PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 20 Sep 2019, 10:03 AM


PublicInvest Research Headlines - 2 Oct 2018

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US: Construction spending shows slight uptick in August. With a jump in spending on public construction largely offset by a drop in spending on private construction, the Commerce Department released a report on Monday showing construction spending in the US ticked up by much less than expected in the month of August. The Commerce Department said construction spending inched up by 0.1% to an annual rate of USD1.319trn in August after rising by 0.2% to an upwardly revised USD1.317trn in July. Economists had expected construction spending to climb by 0.5% compared to the 0.1% uptick originally reported for the previous month. The modest increase in construction spending came as spending on public construction surged up by 2.0% to a rate of USD316.7bn in August from USD310.5bn in July. (RTT)

US: Manufacturing index pulls back off 14-year high in Sept. Partly reflecting supply chain issues, the Institute for Supply Management released a report on Monday showing a slightly bigger than expected slowdown in the pace of growth in the US manufacturing sector in the month of Sept. The ISM said its purchasing managers index fell to 59.8 in Sept from 61.3 in August, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to 60.3. The slightly bigger than expected decrease by the index came after it reached its highest level in over fourteen years in the previous month. (RTT)

EU: Euro zone worried Italy's deficit-boosting budget plan could revive crisis. Top euro zone officials warned Italy on Monday its plan to borrow billions of extra euros to fund spending pledges could tip the bloc back into crisis, vowing to pressure Rome to change course. Italy new eurosceptic government proposed on Thursday a budget that increases the deficit to 2.4% of GDP in 2019, tripling it in comparison with the plans of its predecessors. Markets reacted by dumping Italian debt, the second highest in the euro zone as a share of economic output after bailed-out Greece, as concerns spread about a renewed sovereign debt crisis, just three years after the Greek troubles nearly destroyed the single currency. (Reuters)

EU: Eurozone jobless rate near 10-year low. The euro area unemployment rate dropped to the lowest since Nov 2008, Eurostat reported Monday. The jobless rate fell to 8.1% in August from 8.2% in July. This was the lowest since Nov 2008. In the same period last year, the unemployment rate was 9%. The number of unemployed decreased 102,000 from previous month to 13.22m in August. Data showed that the youth unemployment rate came in at 16.6% versus 16.7% in July. The EU28 overall unemployment rate held steady at 6.8% in August but down from 7.5% in August 2017. This remains the lowest recorded in the EU28 since April 2008. (RTT)

EU: Eurozone manufacturing expands at slowest pace in 2 years. Eurozone manufacturing activity grew at the weakest pace in two years in Sept, final data from IHS Markit showed Monday. The factory Purchasing Managers' Index fell to 53.2, the lowest since Sept 2016, from 54.6 in August. The initial estimate was 53.3. Nonetheless, the sector expanded the current period of expansion to 63 months. Germany remained the best-performing among big-four nations, but growth here slid to its lowest in over two years. France saw a solid expansion, but the weakest in three months. (RTT)

UK: Mortgage approvals at 6-month high. UK mortgage approvals increased to a six-month high in August, the Bank of England reported Monday. The number of mortgages approved in August rose unexpectedly to 66,440 from 65,156 in July. The expected level was 64,500. Looking ahead, with house prices set to stay very high relative to incomes and interest rates rising, outlook for mortgage approvals is subdued, Hansen Lu, a property economist at Capital Economics, said. Secured lending increased GBP2.9bn versus GBP3bn rise in July, BoE said. At the same time, the increase in consumer credit accelerated to GBP1.1bn from GBP0.8bn a month ago. The annual rate came in at 8.1%, the lowest since August 2015. (RTT)

Japan: Manufacturing PMI steady at 52.5 in Sept. The manufacturing sector in Japan continued to expand at a steady pace in Sept, the latest survey from Nikkei revealed on Monday with a manufacturing PMI score of 52.5. That's unchanged from the previous month, and it remains well above the boom-or-bust line of 50 that separates expansion from contraction. Individually, output growth was sustained amid solid demand pressures. Input delivery times continued to lengthen sharply, while business confidence continued to sink. (RTT)

Malaysia: Manufacturing PMI climbs to 51.5 in Sept. The manufacturing sector in Malaysia continued to expand in Sept, and at a faster rate, the latest survey from Nikkei revealed on Monday with a manufacturing PMI score of 51.5. That's up from 51.2 in August, and it moves further above the boom-or-bust line of 50 that separates expansion from contraction. It also represents a 10-month high score for the index. Individually, Sept marked the strongest increase in manufacturing employment since July 2012. Also, input inflation jumped with the introduction of new SST. (RTT)


TM (Neutral, TP: RM3.83): Seeks to raise up to RM4bn via sukuk. Telekom Malaysia (TM) is seeking to raise up to RM4bn through the establishment of sukuk wakalah programmes to fund its capital expenditure and business operating requirements. It has lodged the proposal with the Securities Commission on Sept 28. The sukuk wakalah programmes would comprise Islamic commercial papers (ICPs) and Islamic medium term notes (IMTN) programmes. The ICP Programme and the IMTN Programme have respective tenures of seven and 30 years from the date of first issuance. (The Edge)

Prestariang (Neutral, TP: RM1.19): Gets one-year RM11.63m contract extension. Prestariang has secured a one-year contract extension by the Ministry of Education (MoE) to supply Microsoft software licences to all public higher education institutions under the Ministry for RM11.63m. The contract extension for the “Managing University Software as an Enterprise” (MUSE) programme commenced from July 3 this year and will continue until July 2, 2019. It is the third extension that the MoE has granted to Prestariang under the work scope since the contract was first announced in August 2011. (The Edge)

EA Technique: Seeks US$21.7m claims from MMHE. EA Technique (M) is seeking USD21.74m in claims from Malaysia Marine Heavy Engineering SB (MMHE) over a dispute concerning a contract to convert a vessel into a floating storage and offloading (FSO) facility. The contract was entered into between the two companies on June 9, 2015. It has commenced arbitration against MMHE and a notice of arbitration dated Sept 27 was filed with the director of Asian International Arbitration Centre. (The Edge)

AppAsia: Announces RM24m capital reduction to pare down losses. AppAsia is undertaking a share capital reduction of RM24m with the aim of eliminating its accumulated losses, which amounted to RM23.98m as at June 30. Including estimated expenses from the exercise, AppAsia expects its accumulated losses to be reduced to RM95,577. As at Sept 27, AppAsia has an issued share capital of RM50.46m comprising 345.25m shares. The company has no treasury shares, but has 13.42m 1-1 share issuance scheme options, expiring on March 12, 2020. (The Edge)

Sealink: Sells Miri land for RM26.5m, expects RM19m gain. Sealink International is selling a 1.94ha land in Miri to an indirect wholly-owned unit of Cahya Mata Sarawak for RM26.5m. Sealink SB inked an agreement with CMS Cement Industries SB, which is acquiring the land located 5.2km northeast of Miri city, in Piasau. Specifically, it is an industrial purposes land situated at Piasau Industrial Estate with the land tenure expiring on June 11, 2036 which is accessible from three directions via tar-sealed roads. (The Edge)

Dataprep: Bags RM14.2m contract from RHB Bank. Dataprep Holdings has secured a contract worth RM14.2m from RHB Banking Group to provide desktop support and information technology helpdesk management services. Its subsidiary Solsis (M) SB had secured the contract for duration of three years from Oct 1, 2018 until Sept 30, 2021. The contract is expected to contribute positively to its earnings throughout the contract period. However, the contract was not expected to have any material effect on its net assets for the financial year ending March 31, 2019. (The Edge)

Market Update

The FBM KLCI might open with a positive bias as the price of oil jumped to the highest level in nearly four years overnight amid uncertainty over supply constraints from US President Donald Trump’s sanctions on Iran. Brent crude, the international benchmark, breached $85 for the first time since November of 2014 and ended the day up nearly 3 percent at $85.16. The main US marker, West Texas Intermediate, rose 3.3 percent to $75.64. On Wall Street, the S&P 500 rose 0.4% to 2,924, as it neared its intraday high of 2,940.91 touched last month. The tech-heavy Nasdaq lost steam and ended the day down 0.1%. The Dow Jones Industrial Average gained 192.90 points, or 0.7%, to 26,651.21. Across the Atlantic, the Stoxx Europe 600 rose 0.4% to 384.64, after Friday’s loss of 0.9% spurred by concerns over Italy. The index gained 0.9% for the quarter. Germany’s DAX 30 rose 0.9% to 12,354.26, while France’s CAC 40 gained 0.4% to 5,516.73. The UK’s FTSE 100 lagged, mostly unchanged at 7,501.89.

Back home, the FBM KLCI index lost 0.69 of a point or 0.04% to 1,792.46 points on Monday. Trading volume increased to 2.40bn worth RM1.63bn. Market breadth was negative with 427 gainers as compared to 455 losers. The regional stock markets were mixed, with markets in China starting a weeklong holiday and Hong Kong closed, leaving equities to trade on local factors over broader themes. Japan’s Nikkei was up 0.5% as the dollar continues to push higher against the yen, hitting levels not seen since last November, and helping Japan’s exporters. Korea’s Kospi quickly gave up initial gains and ended just in the red, with Samsung down 0.2%, off its worst levels of the session by the close. Most other Asian markets, such as Taiwan and Singapore managed slim gains.

Source: PublicInvest Research - 2 Oct 2018

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