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

 

PublicInvest Research Headlines - 27 Sept 2018

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Economy

US: Fed raises interest rates, sees at least three more years of growth. The US Federal Reserve raised interest rates and left intact its plans to steadily tighten monetary policy, as it forecast that the US economy would enjoy at least three more years of growth. In a statement that marked the end of the era of “accommodative” monetary policy, Fed policymakers lifted the benchmark overnight lending rate by a quarter of a percentage point to a range of 2.00% to 2.25%. The US central bank still foresees another rate hike in Dec, three more next year, and one increase in 2020. That would put the benchmark overnight lending rate at 3.4%, roughly half a percentage point above the Fed’s estimated “neutral” rate of interest, at which rates neither stimulate nor restrict the economy. (Reuters)

US: New home sales rebound in Aug, but trend softening. Sales of new US single-family homes rebounded in Aug after two straight monthly declines, but the underlying trend still pointed to a weakening housing market against the backdrop of rising mortgage rates and higher home prices. The Commerce Department said new home sales rebounded 3.5% to a seasonally adjusted annual rate of 629,000 units last month. July's sales pace was revised down to 608,000 units from the previously reported 627,000 units. (Reuters)

US: House sends Trump spending bill to avert government shutdown. The House sent President Donald Trump an USD853bn spending bill in an effort to avert an Oct. 1 partial shutdown of the US government and delay the next funding fight until after the Nov elections. The bill, passed Wednesday 361 to 61, provides funding through Dec. 7 for agencies including the departments of Homeland Security, State, Commerce and Justice and science agencies. (Bloomberg)

UK: Car output falls 13% in Aug. British car production fell by an annual 12.9% in Aug, the third consecutive drop in a row, due to model changeovers and preparations for new, tougher emissions rules, a car industry body said. Output stood at 89,254 units last month, driven down by a nearly 40% drop in production for domestic buyers compared with a 4% fall in exports, according to the Society of Motor Manufacturers and Traders. The tougher new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) became mandatory from the start of Sept, forcing certain carmakers to halt deliveries and change plans regarding some models that had yet to have re-certified for emissions. (Reuters)

UK: PM May challenges Trump with defense of multilateralism. British Prime Minister Theresa May called on world leaders in New York to reject nationalism and fight to preserve the multilateral system, challenging US President Donald Trump’s anti-globalism stance. May used her address at the United Nations General Assembly, chaired by Trump, to warn that “aggressive nationalism” could replace the rules based international order unless leaders revived public confidence in the current system. (Reuters)

UK: 'No-deal' Brexit could cost food retail industry USD12bn, according to Barclays study. Food retailers and suppliers could lose GNP9.3bn (USD12.2bn) as a result of new tariffs if Britain leaves the EU without a deal, a study commissioned by Barclays said. The prospect of a “no-deal” Brexit is in sharp focus after Prime Minister Theresa May said talks with EU leaders were at an impasse last week. The Barclays report said food and drink entering the UK from the EU would be subject to a new average tariff of 27%, significantly higher than the 3-4% levy that would be applied to non-food products. (Reuters)

Malaysia: Malaysian financial system to remain resilient, says BNM. Latest stress tests conducted by Bank Negara Malaysia affirm that the Malaysian financial system is expected to remain resilient under severe macroeconomic and financial strains. In its financial stability report, it said financial institutions currently maintain excess total capital buffers of RM135.9bn, which exceed regulatory minima, even under adverse scenarios. "The Bank remains vigilant of domestic and external developments that could affect domestic financial stability, including further tightening in global financial conditions that could lead to higher financial market volatility," it said. (StarBiz)

Markets

Texchem: Sells stake in Yoshinoya Hanamaru restaurants for RM5.29m. Texchem Resources plans to dispose of its entire 49% stake in Yoshinoya Hanamaru Malaysia SB (YHM), which operates the Yoshinoya Hanamaru Japanese casual fast food restaurants here, to Asia Yoshinoya International SB for RM5.29m cash. The proposal will enable the group to unlock the value of its investment as the anticipated returns from the investment into Yoshinoya have not met the group's expectations. Subsequent to the disposal, YHM will cease to be an associate company of Texchem. (The Edge)

LKL: Collaborates with FKS Medical Care to market medical device. LKL International has inked a collaborative memorandum of understanding (MoU) with FKS Medical Care SB to cooperate in the market development of Sanuwave Health Inc's dermaPACE, an advanced medical device used to treat acute and chronic wounds. Under the 2-year MoU, FKS will be responsible for introducing dermaPACE into Malaysia, and both FKS and LKL Advance Metaltech will cooperate together to promote and market the device in the country. (The Edge)

MAHB: Loses RM28m arbitration. Malaysia Airports Holdings (MAHB) has lost arbitration to Kuala Lumpur Aviation Fueling System SB (KAFS), which had sought a RM28.28m claim for alleged losses and damages pertaining to design changes under an airport facilities agreement (AFA) entered into on Sept 26, 2007. Its wholly-owned subsidiary Malaysia Airports (Properties) SB (MA Properties) has received the award from the Arbitral Tribunal in favour of KAFS in relation to the dispute. The award is only in respect of liability and the quantum will be decided by the Arbitral Tribunal in a separate proceeding at a later stage. (The Edge)

Hai-O: 1Q net profit down 38.5% on lower MLM, retail revenue. Hai-O Enterprise registered a reduced net profit of RM11m for the 1QFY19, 38.5% lower than RM17.87m a year ago, owing to lower multi-level marketing (MLM) and retail revenue. Revenue fell 35.7% to RM80.08m from RM124.54m a year ago. Although its wholesale division reported a 4% revenue increase mainly contributed by higher sales from patented medicine it was offset by the poorer performance in the MLM and retail divisions as revenue slumped 43.3% and 6.2% to RM58m and RM7.6m, respectively. (The Edge)

United Malacca: 1Q net loss widens to RM18.5m on lower CPO prices, FFB yield. United Malacca registers a higher net loss of RM18.49m for the 1QFY19 from RM316,000 a year ago, on lower production of fresh fruit bunches (FFB) but expects production to improve in the second half. Even so, it warned of challenges in the financial year owing to depressed crude palm oil (CPO) prices and the adoption of a new accounting framework. Revenue plunged 43% YoY to RM40m from RM70.33m. (The Edge)

Poh Huat: 3Q net profit dips on stiff competition, lower revenue in Vietnam. Poh Huat Resources Holdings recorded a 4.72% decline in net profit for its 3QFY18 to RM9.2m from RM9.66m a year ago, as its Vietnamese operations faced stiffer competition and lower sales. Despite higher contribution from its Malaysian operations, the group’s overall revenue declined 4.28% to RM145m in 3QFY18 from RM151.48m in 3QFY17. The Group product mix in Vietnam has, over recent quarters, shifted to the more affordable ranges resulting in lower sales value. (The Edge)

Market Update

The FBM KLCI might open lower after US Treasury yields sank, dragging down stocks, as the Federal Reserve raised rates for the third time this year on Wednesday. US equities had registered muted gains in morning trading and the S&P 500 index even rose 0.2% following the central bank’s rate rise, but falling Treasury yields dragged down interest rate sensitive financial stocks, with the broader index finishing the day down 0.3%. The Dow Jones Industrial Average fell 106.93 points, or 0.4%, to 26,385.28 and the Nasdaq Composite Index shed 17.11 points, or 0.2%, to 7,990.37. European markets were broadly higher, albeit with only modest gains ahead of the Fed meeting. The benchmark Stoxx Europe 600 rose 0.3%. Germany’s DAX 30 advanced by about 0.1% to 12,385.89, while France’s CAC 40 added 0.6% to 5,512.73. The UK’s FTSE 100 rose by less than 0.1% to end at 7,511.49.

Back home, the FBM KLCI index gained 3.40 points or 0.19% to 1,798.72 points on Wednesday. Trading volume increased to 2.21bn worth RM2.30bn. Market breadth was positive with 469 gainers as compared to 387 losers. The regional markets finished broadly higher today with shares in Hong Kong leading the region. The Hang Seng added 1.15% while China's Shanghai Composite rose 0.92% and Japan's Nikkei 225 tacked on 0.39%.

Source: PublicInvest Research - 27 Sept 2018

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