PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 20 Sep 2019, 10:03 AM


PublicInvest Research Headlines - 10 Dec 2018

Author:   |    Publish date:


World: OPEC agrees on larger-than-expected oil cut after marathon talks. OPEC finally broke an impasse over production curbs, agreeing on a larger-than-expected cut with allies after two days of fractious negotiations in Vienna. The cartel and its partners agreed to remove 1.2m barrels a day from the market, with OPEC itself shouldering 800,000 barrels of the burden. Iran emerged as a winner from the contentious talks, saying it’s secured an exemption from cuts as it suffers the effects of US sanctions. Crude surged as much as 5.4% in London, raising the risk that the deal could anger US President Donald Trump, who had urged the group to keep the taps open and prices low. (Bloomberg)

US: Adds below-forecast 155,000 jobs as wage gain misses. US jobs and wages rose by less than forecast in Nov while the unemployment rate held at the lowest in almost five decades, indicating some moderation in a still-healthy labor market. Nonfarm payrolls increased by 155,000 after a downwardly revised 237,000 gain in the prior month, a Labor Department report showed. The median estimate in a Bloomberg survey called for an increase of 198,000. Average hourly earnings rose 0.2% from the prior month, compared with forecasts for 0.3%, though wages matched projections on an annual basis, up 3.1% for a second month. Treasury yields initially dipped and the dollar declined as the report added to signs that economic growth is cooling a bit, following weakness in business-equipment orders and an ebbing of consumer optimism. (Bloomberg)

US: Trump is said to signal USD750bn national security request. President Donald Trump signaled to Defense Secretary James Mattis he may request USD750bn in national security spending, a US defense official said on Sunday, days after Mattis and two top lawmakers urged him to abandon a plan to seek only USD700bn. The new target may be announced this week by the White House budget office, said the defense official, who spoke on condition of anonymity. Of the total amount, 95% would be Pentagon spending, including war costs. The agreement was reported earlier Sunday by Politico. Mattis, Senate Armed Services Chairman Jim Inhofe of Oklahoma and House Armed Services Chairman Mac Thornberry of Texas urged Trump at a White House meeting on Dec. 4 to abandon a proposed USD33bn cut from the USD733bn national security budget the Pentagon had sought for fiscal 2020. (Bloomberg)

US: Says March 1 'hard deadline' for trade deal with China. US China trade negotiations need to reach a successful end by March 1 or new tariffs will be imposed, US Trade Representative Robert Lighthizer said, clarifying there is a “hard deadline” after a week of seeming confusion among President Donald Trump and his advisers. Global markets are jittery about a collision between the world’s two largest economic powers over China’s huge trade surplus with the US and US claims that China is stealing intellectual property and technology. (Bloomberg)

EU: Bruised euro-zone economy stumbles on after its 2018 beating. The euro-zone economy is down but not out after a year battered by freezing weather, trade wars, budget disputes and car trouble. The exuberance of 2017 -- when the bloc enjoyed a brief “euroboom” -- has given way to slowing momentum and an onslaught of bad news. Germany’s supposed powerhouse economy contracted over the summer, and Italy is not only shrinking but also reviving memories of the regional debt crisis. European automakers are wondering if they’re next to be targeted by US import tariffs. Purchasing managers surveys show the deterioration continuing. Italy is close to a triple-dip recession. (Bloomberg)

China: Nov export, import growth shrinks, showing weak demand. China reported far weaker than expected Nov exports and imports, showing slower global and domestic demand and raising the possibility authorities will take more measures to keep the country’s growth rate from slipping too much. Nov exports only rose 5.4% from a year earlier, Chinese customs data showed, the weakest performance since a 3% contraction in March, and well short of the 10% forecast in a Reuters poll. The customs data showed that annual growth for exports to all of China’s major partners slowed significantly. Import growth was 3%, the slowest since Oct 2016, and a fraction of the 14.5% seen in the poll. (Reuters)

Japan: BOJ on path to taper bond purchases to lowest since start of QE. The BOJ may be making slow progress on the road to its 2% inflation target, but it sure is gathering pace when it comes to tapering its bond purchases. The quest to loosen its grip on the world’s second largest debt market has seen the central bank slow down the YoY increase in its bond holdings by an average 3.2% per month in 2018, BOJ data compiled by Bloomberg show. At this pace, the stockpile would rise just JPY26trn (USD230bn) over 2019, the smallest increase since it began quantitative easing in April 2013. The BOJ has stepped up tapering following widespread criticism that its massive purchases crimped bond trading, distorted market pricing and hurt profitability at banks. (Bloomberg)

Malaysia: To be put back on track in 3 years, says Guan Eng. Finance Minister Lim Guan Eng said the government recognises that Malaysia's fiscal strength has weakened and will take steps to overcome them over a three-year time frame to put Malaysia back on track. He said the ministry of finance (MoF) welcomes Moody's Investors Service's affirmation yesterday of Malaysia's credit ratings at A3, with a stable outlook, which had stated that the A3 rating recognises that government debt will stay high for longer and the government's fiscal policy choices will narrow the revenue base and reduce fiscal flexibility further. (The Edge)

Malaysia: To cut oil output by 15,000 barrels per day, says Azmin Ali. Malaysia has agreed to continue its voluntary commitment to reducing total oil output by 15,000 barrels per day from an earlier cut level of 20,000 barrels per day. The previously agreed arrangement expires at year-end. Minister of Economic Affairs Datuk Seri Mohamed Azmin Ali said this in a statement issued following the fifth Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC Ministerial Meeting in Vienna, Austria. It saw the oil producing countries agreeing to reduce oil production to 1.2m barrels per day for the next six months from 1.8m barrels per day. Mohamed Azmin said this decision is a testament of Malaysia’s commitment to international cooperation to face economic challenges posed by the global oil market. (Bernama)


Top Glove (Neutral, TP: RM5.79): UK investigates after labor rights expose at world's top glove maker. Britain is launching an investigation into medical gloves used by its health service after a Thomson Reuters Foundation expose found stocks from Malaysia could be tainted by the mistreatment of migrant workers at the world’s biggest glove maker. The health ministry said it would investigate standards at Top Glove Corp – which makes rubber gloves sold to Britain’s National Health Service (NHS) - after the expose found some migrants working illegal overtime to pay off debts. Top Glove last week vowed to do more to tackle excessive overtime after the Thomson Reuters Foundation found some workers clocked more than the amount permitted by law, and to cut ties with agents charging migrant workers huge fees to get them jobs. (Reuters)

Comments: If the UK were to insist on rectification of the issue, we think that it could potentially lead to higher labour costs for Top Glove as it will need to hire more workers to address the excessive overtime issue. On a worst case basis, the UK could stop the import of gloves from Top Glove. While we can’t access the financial impact at this juncture as the breakdown on glove exports to UK is unavailable (sales volume to Europe in FY18: 31% or 15.2bn pcs of gloves), we expect sentiment on the stock to take a hit given the uncertainties arising from this issue. Maintain Neutral.

Astro (Outperform, TP: RM2.00): To offer VSS. In a strategic review of its business to strengthen its position in the market, Astro Malaysia Holdings will be undertaking a voluntary separation scheme (VSS) for its employees, offered purely on a voluntary basis. According to a source, Astro is expecting to save 15% or an estimated RM80m in staff cost as a result of the VSS in future financial years. For the FYE Jan 31, 2018, Astro’s staff cost amounted to RM590m. (StarBiz)

YTL: To fork out over RM1bn to buy Spanish firm that's developing a Marriot-brand hotel in Madrid. YTL Corp is buying Spanish firm SOL HTL Project, which owns a freehold property in Madrid that will be refurbished and converted into a 200-room hotel that will operate under the Marriot International Inc's EDITION brand, for EUR220m (RM1bn). It said that the price tag includes payment for loans that SOL HTL owes to the seller of the company, KKH Property Investors SLU. The acquisition is expected to be funded by borrowings and/or internal funds. (The Edge)

Meda Inc: Plans to raise up to RM37m for its Malaysia Tourism City project. Meda Inc is proposing a private placement of up to 10% of its total issued shares, together with a proposed share issuance of a similar quantum, to fund its Malaysia Tourism City project in Kuala Linggi, Alor Gajah, Melaka. Both the private placement and the share issuance could each involve up to 49.2m shares. Assuming an indicative issue price of 38 sen a share for each placement and each subscription share, the company expects to raise gross proceeds of up to RM37.4m from the proposed exercises. (The Edge)

Insas: Disposes of land for RM14.9m in related party transaction. Insas is disposing of a parcel of land in Bukit Damansara for RM14.9m or RM610 per sq ft, in a related party transcation. The group said its indirect wholly-owned unit Filmont Holdings SB is selling the vacant freehold residential measuring 24,380 sq ft land to Satin Magic SB. “The disposal of the land is expected to give rise to a small gain of RM100,000 only for the FYE 30 June 2019 (FY19), after adjusting for relevant expenses and taxes,” it added. (The Edge)


The FBM KLCI might open lower today after US stocks suffered further steep falls at the end of a turbulent week last Friday dominated by uncertainty over the US-China trade dispute and mounting concerns about global growth. Wall Street proved unable to hold its initial gains on Friday, as tech stocks sold off and early strength for the energy sector evaporated, with crude prices giving back some of their early gains after an agreement by OPEC and its partners to cut output. The mood was not helped by remarks from White House trade adviser Peter Navarro, who said the US would push ahead and increase tariffs on Chinese imports if Washington and Beijing could not agree a binding trade truce within a 90-day negotiating period. But European and Asian stock indices mostly ended firmer — albeit well off the day’s highs — as buyers stepped back in after some savage falls on Thursday. On Wall Street, the S&P tech sector fell 3.3%, while energy finished 0.6% lower, after earlier rising sharply. The Dow Jones Industrial Average fell 2.2% softer and the Nasdaq Composite index shed 3%. Across the Atlantic, the Stoxx Europe 600 index ended 0.6% higher — having been up 1.7% at one stage. London’s FTSE 100 rose 1.1%, but the Xetra Dax in Frankfurt reversed an early rise to close 0.2% lower.

Back home, the FBM KLCI index lost 2.80 points or 0.17% to 1,680.54 points on Friday. Trading volume decreased to 1.91bn worth RM1.51bn. Market breadth was negative with 292 gainers as compared to 427 losers. In Hong Kong, the Hang Seng slipped 0.4%, while on China’s mainland the CSI 300 index held steady. Tokyo’s Topix rose 0.6%, while the Kospi in Seoul added 0.5%.

Source: PublicInvest Research - 10 Dec 2018

Source: PublicInvest Research - 10 Dec 2018

Share this

Related Stocks

Chart Stock Name Last Change Volume 
TOPGLOV 4.75 +0.01 (0.21%) 6,165,300 
ASTRO 1.42 0.00 (0.00%) 5,524,600 
YTL 0.94 -0.04 (4.08%) 16,741,300 
MERIDIAN 0.07 0.00 (0.00%) 2,555,900 
INSAS 0.81 +0.005 (0.62%) 319,800 

  Be the first to like this.


404  268  551  764 

Top 10 Active Counters
 ARMADA 0.33-0.015 
 SAPNRG 0.290.00 
 MNC-PA 0.0350.00 
 PWORTH 0.055+0.01 
 YTLPOWR 0.735+0.005 
 KNM 0.41-0.005 
 VSOLAR 0.09+0.005 
 ECOWLD 0.665+0.02 
 GPACKET-WB 0.270.00 
 VELESTO 0.315+0.01 
Partners & Brokers