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Author: PublicInvest   |   Latest post: Tue, 16 Jul 2019, 8:56 AM

 

PublicInvest Research Headlines - 11 Dec 2018

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Economy

US: Inflation expectations a touch weaker. One measure of US inflation expectations dipped a bit in Nov while another held steady for an eighth straight month, according to a Federal Reserve Bank of New York survey. The survey of consumer expectations, one of the Fed’s key price gauges as it weighs how much longer to raise rates, showed median 3-year ahead inflation expectations were 2.9%, just down from Oct’s 3%, where the measure has hovered since March. The one-year ahead measure was steady at 3%, where it has been since April. The US central bank is expected to raise interest rates again next week. While the Fed sees further policy tightening next year, investors are growing skeptical as the global economy slows and so-called leading indicators like US stocks and house prices slip. (Reuters)

US: Fed seen slowing, or even stopping, rate hikes next year. The Federal Reserve’s plans to continue raising interest rates next year were met with more skepticism on Wall Street, with futures traders betting on a pause and one major bank partially walking back a hawkish prediction. The US central bank is still seen rising rates a notch next week in a nod to a hot labor market and economy running well above potential even as inflation remains at target. Yet two volatile months in financial markets and signs of an overseas slowdown have raised doubts the Fed can carry through with the three rate hikes its officials have predicted for 2019. (Reuters)

EU: Eurozone investor confidence lowest since 2014. Eurozone's investor confidence eased sharply in Dec and declined for a fourth month in a row, marking the lowest level since the same month in 2014, survey data from Sentix showed. The investor confidence index dropped to -0.3 from 8.8 in Nov, the behavioral research institute said. The latest reading was the lowest since Dec 2014. Economists had forecast a modest decline in the index to 8.3. Both the current conditions index and expectations measure dropped sharply in Dec. (RTT)

EU: German Oct trade surplus narrows in 'lost year' for exporters. Germany’s trade surplus narrowed in Oct with imports growing faster than exports which were slowed down by trade disputes between the US and both China and the European Union. The Federal Statistics Office said seasonally adjusted exports rose by 0.7% on the month, less than a 1.3% rise in imports. That meant the trade surplus narrowed to EUR17.3bn (USD19.68bn) from EUR17.7bn. A Reuters poll of economists had pointed to a 0.5% rise in exports and a 0.4% increase in imports. (Reuters)

EU: Greek consumer price inflation slows to 1.1% in Nov. Greece's annual EU-harmonised inflation rate slowed in Nov, statistics service ELSTAT data showed. The reading was 1.1% from 1.8% in Oct. The data showed the headline consumer price index decelerated to 1.0% YoY, slowing from 1.8% in the previous month. Greece had been in a protracted deflation mode since March 2013 based on its headline index, as wage and pension cuts and a multi-year recession took a heavy toll on Greek household incomes. (Reuters)

EU: Central bank slashes French 4Q growth estimate on protests. French growth is set to slow close to a standstill in the final quarter as waves of anti-government protests hit business activity, the central bank estimated, downgrading its outlook. The Bank of France forecast the euro zone’s second-biggest economy would eke out growth of only 0.2% in the quarter from the previous three months, down from 0.4% in a previous estimate and from that rate in the 3Q. (Reuters)

UK: Economy slows in three months to Oct, Brexit uncertainty looms. Britain's economy lost speed in the 3 months to Oct, reflecting lower car sales and factory stoppages due to weaker demand that business groups blamed on uncertainty about Brexit. GDP growth slowed to 0.4%, from a strong 0.6% in the 3Q of 2018. (Reuters)

Japan: Economy shrinks most in four years as global risks hit business spending. The Japanese economy contracted the most in over 4 years in the 3Q as companies slashed spending, threatening to chill the investment outlook in 2019 as the export-reliant nation grapples with slowing global growth and trade frictions. Japan’s GDP shrank at an annualized rate of 2.5% in the July-Sept quarter - the worst downturn since the 2Q of 2014 - from 2.8% growth in the 2Q. (Reuters)

Markets

Top Glove (Neutral, TP: RM5.79): Business as usual, no suspension of supply to UK. Top Glove Corp chairman Tan Sri Dr Lim Wee Chai said it's business as usual for the group and its supply with the UK’s National Health Service (NHS) is going on as usual, despite allegations of forced labour made in the UK’s The Guardian newspaper. “There are no issues with the UK’s NHS, its the news reported by the Guardian. NHS have been sending teams to audit us every year, and will continue do so. Lim said the contribution from supply to the UK’s NHS is minimal to Top Glove. “The NHS is not our direct customer, they are a customer of our customer, and the contribution is very small, Its less than 0.5% of sales,” he added. (The Edge)

KPS: Unit plans RM500m Sukuk Murabahah. Kumpulan Perangsang Selangor's unit (KPS) Perangsang Capital SB has proposed to set up an unrated Islamic MTN programme of up to RM500m in nominal value. KPS announced that Perangsang Capital had lodged with the Securities Commission to set up the programe under the Shariah principle of Murabahah (via Tawarruq arrangement). It said the programme has a tenure of up to 15 years from the date of the first issuance. (StarBiz)

MAA: To sell 47.95% stake in Australian unit for RM63m. MAA Group (MAAG) is selling all the 24.3m shares or 47.9% stake it owns in Australian-based retail mortgage and loan securitisation company Columbus Capital Pty Ltd (CCA), for AUD21m (about RM63m). The CCA stake is being sold to Consortia Group Holdings Pty Ltd. The disposal, expected to be completed by Dec 20, is projected to bring in a gain of RM7.7m for MAA. Proceeds from the sale are intended to be used for future investment opportunities and/or prospective new businesses, though it has yet to identify any. (The Edge)

Scientex: Firms deal for 42.4% Daibochi stake for RM222.5m. Scientex said it will issue 25.3m new shares in the company to satisfy the proposed acquisition of a 42.4% stake in Daibochi. Concurrently, Scientex, which is keen to extend a mandatory general offer (MGO) of the remaining stake in Daibochi after the acquisition, has yet to decide whether to acquire the remaining stake via cash or further issuance of new shares in Scientex. Scientex said it has inked a conditional share sale agreement (CSSA) with certain shareholders of Daibochi to acquire the stake via a share swap. (The Edge)

MAHB: Passenger traffic up 4.3% in Nov. Malaysia Airports Holdings (MAHB) handled 4.3% more passengers in Nov compared with the same period a year ago, with traffic boosted by growth from both international and domestic passenger movements. It said international sector recorded a growth of 4% to 4.3m passenger movements, while domestic sector was up 4.6% to 4m passengers. Istanbul Sabiha Gokcen International Airport's (SGIA) passenger traffic grew 2.3% YoY in Nov to 2.6m from RM2.5m a year ago. (The Edge)

Prestariang: Has not received notice of default from government. Prestariang said it has not received any notice of default from the government relating to the cancellation of the Immigration Department's RM3.5bn national immigration control system (SKIN) concession. “In relation thereto, Prestariang SKIN will seek clarification from the government on this matter and will make the necessary announcement once there is any update in relation to the above,” it said. (Bernama)

Market Update

The FBM KLCI might open higher today after a tense and choppy day for global equity markets saw US stocks recover from an early sell-off although the mood elsewhere remained unsettled by persistent uncertainty over the prospects for US-China trade and the UK’s departure from the EU. The improvement on Wall Street came as Apple recovered most of a steep opening drop. That had followed news that a Chinese court had imposed a ban on the sale of certain iPhone models in the world’s largest mobile market. The S&P 500 index, fresh from its worst weekly fall since March, slid to an eight-month low before staging an afternoon rally, although the Stoxx Europe 600 index closed at its weakest point in two years. On Wall Street, the S&P 500 ended 0.2% higher at 2,637, after sliding to 2,583 earlier in the day, its lowest point since early April. The index fell 4.6% last week, the biggest such drop since March. The Dow Jones Industrial Average edged up 0.1%, while the Nasdaq Composite index rose 0.7%. Apple shares ended 0.7% higher, having initially tumbled more than 3%. Across the Atlantic, the Stoxx Europe 600 index fell 1.9%, as the Xetra Dax in Frankfurt and the CAC 40 in Paris both shed 1.5%. London’s FTSE 100 ended 0.8% lower, having spent much of the session in positive territory as sterling tumbled.

Back home, the FBM KLCI index lost 17.23 points or 1.03% to 1,663.31 points on Monday. Trading volume increased to 2.65bn worth RM1.37bn. Market breadth was negative with 194 gainers as compared to 612 losers. In the region, China’s CSI 300 index fell 1.2% and the Topix in Tokyo ended 1.9% lower. Meanwhile, Hong Kong's Hang Seng was off 1.19%.

Source: PublicInvest Research - 11 Dec 2018

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