PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 27 May 2019, 9:14 AM


PublicInvest Research Headlines - 9 Jan 2019

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Global: World Bank sees global growth slowing in 2019. The growth of the global economy is expected to slow to 2.9% in 2019 compared with 3% in 2018, the World Bank said, citing elevated trade tensions and international trade moderation. "At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead," World Bank CEO Kristalina Georgieva said in the semi-annual Global Economic Prospects report. (Reuters)

US: Small-business owners’ confidence in US economy weakens. Small-business owners’ confidence in the US economy fell for the fourth consecutive month and their outlook on business conditions fell to the lowest level since late 2016, according to the National Federation of Independent Business. The conservative-leaning small-business lobby said its optimism index fell to 104.4 in Dec from Nov’s 104.8 reading. The index had set a high of 108.8 in Aug, breaking a July 1983 record. The NFIB survey is a monthly snapshot of small businesses in the US, which account for about half of private-sector jobs. (The Wall Street Journal)

US: More regions see job openings outnumbering the number of people seeking jobs. Job openings are outnumbering unemployed workers across increasingly wide swaths of the US, forcing businesses to rethink how they find workers, which could keep pressure on the Federal Reserve to raise interest rates despite a global economic slowdown. The volume of openings first topped the number of jobless people in Midwestern states in early 2017. But in recent months that phenomenon has spread to other regions, particularly the South. The Labor Department on Tuesday is to release the latest data on job openings, from Nov. The report follows data released last week showing a surge in job growth in Dec and could help central bankers assess sometimes conflicting anecdotal reports about how hard firms must work to fill jobs. (CNBC)

US, China: Trade talks extended amid some signs of progress. The US and China will continue trade talks in Beijing for an unscheduled third day, US officials said amid signs of progress on issues including purchases of US farm and energy commodities and increased access to China’s markets. People familiar with the talks said the world’s two largest economies were further apart on Chinese structural reforms that the Trump administration is demanding in order to stop alleged theft and forced transfer of US technology and on how to hold Beijing to its promises. (Bloomberg)

EU: German economy shows new signs of softening, raising broader fears. Fresh signs of a weakening German economy are raising fears that last year’s slowdown could spill into 2019, deepening the challenges facing policy makers in Europe and the US Industrial production in Europe’s largest economy dropped unexpectedly in Nov, according to data released, the latest reflection of a confluence of headwinds facing the global economy including trade tensions and weakening demand from China. German factories aren’t alone in feeling those effects. (The Wall Street Journal)

UK: House prices rise, broad picture still weak, says Halifax. British house prices rose more than expected in Dec but the property market remains subdued ahead of Brexit, mortgage lender Halifax said. House prices rose 2.2%, more than reversing a 1.2% fall in Nov and outstripping all forecasts in a Reuters poll of economists that had pointed to a 0.2% increase. On an annual basis, prices rose 1.3% in the three months to Dec, again topping all forecasts that pointed to a 0.4% rise. Still, with other surveys and official data mostly showing a slowing housing market, Halifax cautioned against reading too much into the strength of a single month’s figures. (RTT)

Japan: Consumer confidence eases for third month. Japan's consumer confidence weakened for a third consecutive month in Dec, preliminary data from the Cabinet Office showed. The consumer confidence index for households with two or more persons fell to a seasonally adjusted 42.7 from 42.9 in Nov. Economists had forecast a score of 42.8 for Dec. Among the four subindexes of the consumer confidence index, the index reflecting households' inclination to buy durable consumer goods rose in December, while those measuring expectations on employment, life style and savings declined, the report showed. (RTT)

Malaysia: GDP growth to slow to 4.5% in 2020, says Moody's. Malaysia's real GDP growth should slow to 4.7% in 2019 and 4.5% in 2020, after averaging around 5% during 2015-18, according to Moody's Investors Service. Moody's said Malaysia's credit profile reflects the country's large and diversified economy with healthy medium-term growth prospects, and relatively high government debt that is partly offset by a favourable debt structure and large domestic savings. It said external headwinds from trade protectionism will weigh on trade activity, while a review of infrastructure projects and slowing public spending will prove a further drag on growth. Nevertheless, economic expansion will still stay stronger than the median average for A-rated sovereigns, even taking moderating growth into account. (The Edge)


Astro (Outperform, TP: RM2.00): Launches bundled broadband with content offering. Astro Malaysia Holdings raised the ante in the broadband space with its bundled broadband with content offering, starting with its pilot project in Jasin, Melaka. (StarBiz) Comments : Astro's entry into the broadband space is in line with our expectation as we believe that convergence is the key to staying relevant in the fast-changing telecommunication and internet industry. We are positive on this development and believe that it would be value accretive to Astro as we reckon that Astro’s 92% household penetration in Jasin is predominately NJOI, which currently does not generate TV subscription revenue. Astro’s bundled broadband-content packages are priced at RM99/month for 50Mbps and RM129/month for 100Mbps broadband service, both come with Astro’s Family Pack content which has more than 40 channels. The eligible households would be able to subscribe to the bundled package at RM10-20 cheaper as compare to subscribing separately to content package (Astro’s Family Pack normal price: c.RM40/month) and pure broadband internet package (City Broadband: RM79 for 50Mbps and RM99 for 100Mbps). Nonetheless, note that the contribution will not be significant in the near term as this is just a trial project which only target about 1,100 homes in Jasin and it will also depend on the take-up rate by the eligible households. We maintain our earnings estimates and Outperform on Astro with an unchanged TP of RM2.00.

SP Setia (Outperform, TP: RM3.00), Boustead Plantations: Boustead Plantations sues SP Setia unit for RM37m over GST refund. Boustead Plantations has filed a suit claiming RM37.2m from a unit of SP Setia in relation to a refund under the GST. Acting as the group's trustee, CIMB Islamic Trustees had filed the claim against Setia Fontaines SB for alleged breach of a sales and purchase agreement, Boustead Plantations said. (The Edge)

Top Glove (Neutral, TP: RM5.70): Improvements in Aspion to be obvious in 1-3 years. Top Glove Corp said it will take time to turn the operations of Aspion SB around, but the results will be obvious in between one and three years' time. Its executive chairman Tan Sri Lim Wee Chai said Aspion accounted for about 10% of its sales revenue per quarter, and the contribution from the subsidiary for the FYE Aug 31, 2019, will remain relatively small. (The Edge)

MMHE: Qualifies as Petronas contractor for offshore structures. Malaysia Marine and Heavy Engineering Holdings' unit has qualified as a contractor by Petroliam Nasional (Petronas) to provide fixed offshore structure works. MMHE announced that its unit Malaysia Marine and Heavy Engineering SB (MMHE) was awarded a six-year frame agreement by Petronas. (StarBiz)

Hovid: MD, private equity firm secure 94.9% of shares as takeover bid closes. Hovid MD David Ho Sue San and private equity firm TAEL Two Partners Ltd — via special purpose vehicle Fajar Astoria SB — have secured 94.94% of the pharmaceutical company’s shares at the close of their takeover offer. (The Edge)

Consumer (Neutral): Retail sector to be resilient in 2019, but KL office rentals will stay weak, according to Savills. The retail sector is expected to be resilient in 2019, in particular for the beauty and wellness, accessories and niche grocery trade segment, said Savills Malaysia. Major malls will also see strong sales turnover and footfall, the property consultancy firm said. (The Edge)

Market Update

The FBM KLCI might open with a positive note today after US and European stocks maintained their upward momentum as hopes for progress in resolving the trade dispute between Beijing and Washington were buoyed by news that negotiations between the two countries would be extended into a third day. Donald Trump, US president, earlier said that the talks were “going very well”, following on from positive comments on Monday by Wilbur Ross, US commerce secretary and trade hawk. Oil prices also continued to regain ground with Brent crude rising for a seventh day and making what appeared to be a decisive break above the $58 a barrel mark. On Wall Street, the S&P 500 rose 1% to 2,574, having earlier touched 2,579, leaving it 9.7% up from its Boxing day low. The index has risen 5.2% over the past three days. The Dow Jones Industrial Average rose 1.1% while the tech-heavy Nasdaq Composite also ended 1.1% higher as participants largely managed to brush off a profit warning from South Korea’s Samsung. Across the Atlantic, the pan-regional Stoxx Europe 600 index rose 0.9% as the Xetra Dax in Frankfurt gained 0.5%, London’s FTSE 100 ended 0.7% higher and the CAC 40 index in Paris rose 1.2%.

Back home, the FBM KLCI index lost 6.41 points or 0.38% to 1,672.76 points on Tuesday. Trading volume decreased to 2.31bn worth RM2.03bn. Market breadth was negative with 366 gainers as compared to 404 losers. In the region, Seoul’s Kospi Composite fell 0.6% as index heavyweight Samsung fell almost 2%. In Tokyo, the Topix edged up 0.4% while the Hang Seng rose 0.15% and the Shanghai Composite lost 0.26%.

Source: PublicInvest Research - 9 Jan 2019

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