PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 23 Sep 2019, 9:36 AM


PublicInvest Research Headlines - 8 Oct 2018

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US: Commerce's Ross eyes anti-China 'poison pill' for new trade deals. US Commerce Secretary Wilbur Ross signaled on Friday that Washington may flex its muscle with additional trading partners in order to exert pressure on China to open its markets, saying that a “poison pill” provision in the recently completed pact with Canada and Mexico could be replicated. Ross said that the provision was “another move to try to close loopholes” in trade deals that have served to “legitimize” China’s trade, intellectual property and industrial subsidy practices. The US is now in the early stages of talks with Japan and the European Union to lower tariff and regulatory barriers and try to reduce large US trade deficits in autos and other goods. (Reuters)

US: Payrolls and wages cool while jobless rate hits 48-year low. US hiring cooled in Sept by more than forecast, wage gains eased slightly and the jobless rate fell to a 48-year low, illustrating a tight labour market, as well as the impact of Hurricane Florence. Nonfarm payrolls rose 134,000 after a 270,000 gain the prior month that reflected a large upward revision, a Labor Department report showed Friday. (Bloomberg)

US: Trade deficit widens as imports climb and exports fall. Reflecting an increase in imports and a decrease in exports, the Commerce Department released a report on Friday showed the US trade deficit widened in the month of Aug. The Commerce Department said the trade deficit widened to USD53.2bn in Aug from a revised USD50.0bn in July. Economists had expected the trade deficit to widen to USD53.5bn from the USD50.1bn originally reported for the previous month. The wider trade deficit came as the value of imports climbed by 0.6% to USD262.7bn, while the value of exports slid by 0.8% to USD209.4bn. (RTT)

US: Employment rises much less than expected in Sept. Employment in the US rose by much less than expected in the month of Sept, according to a report released by the Labor Department on Friday. The Labor Department said non-farm payroll employment climbed by 134,000 jobs in Sept, while economists had expected an increase of about 185,000 jobs. However, the report also showed a significant upward revision to the pace of job growth in Aug, with employment spiking by 270,000 jobs compared to the originally reported jump of 201,000 jobs. (RTT)

US: Consumer credit jumps more than expected in Aug. Consumer credit in the US jumped by much more than expected in the month of Aug, according to a report released by the Federal Reserve on Friday. The Fed said consumer credit surged up by USD20.1bn in Aug after climbing by USD16.6bn in July. Economists had expected consumer credit to increase by USD15.0b. The report said non-revolving credit such as student loans and car loans climbed by USD15.3bn in Aug after increasing by USD15.2bn in the previous month. Revolving credit, which largely reflects credit card debt, also rose by USD4.8bn in Aug after inching up by USD1.4bn in July. (RTT)

EU: German factory orders rebound on foreign demand. Germany's factory orders rebounded in Aug as the decline in domestic demand was fully offset by robust foreign demand. Factory orders grew a more than-expected 2% MoM in Aug, reversing a 0.9% drop in July, figures published by Destatis revealed Friday. Orders were forecast to rise 0.8%. Domestic orders fell 2.9%, while foreign orders increased 5.8% in Aug on the previous month. Within foreign demand, new orders from the euro area were down 2.2%, but orders from other countries increased 11.1%. (RTT)

Japan: Abe says would welcome Britain to TPP. Japan would welcome Britain “with open arms” into a Trans Pacific trade pact, Prime Minister Shinzo Abe said. Abe also said he hoped both sides in Britain’s deadlocked Brexit negotiations with the European Union (EU) would be able to reach a compromise to avoid a disorderly Brexit. British Trade Minister Liam Fox said in July he would consult the public about a possible bid to join the Pacific trade group that includes Canada, Australia and Mexico, once Britain leaves the EU. (Reuters)

China: Slashes banks' reserve requirements as trade war imperils growth. China’s central bank on Sunday announced a steep cut in the level of cash that banks must hold as reserves, stepping up moves to lower financing costs and spur growth amid concerns over the economic drag from an escalating trade dispute with the US. The reserve requirement cut, the fourth by the PBOC this year, comes as Beijing has pledged to expedite plans to invest billions of dollars in infrastructure projects as the economy shows signs of cooling further, with investment growth slowing to a record low. (Reuters)


SP Setia (Outperform, TP: RM4.50), SD Property (Outperform, TP: RM1.90): Deadline to finalise RM8.8b Battersea deal extended to Dec 31. The deadline to finalise a proposed GBP1.61bn (RM8.8bn) deal involving Phase Two of London’s Battersea Power Station redevelopment has been extended to Dec 31 this year, according to both S P Setia and Sime Darby Property (SimeProp). Permodalan Nasional (PNB) and the Employees’ Provident Fund (EPF) had in Jan proposed to acquire commercial assets worth GBP1.61bn in Battersea Phase 2 Holding Co, a unit in Battersea Project Holding Co Ltd (BPH). S P Setia and SimeProp each holds 40% in BPH. (The Edge)

Willowglen: Bags RM139.36m contract for Gemas-JB electrified railway project. Computer integrated systems design company Willowglen MSC secured a RM139.4m contract in relation to the Gemas-Johor Bahru electrified double-track project. Willowglen said its wholly-owned subsidiary, Willowglen (M) SB, was awarded the contract by Syarikat Pembenaan Yeoh Tiong Lay SB for the construction and maintenance of the communication systems for the electrified railway project. The work is expected to be completed by April 2021. (The Edge)

Tien Wah: To dispose of Australian land for RM65m. Tien Wah Press Holdings’ Australian unit is disposing of a parcel of land in New South Wales, along with a building erected on it, for AUD22.0m (RM65.2m). The group said the property is held by Anzpac Services (Australia) Pty Ltd, which is a wholly-owned unit of Tien Wah’s 51%- owned subsidiary Max Ease International Ltd. The buyer is CEA Property Pty Ltd, Tien Wah said. (The Edge)

MHB: Files USD30.2m claims against EA Technique. Malaysia Marine Heavy Engineering Holdings (MHB) filed a payment claim of USD30.2m (RM125.4m) today, against EA Technique (M). This comes three days after EA Technique announced it has commenced arbitration against MHB for USD21.7m at the Asian International Arbitration Centre. MHB said its action was filed under the Construction Industry Payment and Adjudication Act 2012. The two came into loggerheads amid a contract to convert a vessel into a floating storage and offloading (FSO) facility, which the two companies inked in 2015. (The Edge)

Zelan: Gets RM4.8m claim from Chinese power equipment supplier. Zelan said it has been slapped with a USD1.15m (RM4.8m) claim by Chinese power equipment maker Dongfang Electric Corp in relation with a coal-fired steam power plant project in Indonesia. Zelan said its wholly-owned unit Zelan Holdings (M) SB (ZHSB) received a notice of arbitration in respect of disputes and differences arising from a 2014 agreement between ZHSB and Dongfang. (The Edge)

Sapura Industrial: Signs MoU to form JV. Sapura Industrial has signed a memorandum of understanding with Wada Aircraft Technology Co Ltd and Aero Inc to form a joint-venture company for the manufacture and assembly of aerospace components, tooling, jigs and fixtures. The joint-venture company (JV-co) will cater to the aerospace industry in Malaysia and will synergistically combine the experience, expertise, resources, customer reach and deliverability of the three companies. (StarBiz)

Market Update

The FBM KLCI might open lower today after global stock markets slumped on Friday and US Treasury yields marched higher, as investors digested a mixed US jobs report. While the number of jobs created in the US in September missed forecasts, the overall unemployment rate was better than expected and average earnings rose 2.8 percent, exactly in line with economists’ predictions. Upward revisions to previous months’ numbers also buoyed reaction. The S&P 500 sank 0.8% on Friday, on course for its worst week since the end of June. The Dow Jones Industrial Average fell 1% and the Nasdaq Composite dropped 1.6%. In Europe, the benchmark Stoxx Europe 600 was 0.9% weaker, extending Thursday’s 1.1% drop. Germany’s DAX 30 dropped 1.1% to close at 12,111.90, while France’s CAC 40 fell 1% to 5,359.36. The U.K.’s FTSE 100 slid 1.4% to 7,318.54.

Back home, the FBM KLCI index lost 12.96 points or 0.72% to 1,777.15 points on Friday. Trading volume decreased to 2.05bn worth RM1.89bn. Market breadth was negative with 265 gainers as compared to 639 losers. In the region, the Nikkei 225 led the Hang Seng lower. They fell 0.80% and 0.19% respectively.

Source: PublicInvest Research - 8 Oct 2018

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