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Author: PublicInvest   |   Latest post: Thu, 21 Mar 2019, 10:17 AM

 

PublicInvest Research Headlines - 28 Sept 2018

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Economy

Global: WTO cuts global trade growth forecast. The World Trade Organization on Thursday slashed its forecast for the growth in the global merchandise trade volume for this year and next year, citing heightened trade tensions. The Geneva, Switzerland-based WTO cut the global trade growth forecast for this year to 3.9% from 4.4% predicted in April. The pace of growth in the global trade was forecast to slow to 3.7% next year. "While trade growth remains strong, this downgrade reflects the heightened tensions that we are seeing between major trading partners," WTO Director General Roberto Azevêdo said. (RTT)

US: Pending home sales tumble more than expected in August. Pending home sales in the US dropped by much more than expected in the month of August, according to a report released by the National Association of Realtors on Thursday. NAR said its pending home sales index tumbled by 1.8% to 104.2 in August after falling to 106.1 in July. Economists had expected pending home sales to fall by 0.4%. With the much bigger than expected monthly decrease, pending home sales in August were down by 2.3% compared to the same month a year ago. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. (RTT)

US: Economic growth unrevised at 4.2% in 2Q. A report released by the Commerce Department on Thursday showed the pace of US economic growth in the 2Q was unrevised from the previous estimate. The report said gross domestic product increased at an annual rate of 4.2% in the 2Q, unchanged from the estimate released last month. The unrevised growth also matched economist estimates. The unrevised reading on GDP growth came as a downward revision to private inventory investment was offset by small upward revisions to state and local government spending, consumer spending, non-residential fixed investment, exports, and residential fixed investment. The Commerce Department also said imports, which are a subtraction in the calculation of GDP, were revised down slightly. (RTT)

US: Weekly jobless claims rebound slightly more than expected. First-time claims for US unemployment benefits showed a modest rebound in the week ended Sept 22nd, according to a report released by the Labor Department on Thursday. The report said initial jobless claims rose to 214,000, an increase of 12,000 from the previous week's revised level of 202,000. Economists had expected jobless claims to rise to 210,000 from the 201,000 originally reported for the previous week. The slightly bigger than expected increase came after jobless claims hit their lowest level since Dec of 1969 in the previous week. The Labor Department also said the less volatile four-week moving average inched up to 206,250, an increase of 250 from the previous week's revised average of 206,000. (RTT)

EU: German inflation highest in nearly 7 years. Germany's consumer price inflation accelerated more-than-expected in Sept to its highest level in nearly seven years, initial estimates from the Federal Statistical Office showed Thursday. The consumer price index rose 2.3% YoY following a 2% increase, each in July and August. Economists had expected the rate to remain unchanged. The latest CPI inflation rate was the highest since Nov 2011, when it was 2.4%. Headline inflation has held above the ECB's "below, but close to 2%" target for five months in a row. Earlier this week, ECB President Mario Draghi warned that the underlying inflation in the euro area is likely to see a relatively vigorous pick-up in underlying inflation. The hot and dry weather was largely to blame for the pick-up in inflation. Energy inflation accelerated to 7.7% from 6.9% and food inflation climbed to 2.8% from 2.5%. (RTT)

EU: Eurozone economic confidence at 15-month low. Eurozone economic confidence weakened further in Sept, to a 15-month low, on trade protectionism and political uncertainty, survey data from the European Commission showed Thursday. The economic sentiment index dropped more-than-expected to 110.9 in Sept from 111.6 in August. The indicator has decreased for the ninth straight month to reach its lowest since June 2017. The expected score was 111.2. Sept's fall in the economic sentiment adds to the evidence that economic growth is slowing, Jack Allen, an economist at Capital Economics, said. This slowdown isn't sharp enough to deter the ECB from ending its asset purchases this year, but it supports the bank's cautious approach to monetary tightening, Allen noted. (RTT)

Japan: Unemployment rate 2.4% in August. The jobless rate in Japan came in at a seasonally adjusted 2.4% in August, the Ministry of Internal Affairs and Communications said on Friday - beneath expectations for 2.5%, which would have been unchanged from the previous month. The job-to-applicant ratio was 1.63 - unchanged and matching forecasts. The number of employed persons in August 2018 was 66.82m, an increase of 1.09m or 1.7% on year. The number of unemployed persons in August 2018 was 1.70m, a decrease of 190,000 or 10.1% on year. (RTT)

Markets

Daya Materials (Neutral, TP: Under Review): Bags RM19.98m factory project. Daya Materials has bagged a RM19.98m contract to build a factory and warehouse in Seberang Perai Tengah, Penang. It said the project will be for a period of 10 months, to start on Oct 9 and be completed by or before Aug 9, 2019. (The Edge) Comments: The securing of this contract is yet another indication of the Group's capabilities despite its rather unfortunate categorization as a PN17 company owing to past difficulties, a business of which it has since disposed. Earnings contribution from this contract will not be consequential considering the Group only owns 51% in the subsidiary, but is undoubtedly positive. Our valuation continues to be withheld pending release of its regularization plan, but with Neutral call unchanged.

Tropicana: Enters JV to develop 2 parcels of land in Selangor. Tropicana Corp is going to jointly develop two plots of land it owns in Selangor into a residential development, with two other parties. Its wholly-owned unit Tropicana Harapan SB (THSB), which holds the title to the plots, together with THSB's unit Vivascape SB, inked a JV agreement with Matrimont Development SB for the partnership. Vivascape will serve as the JV Company for the development. Following the agreement, Matrimont will take up a 49% stake in Vivascape and THSB will hold the remainder 51%. (The Edge)

Harrisons: Inks deal for Famous Amos Singapore buy. Harrisons Holdings (M) has confirmed its venture into the retail business in Singapore via the acquisition of the Famous Amos cookies business there for SGD5.7m. Its indirect 51%-owned subsidiary Famous Food Co Pte Ltd (FFC) has entered into a sales and purchase agreement with Shaikh Esa Taha Mattar and Yeo Geok Choe to acquire Famous Amos Chocolate Chip Cookie Singapore Pte Ltd (Amos), which runs the Famous Amos retailing business in Singapore. (The Edge)

Hiap Teck: Narrows 4Q loss on lower operating costs. Steelmaker Hiap Teck Venture narrowed its net loss to RM19.98m in the 4Q ended July 31, 2018, from RM137.87m a year earlier, due to lower operating costs. Revenue came in 42.5% higher at RM325.32m, from RM228.28m previously, underpinned by higher sales across all divisions. The trading division reported a 58% increase in revenue to RM157.61m, from RM99.44m a year ago, whilst the manufacturing segment’s revenue rose 28%. (The Edge)

Malaysia Smelting: Ink MoU to unlock prime land in Butterworth. Malaysia Smelting Corp (MSC) has teamed up with its parent, The Straits Trading Company Ltd, to jointly explore options to unlock the value of land owned by both parties in Butterworth, Penang. The collaboration was effected via a memorandum of understanding (MoU) between its wholly-owned subsidiary MSC Properties SB and Straits Trading, which owns 54.8% of MSC. (The Edge)

Kim Loong: 2Q profit slumps on lower FFB output, palm oil prices. Kim Loong Resources’ net profit more than halved to RM12.01m in the 2QFY19, from RM26.26m in the corresponding quarter last year, due to lower fresh fruit bunches (FFB) production and palm oil prices. Revenue fell 19% to RM210.2m, from RM260.46m a year ago. The company's net profit for the 1HFY19 fell 36% to RM32.14m from RM49.99m a year ago. (The Edge)

Market Update

The FBM KLCI might open flat as US stocks faded in the New York afternoon on Thursday having rebounded strongly earlier in the day as investors digested the Federal Reserve’s message of continued gradual interest rate increases predicated on strength in the American economy. The S&P 500 rose 0.3% on the day, regaining ground after four straight sessions of declines. The Dow Jones Industrial Average climbed 0.2% and the tech-heavy Nasdaq Composite moved 0.7% higher. European stocks trended upwards, with the Euro Stoxx 50 and FTSE 100 gaining 0.5%, and Frankfurt’s Xetra Dax up 0.4%.

Back home, the FBM KLCI index lost 0.08 of a point or 0.00% to end at 1,798.64 points on Thursday. Trading volume decreased to 1.99bn worth RM2.05bn. Market breadth was negative with 359 gainers as compared to 503 losers. The regional markets finished lower with shares in Japan leading the region. The Nikkei 225 lost 0.99% while China's Shanghai Composite gave away 0.54% and Hong Kong's Hang Seng was lower by 0.36%.

Source: PublicInvest Research - 28 Sept 2018

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