PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 22 Nov 2019, 11:33 AM


PublicInvest Research Headlines - 3 Jan 2019

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Global: Factory slump adds to 2019 central bank challenges. Manufacturing gauges across the world’s largest economies stumbled at the end of last year, starting 2019 with fresh challenges for global growth and central banks. The global manufacturing index from JPMorgan Chase & Co. and IHS Markit fell in Dec to the lowest level since Sept 2016 as measures of orders and hiring weakened, data showed Wednesday. That followed other IHS Markit reports showing factory conditions slumped across Asia’s most export-oriented economies, with China’s signaling contraction for the first time since mid-2017 as Taiwan, Malaysia and South Korea also point to declines. Factory growth in the euro area fell to the lowest in almost three years. (Bloomberg)

EU: Eurozone manufacturing growth weakest since early 2016. Eurozone manufacturing expanded at the weakest pace since early 2016 in Dec as new orders fell for a third month and business confidence eroded to a six-year low, results of the survey by IHS Markit confirmed on Wednesday. The final Eurozone Manufacturing PMI, or PMI, was 51.4, unchanged from the flash, but lower than Nov's 51.8. A PMI score above 50 suggests growth in the factory sector. The latest PMI reading for the euro area was the weakest since Feb 2016. "The weakness of the recent survey data in fact raises the possibility that the goods producing sector could even act as a drag on the overall economy in the 4Q, representing a marked contrast to the growth surge seen this time last year." (RTT)

EU: German employment hits record in 2018. Germany's employment grew to a record high in 2018 despite a slowdown in the economy, preliminary figures from the Federal Statistical Office showed on Wednesday. The number of employed grew by 562,000 persons or 1.3% to an annual average 44.8m. "Higher labor force participation of the domestic population and the immigration of foreign workers offset negative demographic effects, so that the number of persons in employment in 2018 was the highest since German reunification in 1991," the statistical office said. In 2017, employment grew 1.4%. Employment has increased for 13 years in a row thus far. The service sector contributed most to the latest growth in employment with a 1.2% or 384,000 increase in the number of employees. Unemployment continued to decline in 2018, down by 130,000 persons or 8% to 1.49m on an annual average. The ILO jobless rate eased to 3.2% from 3.5%. (RTT)

UK: Manufacturing growth unexpectedly improves as factories prepare for Brexit. UK manufacturing sector expanded at the fastest pace in six months in Dec, defying expectations for a slowing, as demand strengthened as manufacturers and clients prepared for Brexit. The CIPS UK manufacturing PMI, or PMI, climbed to 54.2 from Nov's 53.6, survey data from IHS Markit showed on Wednesday. Economists had forecast a lower score of 52.5. A PMI reading above 50 shows growth in the manufacturing sector. "Any positive impact on the PMI is likely to be short-lived, however, as any gains in the near-term are reversed later in 2019 when safety stocks are eroded or become obsolete," IHS Markit Director Rob Dobson said. "Manufacturing will therefore be entering 2019 on a less than ideal footing with Brexit uncertainty having intensified considerably," Dobson added. (RTT)

China: Manufacturing sector shrinks for first time since 2017. China's manufacturing activity fell in Dec, due to a decline in new orders, for the first time since May 2017, survey data from IHS Markit showed on Wednesday. The headline seasonally adjusted Caixin Factory PMI, or PMI, fell to 49.7 from 50.2 in November. Any reading below 50 indicates contraction in the sector. Prior to Dec, manufacturing activity had stagnated in the previous two months. The total new work fell for the first time since June 2016. Meanwhile, new export business declined for the ninth month in a row, but at a softer pace. The employment level decreased as companies decided not to replace voluntary leavers and to reduce operations cost. On the price front, the input price declined for the first time since May 2017 and the output prices fell for the second month in a row. Busines confidence of twelve month outlook for production edged up to a three-month high in Dec. (RTT)

India: Manufacturing growth remains robust. India's manufacturing growth slowed slightly in Dec, but the pace remained strong amid robust sales, data from IHS Markit showed on Wednesday. The headline Nikkei manufacturing PMI, or PMI, fell to 53.2 in December from 54.0 in Nov. Any reading above 50 indicates an expansion in the sector. The latest reading was the second highest in 2018 and contributed to highest quarterly average since the 3Q of fiscal 2012, IHS Markit said. New work grew at the second-quickest pace since Dec 2017 amid expanded client bases, stronger demand and fruitful advertising. Export sales grew for the fourteenth month in a row. The rise in production was among the quickest seen in 2018 and greater sales and technological progress supported the increase in output. Employment continued to expand in Dec, at the slowest pace in four months, while backlogs were accumulated to the quickest extent since May. (Reuters)

Malaysia: Big cloud over Malaysian manufacturing, PMI at lowest level. A big cloud hangs over the Malaysian manufacturing sector after its PMI for Dec 2018 hit its lowest on record. An economist said there was a significant fall in demand, while export orders dropped for the first time since June resulting from weakness across the Asia-Pacific region. IHS Markit economist Joe Hayes is also of the opinion that the index dip will heavily weigh on the final GDP reading for 2018. Meanwhile, Federation of Malaysian Manufacturers (FMM) president Datuk Soh Thian Lai said that Dec’s performance on its own cannot be the concluding figure to deduce that the overall manufacturing sector is bad. “The other reason is also due to cyclical factors. Dec has always had the lowest outputs due to the longer festive season and holidays,” he said. (StarBiz)


AirAsia (Outperform, TP: RM4.14): Targets 100m passengers in 2019. AirAsia Group is out to monetise its digital businesses and broaden the group’s digital footprint this year but has no plan to open more new airlines over the next three years. The airline wants to focus on growing its existing business especially in Indonesia and Philippines. This year AirAsia Group CEO Tan Sri Tony Fernandes is hoping that his airline group would be able to carry over 100m passengers. (StarBiz)

UMW: Winds up four O&G units. UMW Holdings has commenced voluntary winding up of four of its subsidiaries under the unlisted oil and gas (O&G) segment. UMW Holdings president and group CEO Badrul Feisal Abdul Rahim said despite the volatile oil price environment, the group was making good progress on its planned strategic exit from the unlisted O&G segment with exit plans in place for several of the remaining subsidiaries. (Bernama)

XingHe: Seeks expansion via RM100m aquaculture acquisition. XingHe Holdings is exploring a new source of revenue via the RM100m acquisition of an aquaculture business in Kg Wakuba, Sabah. XingHe subsidiary XW Aquaculture SB has entered an agreement to acquire a 97.9-hectare tract and farm assets from Pegagau Aquaculture SB for RM100m cash. (StarBiz)

Rubberex: To dispose of China manufacturing ops to repay borrowings. Rubberex Corp (M) plans to dispose of its manufacturing operations in China for HKD135m (RM71.6m). The proceeds from the sale will partly be used to repay borrowings, which amounted to HKD49.7m as at Sept 30, 2018. Another RM20.9m has been earmarked for the expansion and automation of its production lines of nitrile disposable gloves at the group's existing production facilities in Ipoh, Perak. (The Edge)

MAHB: Says agreement to sell its 11% stake in Hyderabad airport firm terminated. Malaysia Airports Holdings (MAHB) said the agreement to dispose of its 11% stake in GMR Hyderabad International Airport Ltd (GHIAL) to GMR Airports Ltd has been terminated. The airports operator said the share purchase agreement was automatically terminated as the purchaser failed to complete its obligation in accordance with the terms of the agreement by Dec 31, 2018. (The Edge)

MyEG: BNM green-lights launch of iPayEasy e-wallet. MyEG Services announced its sub-subsidiary MyEG Alternative Payment Services SB has received a Letter of No Objection from Bank Negara Malaysia to the launch of its iPayEasy e-wallet. (The Edge)

MQ Technology: Jurassic Theme Park plans with Cambodian firm scrapped. MQ Technology has scrapped plans to collaborate with Cambodian Resort And Entertainment Co Ltd (CRE) on the development and management of a Jurassic Theme Park in Cambodia. MQ Technology said the memorandum of agreement (MoA) entered into with CRE on Dec 12, 2016 and extended to Jan 2, 2019, has lapsed. (The Edge)

Nestle: Doubles sales on e-commerce space. Nestle (Malaysia) said its sales have doubled on Shopee Malaysia e-commerce space within a year of its partnership with the online marketplace. In March 2017, Nestle joined forces with Shopee Malaysia as part of its continuous expansion into the e-commerce space. (Bernama)

Market Update

The FBM KLCI might open higher today, tracking the positive performance on Wall Street overnight. US stocks mounted a comeback on Wednesday, erasing heavy losses seen in early trading, after oil prices swung higher and lifted energy shares. The S&P 500 rebounded to close 0.1% higher, led by the energy, communication services and consumer discretionary sectors. The Dow Jones Industrial Average rose 18.8 points, or 0.08%, after falling as much as 398 points. The Nasdaq Composite advanced 0.5%. Wednesday’s swings between gains and losses marked a continuation of the volatility that gripped Wall Street in December, when stocks plunged more than 6% to clinch the worst year for equities since 2008. Wall Street has been hit by expectations for slower growth in the US economy and corporate earnings, in addition to concerns over interest rate increases by the Federal Reserve and trade negotiations between the US and China. In the latest session, a spike in oil prices helped buoy the market. A Bloomberg survey showed that OPEC production fell by the most in almost two years in December amid cuts by Saudi Arabia, lessening supply concerns driven by record high Russian production. An agreement between OPEC and other nations, including Russia, to lower crude output officially began this month. European markets finished mixed. Performance-wise, the DAX gained 0.20%, the FTSE 100 rose 0.09% while the CAC 40 lost 0.87%.

Back home, the FBM KLCI index lost 22.47 points or 1.33% to 1.668.11 points on Wednesday. Trading volume increased to 1.68bn worth RM0.95bn. Market breadth was negative with 256 gainers as compared to 532 losers. The regional markets also finished broadly lower with shares in Hong Kong leading the region. The Hang Seng lost 2.77% while China's Shanghai Composite was off 1.15%.

Source: PublicInvest Research - 3 Jan 2019

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