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Author: PublicInvest   |   Latest post: Fri, 6 Dec 2019, 9:18 AM

 

PublicInvest Research Headlines - 6 Dec 2018

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Economy

US: Tariff effects broaden across US, wage growth higher, Fed says. Tariff-driven price increases have spread more broadly through the US economy, though on balance inflation has risen at a modest pace in most parts of the country, the Federal Reserve said on Wednesday in its latest report on the economy. The US central bank’s “Beige Book” report also said that the economy appeared to be growing modestly to moderately. While a wide range of businesses cited concerns about the effects of a trade war between the US and China, firms continued to hire and reported bumping up benefits and pay to compete for an increasingly scarce labor pool. (Reuters)

EU: Eurozone private sector growth weakest since 2016. Eurozone's private sector growth was the lowest in more than two years during Nov, led by Germany, though the pace of slowdown was less than what was estimated initially. The final Eurozone Composite PMI fell to 52.7 from Oct's 53.1, survey data from IHS Markit showed on Wednesday. The figure was slightly higher than the flash estimate of 52.4. A reading above 50 suggests growth in the Eurozone private sector, which has now expanded throughout the past five-and-a-half years. Among the euro area countries, Germany's composite PMI fell to 47-month low of 52.3 in Nov, which was slightly better than the flash estimate of 52.2. Italy's measure was unchanged at 49.3, signaling contraction for a second successive month. (RTT)

EU: Eurozone retail sales rebound in Oct. Eurozone retail sales grew in Oct after decreasing in the previous month, preliminary data from Eurostat showed on Wednesday. Retail sales grew 0.3% from Sept, when they fell 0.5%, after the stagnation reported earlier was revised. Economists had forecast a 0.2% increase for Oct. Sales of automotive fuel increased 1.0%, and those of food, drinks and tobacco grew 0.6%. In contrast, sales of non-food products decreased 0.1%. On a YoY basis, retail sales increased 1.7% in Oct after a 0.3% increase in Sept, which was revised from 0.8%. Economists were looking for a 2% gain. In the EU28, retail sales edged up 0.1% from Sept, when they dropped 0.3%. Compared to a year ago, sales rose 2.1% in Oct after a 1.3% gain in the previous month (RTT)

UK: Service sector growth tumbles to 28-month low amid Brexit uncertainty. UK services sector growth slowed to its weakest level in nearly two-and-a-half years in Nov, amid weaker growth in both business activity and new work as Brexit concerns intensified, defying expectations for a modest improvement. The CIPS UK Services PMI, fell to 50.4 from 52.2 in Oct, marking the lowest level since July 2016, survey results from IHS Markit showed on Wednesday. A reading above 50 signals expansion in the services sector. Economists had forecast a score of 52.5. The UK Composite PMI, which combines manufacturing, construction and services, also fell in Nov, down to 51 from 52.2 in Oct. (RTT)

China: Confident on US trade pact, Trump cites Xi's 'strong signals'. China expressed confidence on Wednesday that it can reach a trade deal with the US, a sentiment echoed by US President Donald Trump a day after he warned of more tariffs if the two sides could not resolve their differences. The ministry said China would try to work quickly to implement specific items already agreed upon, as both sides “actively promote the work of negotiations within 90 days in accordance with a clear timetable and road map”. “We are confident in implementation,” it said, calling the latest bilateral talks “very successful”. (Reuters)

China: Services PMI surges in Nov, Caixin says. The services sector in China continued to expand in Nov, and at a greatly accelerated rate, the latest survey from Caixin revealed on Wednesday with a PMI score of 53.8. That beat expectations for 50.8, which would have been unchanged from the Oct reading. It also moves further above the boom or-bust line of 50 that separates expansion from contraction. Also, the composite index jumped to 51.9 in Nov, up from 50.5 a month earlier. Individually, Nov marked the steepest increase in services activity in five months, while manufacturing production remained stable. (RTT)

Markets

TNB (Outperform, TP: RM16.86): Largest solar park in Malaysia starts operation. Tenaga Nasional (TNB) has completed ITS 50MWac solar power project in Sepang, Selangor, the largest solar project in the country. TNB said the large scale solar project (LSS) uses 230,000 solar panels installed on 98 hectares of land in Mukim Tanjung 12, Sepang. The project, won in a competitive bidding by TNB’s subsidiary, TNB Sepang Solar SB, would increase TNB’s renewable energy (RE) capacity to the national grid to 73.2MW. The project reached its commercial operation due date with an initial generation of 2.4MW in Oct. (StarBiz)

Serba Dinamik (Outperform, TP: RM4.69): Buys 30% of India’s eNoah, allocates RM30m for IT projects. A tech unit of Serba Dinamik Holdings is acquiring 30% of IT solutions provider eNoah iSolution India Pvt Ltd for RM15m, as part of the group’s expansion into tech sector, where it has earmarked RM30m for the execution of existing and upcoming projects next year. Serba Dinamik's whollyowned subsidiary Serba Dinamik IT Solutions SB (SDIT) signed a share purchase agreement with eNoah to acquire 251,152 shares, representing approximately a 30% stake in the latter, for USD3.6m or RM14.9m. (The Edge)

Kerjaya Prospek: Bags RM211.6m construction contract from PPB. Kerjaya Prospek Group has secured a RM211.6m contract from PPB Group for construction works for a mixed development project at Taman Megah, Petaling Jaya. The group’s wholly-owned unit Kerjaya Prospek (M) SB (KPMSB) had received the letter of award from PPB’s subsidiary PPB Hartabina SB (PHSB) on Nov 30, 2018 for the construction of the main building and external works. The company said its current outstanding order book stands at approximately RM3.08bn with this new job win. (The Edge)

SunCon: Secures RM100m construction job. Sunway Construction Group (SunCon) has been awarded a RM100m contract, bringing its total orders secured for the year to date to RM1.5bn. The group said its subsidiary Sunway Construction SB (SCSB) has accepted a letter of award (LoA) issued by SA Architects SB, on behalf of Sunway Integrated Properties SB (SIPSB). (StarBiz)

Willowglen: Bags RM14.39m SCADA and RFID contracts. Willowglen MSC’s Singapore unit has secured a contract worth RM14.4m to provide supervisory control and data acquisition (SCADA) and radio frequency identification (RFID) solutions. The contract was awarded to wholly-owned Willowglen Services Pte Ltd by SP PowerAssets Ltd, a Singapore electricity distribution services firm. The one-year contract is non-renewable and is scheduled to be completed by Dec 3, 2019, the group said. (The Edge)

Berjaya Food: Net profit higher from Starbucks boost. Berjaya Food’s (BFood) net profit rose 21% to RM7m for the 2Q ended Oct 31, 2018, from RM5.8m in the corresponding quarter last year on higher contributions from its Starbucks operations in tandem with higher revenue. The group said its 2Q revenue rose 3.6% to RM166.6bn from RM160.8m in the corresponding period mainly due to the same-store-sales growth recorded by Starbucks as well as additional Starbucks cafes operating in Malaysia. The group declared a second interim dividend of one sen per share. (StarBiz)

Market Update

The FBM KLCI might open with a negative bias today after global stocks came under renewed pressure following Wall Street’s steep sell-off on Tuesday, with the mood unsettled by lingering concerns about the US-China trade dispute and the recent flattening of the Treasury yield curve. China made its first comments on the trade ceasefire agreed by the two countries at last weekend’s G20 meeting, expressing confidence it could reach a deal with the US within 90 days. But the remarks — attributed to an unnamed commerce ministry spokesperson — did little to improve sentiment in Europe, where stocks fell pretty much across the board. US markets were closed to mark the funeral of former President George HW Bush. Meanwhile, the Treasury yield curve remained a big focus for participants after the inversion of the two-year/five year segment, and a sharp drop in the gap between two-year and 10-year yields, fuelled concerns about the US economy. The pan European Stoxx 600 index ended 1.2% lower, with Frankfurt’s Xetra Dax falling by the same margin and the FTSE 100 in London ending 1.4% lower.

Back home, the FBM KLCI index lost 6.72 points or 0.40% to 1,688.27 points on Wednesday. Trading volume decreased to 1.75bn worth RM1.52bn. Market breadth was negative with 251 gainers as compared to 519 losers. The regional stock markets were also broadly lower, with the CSI 300 in China shedding 0.5%, the Hang Seng in Hong Kong falling 1.5% and the Topix in Tokyo ending 0.5% lower.

Source: PublicInvest Research - 6 Dec 2018

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