PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 20 Jun 2019, 10:04 AM


PublicInvest Research Headlines - 5 Oct 2018

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US: Consumer comfort at 17-year high amid record GOP sentiment. US consumer sentiment advanced to a new 17-year high on record confidence among Republicans and broad improvement across economic, financial and purchasing moods, the Bloomberg Consumer Comfort Index showed Thursday. Weekly index edged up to 61.6, highest since Dec. 2000, from 61.2. Gauge tracking views of economy advanced to a 17-year high of 65.6 from 64.6. Measure of buying climate ticked up to an 18- year high of 53.6 from 53.5. The fourth straight improvement in confidence comes amid signs that the world’s largest economy continues to grow at a solid pace, with stocks hitting fresh records. (Bloomberg)

US: Inflation is the missing piece from Treasury yields, Fed liftoff. With the Federal Reserve intent on monetary tightening, benchmark Treasury yields are finally taking flight to multi-year highs. Yet absent from this equation is any indication of inflation becoming unmoored. As long-term Treasury yields broke well past recent ranges, traders and economists alike observed that improved growth prospects, rather than an acceleration in inflation, propelled the move. Signs that the US economy remains robust were evident in data Wednesday showing healthy gains in private job creation and America’s service industry. Fed Chairman Jerome Powell, for his part, heaped praise on recent economic performance, sending a strong signal that the central bank would continue raising rates to the point of eventually restricting growth. (Bloomberg)

US: Jobless claims drop more than expected to 207,000. With the release of the closely watched monthly jobs report looming, the Labor Department released a report on Thursday showing a bigger than expected drop in first-time claims for US unemployment benefits in the week ended Sept 29th. The Labor Department said initial jobless claims fell to 207,000, a decrease of 8,000 from the previous week's revised level of 215,000. Economists had expected jobless claims to edge down to 213,000 from the 214,000 originally reported for the previous week. Meanwhile, the report said the less volatile four-week moving average inched up to 207,000, an increase of 500 from the previous week's revised average of 206,500. (RTT)

US: Small-business pay gains at record as firms fight for staff. A record share of small-business owners in the US say they’re raising overall pay to attract workers and retain employees amid one of the tightest labor markets in decades. A net 37% of firms report offering higher compensation in Sept, surpassing the previous record of 35% in May, according to the monthly jobs report from the National Federation of Independent Business released Thursday. “There is extraordinary competition for workers in this historically tight labor market,” NFIB President Juanita Duggan said in a statement released with the data, citing tax cuts and regulatory overhauls as reasons for greater confidence among owners. “Small business owners are investing more in their employees to attract and keep qualified workers.” (Bloomberg)

US: Government interest payments just exceeded Belgium’s output. US government interest payments surpassed total economic output from Belgium in the fiscal year ending Sept 30, underscoring the growing burden of America’s debt load amid wider budget deficits and climbing borrowing costs. The government shelled out USD523bn on interest in fiscal year 2018, the highest on record and 14% more than the prior 12-month period, according to data published by the Treasury Department Thursday. To be sure, the figures represent gross rather than net interest payments. The government in some cases pays interest to itself, as for example the Federal Reserve owns Treasury securities. Still, the rising debt burden has raised alarm bells in Washington, where the Congressional Budget Office in April warned lawmakers that the government is on track to spend more on interest than national defense by fiscal 2023. (Bloomberg)

EU: ECB officials take gradual road to exit citing risks to growth. European Central Bank officials stressed they will only gradually scale back extraordinary monetary stimulus as they try to nudge inflation higher amid rising political and trade risks. “A bit of time is still needed for inflation to stabilize sustainably,” Executive Board member Benoit Coeure said. “There are still downward pressures on prices which are linked to unemployment in particular. So monetary policy should remain accommodative and interest rates should remain low to ensure the return of inflation toward 2%.” With large-scale asset purchases set to end this year, officials are careful to highlight that they’ll take a measured approach in normalizing policy. (Bloomberg)

EU: ECB gets boost as EU court adviser backs legality of QE program. The European Central Bank didn’t overstep its mandate by setting up a quantitative-easing program to stave off deflation, an adviser to the European Union’s highest court said in the wake of a series of challenges arguing the tool clashed with the prohibition of monetary financing. “The program does not infringe the prohibition of monetary financing and does not exceed the powers of the ECB,” Advocate General Melchior Wathelet of the EU Court of Justice said in a non-binding opinion on Thursday. The Luxembourg-based EU judges follow such advice in a majority of cases. (Bloomberg)

UK: Young Brits less likely to own homes or save money, study shows. Young people in the UK are now less likely to own a home or to set aside money for savings, making it difficult for them to achieve financial stability. The proportion of homeowners between the ages of 22 and 29 fell 10 percentage points to 27% in the decade to 2017, the ONS said in a report on Thursday. More than a half of Britons in that age group had no money in savings accounts in the three years to 2016, compared with 41% in the comparable period six years before. The findings may add to concerns about housing in UK, and London in particular, where affordability constraints are weighing on the market even as property prices decline ahead of Britain’s exit from the European Union. (Bloomberg)


Maybank: Gets MAS approval to locally incorporate CFS business in Singapore. The Monetary Authority of Singapore (MAS) has granted Maybank the approval to locally incorporate its Community Financial Services (CFS) business in Singapore. Maybank said MAS has issued a full banking licence with Qualifying Full Bank privileges to Maybank Singapore Limited (MSL), its wholly owned subsidiary incorporated in the republic. (Bernama)

FGV, Eonmetall: FGV grants Eonmetall build, operate, transfer rights to six plants. Eonmetall Group has secured the exclusive rights from a unit of FGV Holdings to build palm fibre oil extraction plants at six selected mill locations, then own and operate them for a concession period of 10 years, before transferring their ownership to the FGV unit. The build, own, operate and transfer (BOOT) arrangement was entered into yesterday between Eonmetall's wholly owned unit Eonmetall Carotene Oil SB (ECOSB) and FGV's indirect, wholly-owned Felda Palm Industries SB (FPISB). The two companies will ink six separate agreements to formalise the BOOT arrangement for all the plants at the designated mills, Eonmetall said. (The Edge)

DBE Gurney: Shareholders told to accept takeover offer. Minority shareholders of DBE Gurney Resources have been advised to accept its largest shareholder Doh Properties Holdings SB's takeover offer for the rest of the shares in the Perak-based poultry firm for 3.5 sen per offer share and one sen per offer warrant. Mercury Securities SB said it is of the view that Doh Properties’ offer to acquire DBE is “fair” and “reasonable”. As at Sept 28, Doh Properties held a 34.91% stake in DBE. (The Edge)

MBM Resources: Muhammad Iqbal is new CEO. Automotive parts maker MBM Resources has appointed Dr Muhammad Iqbal Shaharom as its new president cum CEO with immediate effect. Muhammad Iqbal, 60, has been the acting CEO and president since July 2. He was appointed as MBM vice-president on Jan 16 and has previously served at various capacities of top management positions in DRB-Hicom Bhd, Chery Automobile and Naza Group, the group said. Presently, he is also the MD of Daihatsu (Malaysia) SB, a 51.5%-owned subsidiary of MBM Resources. (The Edge)

Aeon Credit: Lifts interim payout as 2Q profit rises. Aeon Credit Service (M) has declared a higher interim dividend payout after net profit in the 2QFY19 jumped 13% to RM80.6m on higher transactions and financing volume. EPS rose to 31.03 sen from 27.3 sen, the company said. It has declared a higher interim dividend of 22.25 sen per share, to be paid out to shareholders on Nov 8. The improved peformance, however, masked underlaying faced by the company challenges. Profit before tax in the 2Q had declined to RM107.2m compared with RM131.8m made in 1Q. (StarBiz)

Auto (Neutral): New national car to roll out before 2020. The new national car project is expected to roll-out its first model before 2020, said Entrepreneur Development Minister Mohd Redzuan Yusof. He said the semi-autonomous car was planned to enter the global market and would cater to demand from young people. “We are now short-listing two to three partners to participate in this project, including Silterra and CTRM, and expect (the selection) to be concluded by year-end. “The prototype for this (car) model is expected to be ready by early next year,” he said. Mohd Redzuan said the project would be fully funded by the private sector with the help of several government ministries. (Bernama)

Market Update

The FBM KLCI might end the week lower as a severe bond sell-off that began on Wall Street rippled out across global markets on Thursday, triggering the biggest US equity decline in nearly four months. Bonds yields have been rising on optimism about the world economy and expectations that central banks will tighten policy, but fears that rates could climb high enough to restrain growth hit stocks in Europe, the US and Asia. On Wall Street, the Dow Jones Industrial Average fell 200.91 points, or 0.8%, to 26,627.48, but had been down by as many as 357 points, or 1.3%, at the session’s lows. The S&P 500 lost 23.90 points, or 0.8%, to 2,901.61, and the Nasdaq Composite Index skidded 145.57 points to 7,879.51, a drop of 1.8% that had some indications of panic-like selling. The Stoxx Europe 600 dropped 1.1% to close at 379.68, after closing up 0.5% on Wednesday. Germany’s DAX 30 slipped less severely than its peers, down 0.4% to finish at 12,244.14, after reopening from a holiday on Wednesday. Meanwhile, France’s CAC 40 tumbled by 1.5% to 5,410.85 and the FTSE 100 index dropped 1.2% to 7,418.34.

Back home, the FBM KLCI index lost 6.19 points or 0.34% to 1,790.11 points on Thursday. Trading volume decreased to 2.06bn worth RM2.45bn. Market breadth was negative with 317 gainers as compared to 528 losers. In the region, Japan’s Nikkei gave up early gains to finish down nearly 0.6% and Hong Kong’s Hang Seng Index was down 1.7%, led by Chinese companies. Markets in mainland China remained closed for a weeklong holiday.

Source: PublicInvest Research - 5 Oct 2018

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