PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 17 Jun 2019, 12:08 PM


PublicInvest Research Headlines - 27 Nov 2018

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Global: Economy heads into year-end with diminished momentum. The global economy headed into the final stretch of 2018 in weakened shape, handing investors renewed reason to question how much central banks will be able to tighten monetary policy next year. Fresh data from the world’s third and fourth-largest economies on Monday added to the concern. A manufacturing gauge in Japan dropped to the lowest since early 2016, and business confidence in Germany fell for a third month. The slowdown against the backdrop of volatile markets and a burgeoning trade war has implications for monetary policy worldwide. The European Central Bank has a crucial meeting in Dec where it’s due to confirm the end of net asset purchases, a key crisis-era tool. The US Federal Reserve looks set to raise interest rates again next month but may be more cautious in 2019. (Bloomberg)

US: Trump signals US likely to go ahead with China tariff increase. President Donald Trump said he’ll likely push forward with plans to increase tariffs on USD200bn of Chinese goods, indicating he would also slap duties on all remaining imports from the Asian nation if negotiations with China’s leader Xi Jinping fail to produce a trade deal. Trump said he’s prepared to impose tariffs on a final batch of USD267bn of Chinese shipments if he can’t make a deal with Xi when they meet at the Group of 20 meeting in Argentina, which starts Nov 30. The rate could be either 10% or 25%, Trump said. Trump said that Apple Inc.’s iPhones and laptops imported from China could be hit by new tariffs. Americans could “very easily” handle a 10% duty, he said. (Bloomberg)

EU: ECB's Draghi says gradual slowdown normal, partly temporary. Eurozone's gradual economic slowdown is normal and temporary to some extent, and underlying inflation is expected to rise in the coming months, making policymakers confident that the massive asset purchase program could be ended in Dec, European Central Bank President Mario Draghi said on Monday. Draghi said, "A gradual slowdown is normal as expansions mature and growth converges towards its long-run potential." Draghi acknowledged that the economic data since Sept have been somewhat weaker than expected and that the loss in growth momentum mainly reflected weaker trade growth. (RTT)

EU: German business confidence weakens for third month as economy cools, says Ifo. German business confidence eased for a third consecutive month in Nov as the economy is "cooling down", results of the survey by the Ifo Institute showed on Monday. The Ifo business confidence indicator fell to 102 from 102.9 in Oct, which was revised from 102.8. Economists had expected a reading of 102.3. The latest reading was the lowest since July, when it was 101.9. The expectations index of the survey dropped to four-month low of 98.7 from 99.7, which was revised from 99.8. Economists had forecast a score of 99.3. (RTT)

UK: GDP to be 4% lower if proposed Brexit deal implemented, says NIESR. Brexit has hit the UK economy hard and the impact would be greater in the long run if the proposed deal is implemented, a report from the National Institute of Economic and Social Research warned on Monday. “If the government's proposed Brexit deal is implemented, then GDP in the longer term will be around 4% lower than it would have been had the UK stayed in the EU," the think tank said. The NIESR expects the uncertainty about the precise shape of the future relationship to continue beyond the transition period ending on Dec 31, 2020. (RTT)

UK: Mortgage approvals at 5-month high in Oct. Mortgage approvals for house purchase in the UK rose in Oct to its highest level in five months, figures from the UK Finance showed on Monday. The number of mortgage approvals for house purchase climbed to 45,289 from 37,348 in September. The figure was the highest since June, when approvals were 47,175. A year ago, approvals were 43,706. In Oct, gross mortgage lending grew 5.6-% YoY to GBP25.5bn. Credit card spending rose 12.1% YoY to GBP11.3bn. (RTT)

China: Deep in the data, China’s bank funding squeeze is easing off. China’s beleaguered private companies may be on the cusp of better times, with signs emerging that a government push to boost bank lending is working. The private sector, which makes up about 80% of employment in the world’s second-biggest economy, has been struggling with a credit squeeze triggered by a campaign to shrink China’s shadow-banking industry. With corporate defaults hitting a record this year, policy makers acted to restart the credit flow, notably by verbally directing banks to provide more loans. (Bloomberg)

Japan: Manufacturing PMI slows to 51.8 in Nov, says Nikkei. The manufacturing sector in Japan continued to expand in Nov, albeit at a slower pace, the latest survey from Nikkei showed on Monday with a preliminary manufacturing PMI score of 51.8. That's down from the six month high score of 52.9 in Oct, although it remains above the boom-or bust line of 50 that separates expansion from contraction. (RTT)


MyEG: Signs MoU to acquire stake in Cartenz. MyEG Services has entered into a memorandum of understanding to take up a 40% stake in an Indonesian e-government services provider for USD10m (RM42m). The proposed strategic partnership with PT Cartenz Technology Indonesia, subject to the fulfilment of relevant terms and conditions, marked the group’s entry into the Indonesian e Government space. (StarBiz)

Kerjaya Prospek: Secures RM282.25m construction jobs from Nusmetro Group. Kerjaya Prospek Group via its unit has secured two contracts worth RM282.25m from Nusmetro Group for construction works in Mont Kiara and Jalan Cheras, KL. The group said Kerjaya Prospek (M) SB has secured a RM29.82m contract for the substructure works of a commercial development comprising a three-storey basement carpark and 51-storey office building in Mont Kiara. The contract is expected to be completed by Sept 25, 2020. Meanwhile, the second contract is worth RM252.43m, involving the construction of the main building of a proposed commercial development in Jalan Cheras, expected to be completed by March 31, 2020. (StarBiz)

Caely: Proposes one-for-one bonus issue. Undergarments manufacturer Caely Holdings is proposing to undertake a bonus issue of up to 120m new shares on the basis of one bonus share for every one existing share held at an entitlement date to be determined later. Caely said the proposed bonus issue is intended to reward their existing shareholders for their loyalty and continuing support for the group. The proposed bonus issues is expected to be completed by 1Q 2019. (The Edge)

Panasonic: 2Q net profit up 44%, declares 15 sen dividend. Panasonic Manufacturing Malaysia’s net profit grew 44.34% to RM34.13m in 2QFY19 from RM23.64m last year due to higher revenue. This was in line with its higher revenue of RM308.81m, which was a 11.27% increase, against RM277.53m in 2QFY18. Notably, its fan products and other segment’s PBT rose 73% to RM21.5m, compared with RM12.4m. (The Edge)

Taliworks: 3Q net profit almost doubles, pays 1.2 sen dividend. Taliworks Corp's net profit almost doubled to RM19.68m in 3QFY18 from RM10.01m a year ago, on higher contributions from the construction and water treatment, supply and distribution divisions. The company said this was further supported by lower cost of operations specifically from lower rehabilitation and maintenance cost incurred in its Langkawi operations. "Additionally, the group accounted for its share of toll compensation of RM4.1m received in respect of the non-increase in scheduled toll rate hike on Jan 1, 2016 for the New North Klang Straits Bypass Expressway," Taliworks added. (The Edge)

Lay Hong: Slips into quarterly net loss for 1st time in two-and-a half years. Poultry and egg producer Lay Hong slipped into the red in 2QFY19, posting a net loss of RM10.96m – its first loss-making quarter in two-and-a-half years – compared with a net profit of RM12.17m a year ago due to higher feed cost, resulting from the stronger US dollars. Lay Hong also attributed the loss to the one-time early retirement of the layer's amortisation cost for a flock of birds. On prospects, Lay Hong said the average egg price is expected to rise in the coming quarters after the industry players have decided to reduce production in order to regularise the oversupply situation experienced in the recent quarter. (The Edge)

Market Update

The FBM KLCI might open higher today after Wall Street indices joined a global stocks rebound, helped by demand for energy majors as a rebound for oil prices left Brent crude above $60 a barrel. The main international crude benchmark regained 3.2 percent to $60.65 a barrel after the previous session’s fall of more than 6 percent took it down more than 30 percent from its October peak. On Wall Street, the S&P 500 closed up 1.6% with oil majors among the biggest gainers. The Nasdaq Composite ticked up 2.1% while the Dow Jones Industrial Average rose 1.5%. General sentiment was also helped by a brighter political backdrop, as hopes returned for an improvement in trade relations between the US and China at this week’s G20 summit. Presidents Donald Trump and Xi Jinping are expected to meet at the gathering in Argentina, leading to hopes that they will repair trade relations between the two countries. Signs that Italy’s government could be prepared to compromise on its budget stand-off with the EU and the approval of the UK’s Brexit deal by the European Council were also supportive. They helped the rally gather pace in European trade. Eurozone financials also benefited from talk that the European Central Bank was considering furthering its longer-term refinancing operations designed to support lending in the eurozone. That left the Stoxx 600 index rose 1.2%. London’s FTSE 100 added 1.2%, while Frankfurt’s Xetra Dax 30 climbed 1.6%.

Back home, the FBM KLCI index gained 2.06 points or 0.12% to 1,701.99 points on Monday. Trading volume increased to 1.74bn worth RM1.41bn. Market breadth was negative with 354 gainers as compared to 452 losers. In the region, mainland China’s CSI 300 index ended the day flat, while the Hang Seng climbed 1.7% and Tokyo’s Topix edged up by 0.2%.

Source: PublicInvest Research - 27 Nov 2018

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