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PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 20 Nov 2019, 9:59 AM

 

PublicInvest Research Headlines - 31 Dec 2018

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Economy

Global: Pacific trade pact takes off with tariffs cut in six nations. A landmark 11-country trade deal, a revamped version of the Trans Pacific Partnership (TPP), came into force on Sunday with New Zealand’s trade minister hailing the opportunities it presented for exporters. The deal, which will slash tariffs across much of the Asia Pacific region, does not include the US after Washington pulled out of the TPP negotiations in 2017. “The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) provides New Zealand with trade agreements for the first time with three significant economies: Japan, Canada and Mexico,” Trade Minister David Parker said in a statement. The pact came into effect on Sunday for Australia, New Zealand, Canada, Japan, Mexico and Singapore, with Vietnam to follow on 14 January, Australia’s Department of Foreign Affairs and Trade said. (Reuters)

US: Pending home sales show continued decrease in Nov. With decreases in the South and Midwest more than offsetting increases in the Northeast and West, the National Association of Realtors released a report on Friday showing a continued drop in pending home sales in the month of Nov. NAR said its pending home sales index fell by 0.7% to 101.4 in Nov after plunging by 2.6% to 102.1 in Oct. The continued decline in pending home sales matched economist estimates. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. Compared to the same month a year ago, pending home sales slumped by 7.7%, reflecting the eleventh straight month of annual decreases. (RTT)

US, China: Trump says 'big progress' on possible China trade deal. US President Donald Trump said on Twitter that he had a “long and very good call” with Chinese President Xi Jinping and that a possible trade deal between the US and China was progressing well. “Just had a long and very good call with President Xi of China,” Trump said on Saturday. “Deal is moving along very well. If made, it will be very comprehensive, covering all subjects, areas and points of dispute. Big progress being made!” Chinese state media also said Xi and Trump spoke on Saturday, and quoted Xi as saying that teams from both countries have been working to implement a consensus reached with Trump. (Reuters)

US, China: Trade wars cost US, China billions of dollars each in 2018. The US-China trade war resulted in billions of dollars of losses for both sides in 2018, hitting industries including autos, technology - and above all, agriculture. Broad pain from trade tariffs outlined by several economists shows that, while specialized industries including US soybean crushing benefited from the dispute, it had an overall detrimental impact on both of the world’s two largest economies. The losses may give US President Donald Trump and his Chinese counterpart, Xi Jinping, motivation to resolve their trade differences before a March 2 deadline, although talks between the economic superpowers could still devolve. The US and Chinese economies each lose about USD2.9bn annually due to Beijing’s tariffs on soybeans, corn, wheat and sorghum alone, said Purdue University agricultural economist Wally Tyner. (Reuters)

EU: Germany inflation at 8-month low, weaker than expected. Germany's consumer price inflation slowed sharply in Dec to its lowest level in eight months, figures from the Federal Statistical Office showed on Friday. The consumer price index rose 1.7% YoY following a 2.3% increase in Nov. Economists had forecast an inflation rate of 1.9%. The latest inflation figure was the lowest since April, when price growth was 1.6%, same as in March. Compared to the previous month, the CPI edged up 0.1% in Dec, which was less than the 0.3% gain economists' had predicted. The annual average inflation was 1.9% in 2018, the agency said. Inflation accelerated from 1.8% in 2017 and was the highest since 2012, when it was 2%. (RTT)

China: To restrict imports of scrap steel, aluminium from July. China will restrict imports of scrap steel and aluminium from July 1, the environment ministry said on Saturday. Scrap steel and aluminium would be moved from an unrestricted import list of solid waste products usable as raw materials to a restricted import list, the Ministry of Ecology and Environment said. Relevant departments were researching the formulation of standards for recycled copper and aluminium, it said. Copper and aluminium raw materials meeting relevant national standards would not be considered solid waste, and can be imported as regular goods, it said. China’s imports of solid waste fell more than half between Jan and mid-Nov compared with the same period a year earlier, as the country tightened a ban on solid waste imports. (Reuters)

Japan: Retail sales sink 1.0% in Nov. Retail sales in Japan were down a seasonally adjusted 1.0% on month in Nov, the Ministry of Economy and Industry said on Friday. That missed expectations for a decline of 0.4% following the 1.3% increase in Oct. On a yearly basis, retail sales were up 1.4% - exceeding expectations for an increase of 0.6% following the 3.6% gain in the previous month. Sales from large retailers sank 2.2% on year, shy of expectations for a fall of 0.4% following the 0.8% drop a month earlier. (RTT)

Japan: Industrial production falls 1.1% In Nov. Industrial production in Japan was down a seasonally adjusted 1.1% on month in Nov, the Ministry of Economy and Industry said in Friday's preliminary report. That exceeded expectations for a decline of 1.5% following the 2.9% jump in Oct. On a yearly basis, industrial production advanced 1.4% - also beating forecasts for 0.6% after climbing 4.2% in the previous month. Upon the release of the data, the METI maintained its assessment of industrial production, saying: Industrial production is picking up slowly. (RTT)

Markets

Yong Tai (Outperform, TP: RM0.82): Proposed acquisition of PTS Leisure SB for RM3m. Yong Tai has entered into a Share Sale Agreements with PTS Properties SB (PTSP) for the acquisition of 1m ordinary shares in PTS Leisure SB (PTSL), representing the entire issued shares of PTSL from PTSP for a cash consideration of RM 3m. (Bursa Malaysia)

Comments: The acquisition further solidifies its position as a leading tourism-related provider in the state. Expressed plans of widening its customer base for Encore Melaka and earnings potential is commensurate with price paid for the companies. We strongly believe recent share price weakness is unwarranted and reaffirm our Outperform with unchanged target price of RM0.82.

Astro (Outperform, TP: RM2.00): Subsidiary secures RM300m term loan from AmBank. Astro Malaysia Holdings says its wholly owned subsidiary, MEASAT Broadcast Network Systems SB (MBSN), has secured an RM300m term loan from AmBank (M). The term loan is to be used to finance MBSN's production, purchase and licensing of content/programmes/channels, to purchase set-top boxes (including the settlement of vendor financing), for capital expenditure — including asset acquisition for broadcast and transmission and acquisition of software and platforms, and/or for lending to any member of the Astro Group at a mutually agreed interest rate. The loan is available for multiple drawdowns within six months from the date of the facilities agreement. (The Edge)

Berjaya Land: Sells entire stake in Intercontinental Hanoi for RM222m. Berjaya Land says it plans to divest its entire stake in TPC Nghi Tam Village Ltd (TPC Village), which operates the five-star Intercontinental Hanoi West Lake Hotel, for VND1,244.6bn or RM222.2m. Berjaya Land said the proposed disposal of its stake in the TPC Village joint venture will result in an estimated gain of about RM192.3m. It had invested VND686.9bn (or approximately RM122.6m) in the JV to date. (The Edge)

Mesiniaga: Bags job worth RM27m related to EG-IIM project. Mesiniaga has bagged a four-month contract worth RM27.4m from Xiddig Cellular Communications SB for works related to the latter's Malaysia International Internet Gateway (EG-IIM) project. The project entails the delivery of lab equipment and site preparation for the EM IIG Project's service testing and verification. (The Edge)

Prestar: Buys RM14.5m Rawang land for business expansion. Steel-maker Prestar Resources is acquiring a 8,093 sq m freehold plot of land in Rawang for RM14.5m to expand its pallet racking business. Prestar said its wholly-owned subsidiary Prestar Storage Systems SB (PSSSB) has inked a sale and purchase agreement (SPA) with GMS Purnamax (M) SB for the acquisition. Prestar said the acquisition, expected to be completed in three months after the SPA, will be funded through bank borrowings. (The Edge)

Paramount: Establishes RM800m 20-year sukuk programme. Paramount Corp has established a 20-year unrated Islamic Medium Term Notes (Sukuk Murabahah) Programme of up to RM800m in nominal value. Paramount said proceeds from the programme will be used to finance its acquisition of land, investment assets, property development projects, refinance existing and future borrowings, and/or to fund its working capital. (The Edge)

Market Update

The FBM KLCI might struggle to open higher today after US stocks settled almost where they started on Friday, but only after a volatile day of trading that capped one of the wildest weeks on Wall Street in recent years, leaving both American and global equities on pace for their worst year in a decade. The S&P 500 index closed down 0.1%, having failed to add to the gains from two consecutive late afternoon rallies. The Dow Jones Industrial Average was also modestly lower, while the tech-heavy Nasdaq Composite eked out a 0.1% gain. The US indices had swung between positive and negative territory on the final full day of trading of 2018, reflecting the volatility that investors increasingly predict will persist into the New Year. Equity markets have been on a roller-coaster ride throughout the Christmas period, clawing back some of the losses from before the holiday when investors worried about the political, economic and monetary policy outlook. The worst Christmas Eve trading day on record was followed by a record-breaking Wall Street bounce on Wednesday. Across the Atlantic, European stocks enjoyed a largely positive performance on Friday. London’s FTSE 100 index closed up 2.3% and the Europe-wide Stoxx 600 rose 2%.

Back home, the FBM KLCI index gained 1.35 points or 0.08% to 1,692.07 points on Friday. Trading volume decreased to 1.42bn worth RM1.10bn. Market breadth was positive with 385 gainers as compared to 343 losers. In the region, the Hang Seng index was up 0.1% while China’s domestic stocks gained slightly more. Australia’s S&P ASX 200 climbed 1%. Japan’s Topix index was down 0.5% following news that Japanese factory output dipped in November, the sixth such contraction in eight months. The Friday session represented the final trading day of the year in some Asian markets including Shanghai and Tokyo.

Source: PublicInvest Research - 31 Dec 2018

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