threatens to replace a huge number of jobs. Haldane said that the so called Fourth Industrial Revolution a digitally-driven paradigm shift similar to previous industrial revolutions in the West, had the potential to displace numerous jobs and leave people "technologically unemployed." "Each of those [industrial revolutions] had a wrenching and lengthy impact on the jobs market, on the lives and livelihoods of large swathes of society," Haldane told the BBC. The BOE economist cautioned that previous industrial revolutions resulted in "heightened social tensions," "financial tensions" and "inequality." (CNBC)

China: Sells diesel to South Africa as refiners seek new export markets. State-run oil company Sinopec is selling diesel as far afield as South Africa as China’s refiners seek homes for their surplus fuel in the latest sign of troubles in the domestic refining business. Sinopec said on Monday it shipped its first 30,000 tonnes of diesel from its Shanghai refinery heading for South Africa. This cargo and another Sept shipment marked the first batch to South Africa in two years. Such shipments have also been extremely rare in the past five years. China’s four oil majors are facing a glut overhang in domestic market and the companies are fully aware of the headwinds ahead. China exported record volumes of diesel in May, with the total almost hitting 2.4m tonnes. Shipments have remained firm since, as domestic fuel demand growth stagnates. (Reuters)

Markets

LBS Bina (Outperform, TP: RM1.31): To launch new Dengkil township in Sept or Oct. LBS Bina Group will be launching a new township in Dengkil by Sept or Oct. “We will be launching our next township project in Cyber South, Dengkil by Sept or Oct, subject to the approval of the authorities and APDL [advertising permit and developer license],” said LBS Bina Group MD Tan Sri Lim Hock San. He said LBS plans to build 3,000 affordable home priced at RM300,000 in the Dengkil project to support the government’s target of increasing affordable homes in the nation. (The Edge)

CIMB (Outperform, TP: RM7.40): Introduces benefits for staff with special needs children. CIMB Group Holdings introduced fresh policies for staff with special needs children by providing financial assistance and flexible work arrangements to help them focus on their children and career. The policies will allow eligible employees to work from home one day per week, and receive financial aid of up to RM1,000 per child monthly. These latest enhancements are part of ‘Workplace Wellness@CIMB’, a comprehensive work-life initiative to assist employees in both their professional and personal aspirations. (Bernama)

Axiata (Neutral, TP: RM5.00): Xpand and Koble sign exclusive licensing partnership. Axiata Group’s wholly owned subsidiary Axiata Business Services SB has signed an exclusive licensing agreement covering the Asia region to offer small and medium-sized enterprises (SME) and larger enterprises a digital business matchmaking service to meet buyers and suppliers that are a perfect match for potential commercial opportunities. Axiata Business Services operates under the brand Xpand, and Koble Inc is a leading global business-to-business matchmaking platform. (StarBiz)

Gadang: Bags RM86m TRX job from TRX City. Gadang Holdings has bagged a RM86.1m contract from TRX City SB, a company owned by the Ministry of Finance and the master developer of the RM40bn Tun Razak Exchange (TRX) development here, to undertake public realm infrastructure work (Phase 1) at TRX. The tender for the contract was called in Jan, following a pre-qualification exercise in Oct last year. The project will commence on Sept 1, with completion by the 3Q of 2019. (The Edge)

Eita Resources: Bags Bintulu substation job worth RM67m. Eita Resources’ 60%-owned unit has won a RM67.2m contract to build a 132kV substation and to undertake the extension of a 275kV substation in Kemena, Bintulu, Sarawak. Eita said its unit, Transsystem Continental SB, received the notification of award from Sarawak Energy's subsidiary, Syarikat SESCO. The contract is expected to start on Sept 3, to be completed in 28 months. (The Edge)

PetChem: Monitors potential impact of US-China trade war. Petronas Chemicals is currently monitoring the impact of the escalating trade war between the United States and China on the petrochemical industry. MD/CEO Datuk Sazali Hamzah pointed out that there is no serious threat to the industry at the moment. “Our business is still as usual. But we are closely monitoring the situation, the trade war between China and the US. In the long term, it is not as good as it may impact some of the industrial growth in China. The industry will normalise at the end. “Our customers in China are still actively pursuing strategic collaborations with us,” he said. (Bernama)

Utusan: Is now a PN17 company. Umno-linked media company, Utusan Melayu (M) has been classified as a PN17 company, denoting its financials were inadequate as a listed entity. The company, which has defaulted on loans from Bank Mualamat Malaysia and Maybank Islamic, said that it would need to come up with a regularisation plan within the next 12 months. If it fails to come up with a plan, it risks being delisted from the stock exchange. (StarBiz)

Petrol One: Appeals against delisting decision. PN17 entity Petrol One Resources said it has submitted an appeal to Bursa Malaysia Securities against the latter’s decision to delist its securities from the Main Market of the local bourse. It said the appeal was submitted against the suspension and delisting of its securities, which was initially slated for this Friday (Aug 24). “Given that the appeal was submitted within the appeal timeframe (by Aug 20), the removal of the securities of the company from the official list of Bursa Securities on Aug 24 shall be deferred, pending decision by Bursa Securities on the appeal,” it said. (The Edge)

REX Industry: Seeks 10% share buyback. REX Industry is proposing to seek its shareholders’ approval to allow it to purchase up to 10% of its issued share capital at the forthcoming annual general meeting. REX said the proposed share buy-back will enable it to have an additional option to utilise its surplus financial resources. In addition, the purchased shares may be held as treasury shares and resold on Bursa Malaysia, with the intention of realising a potential gain without affecting the total issued shares of the company. The proposed share buy-back is expected to be completed by the 4Q of 2018, it added. (The Edge)

PetDag: 2Q net profit up 28%, pays 16 sen dividend. Petronas Dagangan (PetDag), the marketing arm of Petroliam Nasional, saw its net profit rise 27.8% to RM314.4m in the 2QFY18 from RM246.0m a year ago, mainly due to higher margin which resulted from increasing Mean of Platts Singapore (MOPS) price trend, lower product and freight costs, as well as an increase in other income arising from insurance proceeds claim received by a subsidiary. This was partially offset by higher advertising and promotion expenses. The group also declared an interim dividend of 16 sen per share for the FYE Dec 31, 2018, payable on Sept 19. (The Edge)

United Plantations: 2Q net profit falls 22% on lower revenue. United Plantations’ net profit fell 22.4% to RM87.2m in the 2QFY18, from RM112.4m a year ago, on lower revenue. Quarterly revenue dropped 12.8% to RM309.9m versus RM355.3m in 2QFY17. It attributed the weak quarterly revenue to a decrease in its plantations business due to lower palm kernel (PK) price in the Malaysian operations by 24.9%, and lower crude palm oil (CPO) and PK prices in the Indonesian operations by 19.4% and 23.4% respectively, in 2QFY18. (The Edge)

Auto (Neutral): New Perodua Myvi production disrupted due to supply issue. The production of Perodua’s best-selling car model, the new Myvi, has been temporarily halted due to a supply disruption at one of its vendors. The disruption has resulted in about 3,000 customers not being able to register their new Perodua Myvi before the end of Aug. Perodua Sales SB MD Datuk’ Dr Zahari Husin said that the current priority for Perodua is to deliver the new Perodua Myvi to some 3,000 customers who were originally scheduled to receive their cars before Sept 1, adding that allocation for all Myvi orders before June 1 has just been completed. (The Edge)

Market Update

The FBM KLCI might open higher today as global stock markets began the week on a broadly positive note as participants shrugged aside a fresh retreat for the Turkish lira and instead focused on hopes for a positive outcome to trade talks between the US and China this week. Reports late last week that the two sides were making progress contained few details, but did suggest that negotiators were aiming for a meeting between Donald Trump, US president, and Xi Jinping, his Chinese counterpart, in November. On Wall Street, the S&P 500 ended 0.2% higher at 2,857, leaving it 0.6% short of the record high of 2,873 reached in January. The Dow Jones Industrial Average rose 0.4% while the tech-heavy Nasdaq Composite edged 0.1% higher. Across the Atlantic, the Europe-wide Stoxx 600 rose 0.6% as the exporter-heavy Xetra Dax index outperformed its regional peers with a gain of 1% and London’s FTSE 100 gained 0.4%.

Back home, the FBM KLCI index gained 4.11 points or 0.23% to 1,787.58 points on Monday. Trading volume increased to 2.28bn worth RM2.04bn. Market breadth was negative with 383 gainers as compared to 497 losers. The regional markets finished mixed. Performance-wise, the Hang Seng gained 1.41%, the Shanghai Composite rose 1.11% and the Nikkei 225 lost 0.32%.

Source: PublicInvest Research - 21 Aug 2018

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