PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 14 Nov 2019, 9:44 AM


PublicInvest Research Headlines - 30 Oct 2018

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Global: WTO metal tariff dispute delayed as countries block action. Requests for the World Trade Organization to hear disputes related to US steel and aluminum tariffs were delayed on procedural grounds Monday, putting off any action until November. In a volley of filings this month, WTO members including the European Union, China and the US escalated disputes over the new metal duties, justified on national security grounds, and the European response to them. Each member can block an initial call for a dispute panel once -- a fairly standard WTO maneuver -- meaning the applications could be granted at the next meeting in Nov. The move sets the stage for a showdown that some fear could lead to the US abandoning the Geneva-based WTO. (Bloomberg)

US: Is said to plan more China tariffs if Xi meeting fails. The US is preparing to announce by early Dec tariffs on all remaining Chinese imports if talks next month between presidents Donald Trump and Xi Jinping fail to ease the trade war, three people familiar with the matter said. An early-Dec announcement of a new product list would mean the effective date -- after a 60-day public comment period -- may coincide with China’s Lunar New Year holiday in early February. The list would apply to the imports from the Asian nation that aren’t already covered by previous rounds of tariffs -- which may be USD257bn using last year’s import figures, according to two of the people. US officials are preparing for such a scenario in case a planned Trump-Xi meeting yields no progress on the sidelines of a Group of 20 summit in Buenos Aires in November, according to two of the people, who declined to be identified to discuss internal deliberations. They cautioned that final decisions had not been made. (Bloomberg)

US: Personal income shows modest increase in Sept. A report released by the Commerce Department on Monday showed personal income in the US rose by slightly less than expected in the month of Sept, although the report also showed personal spending increased in line with estimates. The report said personal income edged up by 0.2% in Sept after climbing by an upwardly revised 0.4% in August. Economists had expected income to rise by 0.3%, matching the increase originally reported for the previous month. Disposable personal income, or personal income less personal current taxes, also ticked up by 0.2% in Sept after advancing by 0.4% in August. (RTT)

US: Fed hits inflation double-bullseye as price outlook stays murky. The numbers might never again look so good for the Federal Reserve. For the first time since the central bank introduced its 2% inflation objective in 2012, both the headline and core measures of year-on-year price moves hit their target on the nose last month, government figures showed Monday. And that came on top of a historically low unemployment rate of 3.7%. Fed officials may briefly pat themselves on the back when they gather for a meeting in Washington next week. But it won’t last long. (Bloomberg)

US: Treasury sees 2018 borrowing needs surging to USD1.34trn. The US Treasury Department said government borrowing this year will more than double from 2017 to USD1.34trn as the Trump administration finances a rising budget deficit. Specifically, the department expects to issue USD425bn in net marketable debt from Oct through Dec, lower than the USD440bn estimated in July, according to a statement released Monday in Washington. The Treasury sees an end-of-Dec cash balance of USD410bn, compared with its previous forecast of USD390bn. (Bloomberg)

UK: Mortgage approvals decline in Sept. The UK mortgage approvals declined in Sept, figures from Bank of England showed Monday. The number of housing loan approvals fell to 65,269 in Sept from 66,101 in August. Nonetheless, this was above the expected level was 64,700. Lending secured on dwelling rose at a faster pace of GBP 3.9bn, following August's GBP 3.1bn increase. Meanwhile, the increase in consumer credit slowed to GBP 0.8bn from GBP 1.2bn in August. Credit was forecast to rise again by GBP 1.2bn. Further, data showed that lending to non-financial businesses fell GBP 1.7bn compared to an increase of GBP 2.2bn in August. (RTT)

UK: Hammond calls time on UK austerity with a post-Brexit tax cut. UK Chancellor of the Exchequer Philip Hammond promised early tax cuts and an end to austerity despite weak growth forecasts and uncertainty over Brexit. Hammond is under pressure to end almost a decade of spending cuts that have limited public services and spurred support for the opposition Labour Party and its socialist leader, Jeremy Corbyn. But he’s trying to do so at a less than opportune time with Britain scheduled to leave the European Union in March, and on the eve of his speech, he said Britain may need another emergency budget and prolonged austerity in the event of a no-deal Brexit. (Bloomberg)


Gamuda (Trading Buy, TP: RM3.14), MMC: JV served arbitration notice over 329km double-track project. A jointly-owned unit of Gamuda and MMC Corp has been served an arbitration notice relating to the 329km Electrified Double Track Project (EDTP) between Ipoh and Padang Besar. Gamuda and MMC said that MMCGamuda Joint Venture SB (MGJV) was served the arbitration notice on Oct 25 by Emrail, formerly known as Time Salam SB. Both groups added they will make a further announcement if there are any material developments in respect of the foregoing. (The Edge)

MISC: JV bags RM735m time charter contract in Vietnam. MISC’s 51%-owned JV with PetroVietnam Technical Services Corporation has won a time charter contract to lease a floating storage and offloading vessel (FSO) for USD176m (RM735m). Idemitsu Kosan Co Ltd (IKC) will lease the FSO for seven years, with the charter expected to commence by mid-2020, MISC said. It added that upon conversion of the vessel, the FSO will be deployed for the Sao Vang and Dai Nguyet Development Project in Blocks 05-1b and 05-1c offshore Vietnam. (The Edge)

Ranhill: Energy Commission rescinds Sandakan power project. The Energy Commission (EC) has rescinded the proposed 300MW power plant project in Sandakan that was awarded to Ranhill Holdings’ unit. It said the EC had issued a letter to the consortium consisting of Sabah Development Energy (Sandakan) SB (SDESB) and Ranhill’s unit, SM Hydro Energy SB (SMHE), informing them of the cancellation of the proposed project. (StarBiz)

Bintai Kinden: Receives RM33.9m contracts. Kejuruteraan Bintai Kinden Corp has been appointed by Tenaga Nasional to be the contractor for a GIS station in Penang and a double circuit underground cable in Shah Alam for a total sum of RM33.95m. The contracts are estimated to be completed within 685 days for the GIS station and 450 days for the underground cable. (StarBiz)

Sapura Resources: Partners Dilog for aircraft MRO works in Senai. Sapura Resources has partnered with Dilog Training and Services SB to collaborate for the provision of maintenance, repair and overhaul (MRO) services for narrow body commercial aircraft in Senai, Johor. Sapura’s wholly-owned unit, Mercu Sapura SB (MSSB), signed a JV and shareholders agreement with Dilog. The agreement is expected to be completed by the 3Q FYE Jan 31, 2019, or at the end of Oct 2018. It said it intends to finance the JV through internally-generated funds. (The Edge)

Scomi: EXIM demands USD19m from units. Subsidiaries of Scomi Group have been served a notice of demand for USD19.1m (RM79.8m) by the Export-Import Bank of Malaysia (EXIM) over a failure to pay the amount due under bank facilities. Scomi Transit Projects Brazil (Sao Paulo) SB (STPB), a wholly-owned unit of Scomi Engineering (SEB), which is in turn a wholly-owned unit of the Scomi group, had been the borrower while SEB had acted as its guarantor. “STPB and SEB are still in the process of negotiating with EXIM, have sought an extension of time and are still awaiting a decision from EXIM,” Scomi said. (The Edge)

Market Update

The Dow Jones gave up earlier gain of 352 points to end 245.39 points lower, staging the biggest intraday reversal in more than 8 months. The S&P 500 closed in correction territory. The market volatility was driven by news on the possibility of more US-China tariffs to be announced if next month’s Trump-Xi meeting fails to ease the trade war. Boeing dropped 6.6% following report on further tariffs may be imposed on US-China trades as well as a plane crash relating to a brand-new Boeing 737 MAX 8 jet operated by Lion Air, the first accident of its kind for the variant of the top-selling plane. Meanwhile, stocks in Europe closed sharply higher as investors reacted to news that China will announce a 50% cut in car purchase taxes and German Chancellor Angela Merkel plans to step down as party chairman. Auto stocks were higher, rising by more than 3%. Banks were also among the top performers on the back of strong earnings. The FTSE, DAX and CAC gained 1.25%, 1.20% and 0.44% respectively. In Asia, markets were mixed as major Chinese indexes fell more than 2% while Singapore, Thailand and Malaysia rose 0.32%, 0.49% and 0.04% respectively.

Back home, FBM KLCI was marginally higher, added less than 1 point to close at 1,636.88. MISC’s 51%-owned joint venture with PetroVietnam Technical Services Corporation has won a time charter contract to lease a floating storage and offloading vessel for USD176m (or RM735m). TMC Life Sciences reported its best fourth quarter performance in a decade, as its net profit rose 2.2% to RM11.3m, thanks to lower total operating expenditure. Three of Seacera Group's major shareholders had been forced to hive off their stakes, including its non-executive chairman Datuk Seri Mansor Masikon and managing director Zulkarnin Ariffin. The duo and Datuk Ismail Osman were forced to sell down their stakes on the market by banks or stock broking firms.

Source: PublicInvest Research - 30 Oct 2018

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