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PublicInvest Research

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

 

PublicInvest Research Headlines - 4 Jan 2019

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Economy

US: Factory activity hits two-year low, casts shadow over economy. US manufacturing activity slowed sharply to a two-year low in Dec amid a plunge in new orders and hiring at factories, suggesting the economy was probably not immune to slowing growth in China and Europe. The ISM survey published on Thursday offered a downbeat assessment of the manufacturing sector, with almost all components declining last month. Concerns about the economy’s health are escalating despite the labor market remaining strong. “The economy is just going to be spinning its wheels with subpar growth in 2019 if the purchasing managers report is to be believed,” said Chris Rupkey, chief economist at MUFG in New York. “New orders have dried up and this will take a toll on business investment and growth in 2019.” The ISM said its index of national factory activity tumbled 5.2 points to 54.1 last month, the lowest reading since Nov 2016. (Reuters)

US: The president of the Dallas Fed says central bank should pause rate hikes amid turmoil in markets. The Federal Reserve ought to stop raising interest rates until it gets a clearer picture of where the economy is headed, Robert Kaplan, president of the central bank’s Dallas district, said on Thursday. Slowing global growth, weakness in rate-sensitive industries and tightening financial conditions that have included a sharp stock market drop have indicated to Kaplan that the Fed should hit the pause button, he said. “I think those three issues are affecting the market, but they’re also affecting my thinking about monetary policy,” he said. “It’s gonna take some time to see the depth and breadth of those three issues.” (Bloomberg)

US: Weekly jobless claims increase more than expected. The number of Americans filing applications for jobless benefits increased more than expected last week, but the underlying trend continued to point to labor market strength despite ongoing financial market volatility. Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 231,000 for the week ended Dec 29, the Labor Department said on Thursday. Data for the prior week was revised higher to show 5,000 more applications received than previously reported. Economists polled by Reuters had forecast claims increasing to 220,000 in the latest week. The Labor Department said claims for California and Virginia were estimated last week. Unadjusted claims for both of those states declined last week. (Reuters)

US: White House says shutdown trims 0.1% from GDP every two weeks. The ongoing partial government shutdown will cut US economic output by about 0.1% every two weeks, the chairman of the White House Council of Economic Advisers said. “Our estimate is that GDP in the 1Q could go down by about a tenth if this were to resolve in the next few weeks,” CEA Chairman Kevin Hassett said on Thursday. While it wasn’t immediately clear whether Hassett was referring to the level of GDP or the annualized pace of growth, his estimate appears to be broadly in line with those from private forecasters. Hassett said that if the shutdown persists, the pace of economic growth would continue to decline. (Bloomberg)

US: Private sector job growth far exceeds estimates in Dec. Partly reflecting favorable weather, payroll processor ADP released a report on Thursday showing much stronger than expected US private sector job growth in the month of Dec. ADP said private sector employment surged up by 271,000 jobs in Dec after climbing by a downwardly revised 157,000 jobs in Nov. Economists had expected an increase of about 178,000 jobs compared to the addition of 179,000 jobs originally reported for the previous month. The much stronger than expected job growth in Dec reflected the biggest jump in private sector employment since Feb of 2017. "We wrapped up 2018 with another month of significant growth in the labor market," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. (RTT)

UK: Construction growth weakest in 3 months. British construction sector growth was the weakest in three months in Dec amid a slower rise in commercial work, survey data from IHS Markit showed on Thursday. The CIPS PMI, fell to 52.8 from 53.4 in Nov. The latest reading was in line with economists' expectations. A PMI reading above 50 suggests growth in the construction sector, which has now expanded for nine months in a row. New order growth was subdued in Dec, leading to softer output growth. The unusually wet weather had also acted as a brake on construction work, IHS Markit said. Among the sub sectors, commercial work grew at the slowest pace since May 2018. Meanwhile, civil engineering activity rose at the fastest pace since May 2017. Business optimism rose to the highest since last April and was well above the near six-year low seen in Oct. (RTT)

Malaysia: Nov export growth seen easing to 6.6% YoY. Malaysia's exports likely grew 6.6% in Nov from a year earlier, slowing sharply from the previous month, a Reuters poll showed. The country's annual export growth had jumped 17.7% in Oct, amid strong demand from China and higher shipments of manufactured and mining goods. Malaysia's import growth is also expected to ease to 3.1% YoY in Nov, a drop after rising 11.4% the previous month. The country's trade surplus is expected to narrow to RM11.5bn (USD2.78bn) in Nov, down from RM16.3bn in Oct, the largest trade surplus in Malaysia's history. (Reuters)

Markets

Ecobuilt: Bags RM203m affordable housing project. Ecobuilt Holdings (formerly known as M-Mode) has bagged an RM202.5m contract to build two affordable apartment blocks housing 1,320 units, in Kampung Muhibbah, Bukit OUG here. Ecobuilt said its wholly owned subsidiary E&J Builders SB has accepted the letter of acceptance from Vistarena Development SB for the appointment of E&J as the main contractor for the proposed project. The project is expected to be completed by July 3, 2021. (The Edge)

United Malacca: Sells four estates to Huat Lai for RM175m. United Malacca on Thursday entered into three separate agreements to sell four plantation estates to Huat Lai Resources for RM175.1m. The four estates, located in Negri Sembilan and Melaka, measuring a total of 1,021ha, were sold via an open tender exercise. C H Williams Talhar & Wong SB has valued the land and plantation assets at RM185.4m, the company said. (The Edge)

Nexgram: To dispose of Nexgram Tower for RM67m. Nexgram Holdings has proposed the disposal of Nexgram Tower, an 11-storey stratified office building located at Bangsar South, Kuala Lumpur, for a consideration of RM67m to IMS Development SB. But the group will realise an estimated loss on disposal of approximately RM12.4m, based on the property’s current book value of RM79.4m. The original cost of investment of the building was RM64m. (The Edge)

AZRB: To continue providing diesel bunkering services to PetDag customers. Ahmad Zaki Resources (AZRB) said its wholly owned subsidiary has agreed to continue providing marine high speed diesel bunkering services to vessels belonging to Petronas Dagangan customers at Kemaman port in Terengganu. With the new agreement, Inter-Century SB (ICSB) will continue its bunkering activities at the Kemaman Supply Base for five years until Dec 31, 2023. (The Edge)

Kejuruteraan Asastera: To raise RM7.14m for acquisitions, investments. ACE Market-listed electrical and mechanical engineering company Kejuruteraan Asastera (KAB) is looking to raise RM7.14m from a proposed special issue of up to 34m new ordinary shares in the company to Bumiputera investors. KAB MD Datuk Lai Keng Onn said most of the proceeds from the exercise will be utilised to finance potential acquisitions and investments in businesses and assets that can help drive its electrical and mechanical engineering services further. (The Edge)

IPO: ACE Market-bound DPI acquires new machine to expand production capacity. ACE Market-bound aerosol paints producer DPI Holdings has acquired a new fully-automated aerosol filling line worth RM450,000 for its existing plant, which will increase its production capacity to meet rising demand. DPI said the new aerosol filling line is currently undergoing installation and trial runs, and is expected to begin operations in the next few months. Its current production capacity is 9.7m cans. (The Edge)

IPO: Mr DIY planning RM1.5bn IPO. Mr DIY, Malaysia’s biggest home improvement retailer, is planning to launch an IPO either in Malaysia or Hong Kong in 4Q of this year, says Creador SB CEO Brahmal Vasudevan. Private equity firm Creador is an investor in Mr DIY, which emerged some three years ago. It owns an 18% stake in the company, while the remainder is held by the company’s founders. Sources said Mr DIY is looking to raise RM1.5bn via IPO. (StarBiz)

Market Update

The FBM KLCI might open lower today after another day of turbulence across global markets left equities nursing further heavy losses, as mounting worries about the outlook for the world economy fuelled gains for “haven” assets such as the yen, US Treasuries and gold. Apple set a gloomy tone late on Wednesday after it blamed poor iPhone sales in China for its first sales warning in 16 years. The move came hard on the heels of data showing that Chinese manufacturing had contracted last month for the first time since May 2017. Meanwhile, the global growth worries were compounded on Thursday by the latest report from the US Institute for Supply Management, which showed that factory output on December had expanded at the slowest pace for more than two years. The survey also showed that businesses were becoming increasingly worried about the impact of Washington’s trade dispute with Beijing. On Wall Street, the S&P 500 ended 2.5% lower at 2,447, while the Dow Jones Industrial Average tumbled 2.8% and the Nasdaq Composite index fell 3.1%, its first drop in six sessions. In Europe, Frankfurt’s Xetra Dax fell 1.6% and London’s FTSE 100 closed 0.6% lower. The region-wide Stoxx 600 shed 1%.

Back home, the FBM KLCI index gained 7.72 points or 0.46% to 1,675.83 points on Thursday. Trading volume increased to 1.76bn worth RM1.22bn. Market breadth was negative with 366 gainers as compared to 367 losers. The regional markets finished mostly lower with Hong Kong's Hang Seng gave away 0.26% and China's Shanghai Composite lower by 0.04%.

Source: PublicInvest Research - 4 Jan 2019

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