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Author: PublicInvest   |   Latest post: Mon, 22 Jul 2019, 10:32 AM

 

PublicInvest Research Headlines - 26 Oct 2018

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Economy

US: Business spending on equipment cooling; goods trade deficit rises. US business spending on equipment appeared to have remained slow in Sept and the goods trade deficit widened further as rising imports outpaced a rebound in exports, suggesting economic growth moderated in the third quarter. But the growth pace in the last quarter was probably solid, with other data on Thursday showing gains in both wholesale and retail inventories last month. A tightening labor market, which is steadily lifting wage growth, is also supporting the economy. The Commerce Department said orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dipped 0.1% last month amid weakening demand for fabricated metals and electrical equipment, appliances and components. (Reuters)

US: Pending home sales rebound with 0.5% increase in Sept. Contracts to buy previously-owned US homes rose for the first time in three months, indicating that the recent market slump may be starting to stabilize, National Association of Realtors data showed. The report showed declines in bookings for electrical equipment, appliances and components, while orders for computers and electronic products were unchanged. Categories with gains included motor vehicles and parts, as well as machinery. Uncertainty over trade is already cutting into companies’ expected profits and expansion plans, making it a risk to the pace of economic growth. Companies are coping with higher prices for steel and aluminium, and some firms cite tariffs as an investment and growth concern. (Bloomberg)

EU: ECB sticks to plan to curb stimulus even on darker outlook. The ECB still intends to cap its bond-buying by year-end and leave room for an interest-rate increase late next year, even amid mounting signs that the euro-area economy is wilting under global pressures. The Frankfurt-based institution said it will buy EUR15bn (USD17bn) of bonds a month through Dec, with a final decision to end the program contingent on incoming information. Policy makers reiterated that interest rates will remain at their present record lows “at least through the summer” of 2019. (Bloomberg)

EU: ECB's Villeroy says inflation still firming, labour market tightening. A drop in unemployment in the euro zone as well as rising wages is giving the ECB’s increasing confidence inflation is on track to reach its objective, ECB policymaker Francois Villeroy de Galhau said. “Our outlook for inflation is still firming. There are increasing signs that the labour market is tightening and nominal wage growth is picking up,” Villeroy, who is also governor of the Bank of France, told a conference. (Reuters)

UK: May invites 120 business leaders to discuss Brexit. UK Prime Minister Theresa May invited 120 business leaders to a Brexit question and answer session next week to update them on her strategy for unblocking the stalled negotiations with the EU. With time running out to secure a deal, business groups are desperate for certainty over the kind of trade terms the divorce will deliver. In particular, chief executive officers want reassurances that a 21-month transition period following Britain’s departure from the bloc in March will be secured. If the UK and the EU fail to strike a withdrawal agreement, there will be no formal transition period to cushion the impact of Brexit. (Bloomberg)

China, Japan: Japan’s Abe arrives in China vowing to lift ties to ‘new level’. Japanese Prime Minister Shinzo Abe arrived in Beijing on Thursday, seeking to further cement a recovery in relations with China that were wracked by a territorial dispute six years ago. In the first official visit in seven years, Abe is first set to mark the 40th anniversary of a peace and friendship treaty alongside Premier Li Keqiang, while on Friday he’ll hold formal talks with both Li and President Xi Jinping. The trip takes place as Asia’s two largest economies come under pressure from US President Donald Trump over what he has called unfair trade practices. (Bloomberg)

Japan: Tokyo overall CPI climbs 1.5% on year in Oct. Overall consumer prices in the Tokyo region were up 1.5% on year in Oct, the Ministry of Internal Affairs and Communications said. That was in line with expectations and up from 1.3% in Sept. Core CPI, which excludes volatile food prices, advanced an annual 1.0% - unchanged and in line with expectations. Individually, prices for food, housing, fuel, clothing, medical care, transportation, education and recreation all were higher. On a monthly basis, both overall and core CPI for Tokyo were up 0.1%. (RTT)

Markets

Cypark (Neutral, TP: RM2.45): Proposes one-for-two bonus issue. Cypark Resources has proposed the issuance of one bonus share for every two existing shares held at an entitlement date to be determined later. The group said assuming that all of the 14.5m outstanding employee share option scheme options are exercised prior to the entitlement date, 157.2m bonus shares will be issued. This will result in an enlarged issued share capital of up to 471.5m shares. (The Edge)

Selangor Properties: Wen family to take private at RM5.70 per share. The Wen family, which holds a 68.23% stake in Selangor Properties, is looking to take the company private at RM5.70 per share. The privatisation will be done through a proposed selective capital reduction and repayment exercise (SCR). Selangor Properties said it received a letter from its major shareholder Kayin Holdings SB, which is the vehicle of the Wen family, requesting for the company to undertaken an SCR. (The Edge)

Eita Resources: Secures second underground cable contract from TNB this week. Eita Resources’ 60%-owned subsidiary has secured an underground cable works contract from Tenaga Nasional (TNB) worth RM48.8m. Eita Resources said the letter of acceptance was received by its subsidiary Transsystem Continental SB to undertake the 132kV double circuit loop in and loop out underground cable works from the Transmission Main Intake (or Pencawang Masuk Utama [PMU] of Gelugor to PMU Farlim and into PMU Datuk Keramat in Penang. (The Edge)

CCM Duopharma: Foray into stemcell via Korea's SCM Lifescience stake. CCM Duopharma Biotech (CCM Duopharma) has bought a 5.8% stake in South Korea's SCM Lifescience Co., Ltd, which specialises in stem cell therapeutics, for RM20.24m. CCM Duopharma said this marked its foray into regenerative medicine. It also entered into an exclusive marketing and commercialisation deal with SCM. (StarBiz)

FGV: Unit commences arbitration against Twin Wealth for outstanding sum of USD13.3m. FGV Trading SB, a wholly-owned subsidiary of FGV Holdings, has commenced arbitration proceedings against Twin Wealth Macao Commercial Offshore Ltd for outstanding payments of USD13.3m (RM55.2m) under various palm olein contracts. FGV Trading is alleging Twin Wealth had only made part payments to it for its bulk purchase of the refined, bleached and deodorised palm olein last year. (The Edge)

Perak Corp, Only World Group: Scrap collaboration in struggling theme park. Perak Corp and Only World Group Holdings (OWG) have scrapped plans to co-manage and co-operate in the floundering Movie Animation Park Studios (MAPS) in Ipoh, Perak. The mutual termination of the Heads of Agreement (HOA) was announced by both companies and comes on the heels of the park’s staggering accumulated losses of RM474m. (The Edge)

Paramount: Proposes securitisation exercise to streamline campus assets. Under a securitisation exercise to streamline group assets and achieve a more efficient capital structure, Paramount Corp has proposed to dispose of three of its tertiary education campuses to a special purpose vehicle for a combination of cash amounting to RM420m and new cumulative redeemable non convertible preference shares in the vehicle. (The Edge)

Market Update

US markets bounced back overnight as consumer discretionary and technology-based stocks led the comeback. Earnings reports continue to be a key feature, with Microsoft and Twitter releasing estimate-beating revenue and profit numbers and Tesla posting a surprise profit. After-hours trading saw the share prices of Alphabet (Google’s parent company) and Amazon slumping however as their numbers came in below expectations. Nonetheless, market participants are viewing the recent swoon as more of a sentiment shift rather than a fundamental one. On the day, the Dow Jones Industrial Average and S&P 500 gained 1.6% and 1.9% while the Nasdaq Composite jumped 2.9%. European stocks were mostly higher as investors digested corporate earnings and the European Central Bank’s (ECB) decision to leave rates unchanged. The bank also reiterated that net asset purchases by the ECB will sit at the current monthly pace of €15bn until the end of December, after which buying will stop. Auto-related stocks were the biggest movers on the continent, with France’s Peugeot Citroen and Germany’s Continental up 6.9% and 7.7% respectively on stronger numbers. Markets in Asia were mostly lower earlier in the day, needless to say, in reaction to Wall Street’s sharp fall the day before. Greater China markets were the biggest strugglers, with benchmarks in Hong Kong and Taiwan down 1.0% and 2.4%. The Shanghai Composite Index was down 2.5% at a point, but clawed back losses to close fractionally higher. The FBM KLCI (-0.2%) also saw a similar pattern, though still closing in the red for the day.

The owners of Selangor Properties who own a 68.2% stake in the company are looking to take the company private at RM5.70 per share through a proposed selective capital reduction and repayment exercise (SCR). Serba Dinamik has secured a total of 13 operations and maintenance (O&M) contracts worth an estimated RM512.17mn cumulatively. Eita Resources’ 60%-owned subsidiary has secured an underground cable works contract from Tenaga Nasional worth RM48.83m.

Source: PublicInvest Research - 26 Oct 2018

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