PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 16 Aug 2019, 11:01 AM


PublicInvest Research Headlines - 5 Nov 2018

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US: Payrolls rise more than forecast as wage gains hit 3.1%. American workers enjoyed the biggest leap in pay since 2009 as job gains topped forecasts and the unemployment rate held at a 48-year low, a boost for President Donald Trump ahead of next week’s midterm elections and reason for the Federal Reserve to keep raising interest rates. Nonfarm payrolls rose 250,000 after a downwardly revised 118,000 gain, a Labor Department report showed Friday. The median estimate in a Bloomberg survey called for an increase of 200,000 jobs. Average hourly earnings for private workers advanced 3.1% from a year earlier. (Bloomberg)

US: Trade deficit rises more than expected in Oct and is now up 10% for 2018. The US goods and services deficit increased more than expected in Sept amid escalating tensions with its global trading partners. The shortfall rose to USD54bn for the month, a 1.3% increase, or USD700m, from Aug and reflective of a 10.1% increase year to date, according to government numbers released Friday. Economists surveyed by Refinitiv had been looking for a gain of USD53.6bn. The goods deficit stood at USD76.3bn, the highest on record on a seasonally adjusted basis. (CNBC)

US: Factory orders climb more than expected in Sept. New orders for US manufactured goods increased by more than expected in the month of Sept, according to a report released by the Commerce Department on Friday. The Commerce Department said factory orders climbed by 0.7% in Sept after spiking by an upwardly revised 2.6% in Aug. Economists had expected factory orders to rise by 0.5% compared to the 2.3% jump originally reported for the previous month. Durable goods orders increased by a downwardly revised 0.7% in Sept after soaring by 4.7% in Aug. (RTT)

US, China: Trump-Xi trade deal likely to begin rather than end at G- 20. President Donald Trump often seems to be caught between his ideological desire to rewrite America’s trade relationship with China and a businessman’s instinct to cut a deal. And with midterm elections looming and financial markets coming off a rough Oct, the deal-maker appears to have the upper hand. “We’ll make a deal with China, and I think it will be a very fair deal for everybody,” Trump said. The two sides are “getting much closer to doing something,” he said. Still, to satisfy Trump’s own inner ideologue, and the China hawks in his administration, that “something” is going to have to hang on substance. And that’s where things are likely to get complicated. (Bloomberg)

EU: Germany manufacturing growth at 29-month low. German manufacturing sector growth eased to its lowest in nearly two-and-a-half years in Oct as orders dropped for the first time since late-2014, final data from IHS Markit showed on Friday. The manufacturing PMI dropped to 52.2 from 53.7 in Sept. The flash reading released on Oct 24 was 52.3. The reading fell for a third month in a row in Oct. Any reading above 50 indicates expansion in the factory sector. New orders dropped for the first time since Nov 2014, led by intermediate and capital goods sub-sectors. Export sales decreased for a second straight month and at the fastest pace in over five years. (RTT)

UK: Construction activity growth accelerates despite weak outlook. UK construction sector expansion unexpectedly accelerated in Oct, but firms were the least optimistic about prospects in nearly six years, survey data from IHS Markit showed on Friday. The IHS Markit/ Chartered Institute of Procurement & Supply construction PMI, rose to 53.2 from 52.1 in Sept. Economists had expected a score of 52. A PMI reading above 50 suggests growth in the sector. The construction sector has grown every month since April, yet the PMI reading remains below its long-term average of 54.3. Overall, the October survey for activity was more encouraging than expected, but caution on new orders, labor availability and future expectations suggest the outlook remains subdued. (RTT)


S P Setia (Outperform, TP: RM4.50): Applauds initiatives to improve economy and property sector. S P Setia president and CEO Datuk Khor Chap Jen applauded the government’s initiatives in Budget 2019 which focuses on the lower and middle-income segments by addressing issues on cost of living, affordable housing, public transportation improvements, education sector upgrades and new technology to spur growth. “We believe these holistic incentives will improve the economic environment which ultimately enables the property industry to grow and to benefit home buyers in the long run,” Khor said. (The Edge)

YKGI: Exits coated coil business, sells units for RM125m. YKGI Holdings is disposing of two of its coated coil business and related assets as a going concern for RM125m. The disposal to NS BlueScope (Malaysia) SB will result in YKGI exiting from the coated coil business in Peninsular Malaysia, enabling the company to focus on its profitable downstream business in East Malaysia. This will present the company with an opportunity to expand its downstream business to the Peninsula, as it will no longer be saddled with financial burden on its loss-making coated coil business, YKGI said. The proceeds of RM125m from the disposal is expected to be utilised for the repayment of loans, it said. As at Sept 30, YKGI’s total loans stood at RM142.9m. (The Edge)

MAHB: Airport REIT formation a way for govt to 'securitise' its infra assets. Malaysia Airports Holdings (MAHB) is of the view that the formation of the airport real estate investment trust (airport REIT), as proposed in the Budget 2019, is a way for the government to "securitise" its infrastructure assets. It also said it will await further direction from the government in order to get a clearer picture on the implementation mechanism of the proposed REIT. "In the meantime, we will still continue with the Operating Agreement finalisation discussion with government and the Regulated Asset Base study with the Malaysian Aviation Commission (Mavcom) as a way for us to undertake the capital expenditure needed for the future upgrading and expansion of the airports. (The Edge)

Property (Neutral): Property consultant expects more deals closed before higher RPGT kicks in. A property consultant expects a more active real estate transaction now till year end to avoid additional Real Property Gains Tax (RPGT) charges. The tax will be applied at a rate of 5% from the sixth year onwards for disposals made by Malaysian citizens and permanent residents, and a rate of 10% on disposals made by property holding companies and non-citizens. Henry Butcher Penang executive vice-president of asset valuation activity Shawn Ong believes it will encourage more transactions before it takes effect in Jan next year. (The Edge)

Telecommunications (Neutral): MYTV in talks to resolve disputes. MYTV Broadcasting SB (MYTV) has sought the Malaysian Communications and Multimedia Commission’s (MCMC) intervention to help resolve ongoing disputes with Telekom Malaysia (TM), a statement from MYTV said. MYTV said it is working with TM to find a solution to ensure continuity of the digital terrestrial television (DTT) service. StarBiz reported that services for the free-to-air TV migration from analogue to digital were suspended in several states over disputes of non-payment between MYTV and TM. Hundreds of viewers in Sabah, Sarawak, Kelantan, Terengganu, Pahang, Negri Sembilan, Malacca and Perak were affected. Up to 20 broadcasting sites have been shut down since Oct 11 and 25. (StarBiz)

Market Update

The FBM KLCI might open within a narrow range today after US stocks turned lower after three straight days of solid gains last Friday, as a steep fall for Apple led a retreat for the broader technology sector and participants took a less optimistic view of the prospects of a thaw in US-Sino trade relations. European equities pared their early gains although the Stoxx 600 index still registered its best week since December 2016, while emerging market stocks — as measured by the FTSE EM index — extended their recent rally to reach a four-week high. The retreat for Wall Street also came as a robust US employment report helped reinforce expectations that the Federal Reserve would raise interest rates again next month, pushing Treasury yields and the dollar higher. Apple’s decline came in response to a disappointing outlook for holiday season sales from the company. On Wall Street, the S&P 500 ended 0.6% lower at 2,723, having risen as much as 0.6% in early trade. However, the index was up 2.4% for the week, its best showing since May. The Nasdaq Composite fell 1.2%, with Apple 6.6% lower, while the Dow Jones Industrial Average shed 0.4%. Across the Atlantic, the Stoxx 600 Europe index ended 0.3% higher, after gaining 1.3% earlier in the day. The Xetra Dax in Frankfurt gained 0.4% but London’s FTSE 100 closed 0.3% lower.

Back home, the FBM KLCI index gained 6.95 points or 0.41% to 1,713.87 points on Friday. Trading volume increased to 3.16bn worth RM2.53bn. Market breadth was positive with 744 gainers as compared to 204 losers. In the region, the early optimism about a US-China trade deal pushed Chinese stocks sharply higher. The CSI 300 index of mainland stocks rose 3.6% while the Hang Seng index in Hong Kong climbed 4.2%. The Topix index in Tokyo rose 1.6%.

Source: PublicInvest Research - 5 Nov 2018

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