PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 18 Oct 2019, 9:14 AM


PublicInvest Research Headlines - 14 Jan 2019

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US: Core inflation holds steady as energy drags down main index. A key measure of U.S. inflation was little changed in Dec while falling energy prices dragged down the broader gauge, giving the Federal Reserve little urgency to raise interest rates soon as it signals a more cautious approach in 2019. Excluding food and energy, the so-called core consumer price index rose 2.2% from a year earlier for a second month and increased 0.2% from Nov, matching the median estimates of economists, according to a Labor Department report. The broader CPI cooled to a 1.9% annual gain and was down 0.1% from the prior month as energy costs fell the most in almost three years. The data suggest inflation is contained around the Fed’s target, with prices underpinned by steadily rising wages and a tariff war with China. (Bloomberg)

US: Government shutdown may depress Jan job growth. A partial shutdown of the US government could slash job growth by as much as 500,000 in Jan and lift the unemployment rate above 4.0% unless the impasse in Washington is resolved before next Friday, economists warned. Some 800,000 government workers missed their first paycheck on Friday following the partial shutdown which started on Dec 22 as President Donald Trump demanded that the US Congress give him USD5.7bn this year to help build a wall on the country’s border with Mexico. The Labor Department, which has not been affected by the shutdown, surveys employers and households for its closely watched employment report, which includes nonfarm payrolls and the unemployment rate, during the week that includes the 12th of the month. (Reuters)

EU: Italy Treasury minister sees stagnation rather than recession. Italy’s Treasury Minister said on Sunday he did not see a recession on the horizon but acknowledged there could be a period of stagnation. The Italian economy has been slowing for the last year and GDP declined by 0.1% in the 3Q, the weakest result since 2014. On Friday industrial output for Nov came in much weaker than expected, increasing the risk of recession for the euro zone’s third largest economy. “Let’s wait for data for the last quarter of 2018. I don’t see a recession, I see a situation of stagnation,” Giovanni Tria said. (Reuters)

UK: Economy cools further in Nov. UK economic growth eased further in the three months to November with the pace of expansion slowing to a six-month low, driven by the weak performance in manufacturing, as activity was damped by uncertainties linked mainly to global trade and Brexit. Growth in the GDP slowed to 0.3% from 0.4% in the three months to Oct, the monthly estimates from the Office for National Statistics showed. The pace was the weakest since the three months to May, when the economy expanded 0.1%. Services were the largest contributor to GDP growth in the three months to Nov, the ONS said. Manufacturing output decreased for a second month running, down 0.8% in the three months to Nov after a 0.2% fall in the previous three-month period. (RTT)

China: Promotes use of yuan among Southeast Asian nations. China published a five-year blueprint on Friday, seeking economic and financial integration between southern Guangxi province and Southeast Asia, representing Beijing's latest effort to promote international use of the yuan currency. China's state council or cabinet has agreed to build Guangxi, which borders Vietnam, into a financial gateway between the Association of Southeast Asian Nations (ASEAN) and China, the world's second biggest economy, the PBOC said. As a key objective of the plan, China will promote the use of the yuan among ASEAN countries, with plans to facilitate cross-border trade settlement, currency transactions, investment and financing in the Chinese currency. (Reuters)

China: To roll out measures to maintain stable employment. China will roll out a series of measures to maintain stable employment this year, the official Xinhua news agency reported, citing the country’s human resources ministry. China is grappling with the impact of a slowing economy amid a damaging trade dispute with the US, its largest trading partner, and sources have said it plans to set a lower economic growth target of 6% to 6.5% in 2019, compared with “around” 6.5% in 2018. In order to ensure employment, the Chinese government will reduce the burden on companies, officials from the Ministry of Human Resources and Social Security said, according to Xinhua, adding that research on plans to cut their social insurance premium rate would be accelerated. (Reuters)

China: Will reduce foreign investment curbs, 2018 FDI rises 3%. China will reduce restrictions on foreign investment and address difficulties facing foreign companies investing in the country, the commerce minister said. Commerce Minister Zhong Shan said China would allow full foreign ownership of companies in more areas of the economy and would reduce the number of industries in which foreign investment was restricted or barred, the Ministry of Commerce said. It appeared to be largely reiterations of past pledges by Chinese officials for further market opening. FDI into China rose by 3% YoY to USD135bn in 2018, Zhong said. That would mark a slowdown from growth rates of 7.9% in 2017 and 4.1% in 2016. (Reuters)

Japan: Current account surplus falls 43% on higher oil imports. Japan posted a 43.5% drop in the current account surplus from a year earlier in Nov as goods trade fell into the red on higher oil imports that cut growth in exports, government data showed. The current account, one of the widest gauges of international trade, was at JPY757.2bn (USD7bn), coming below the JPY1trn line for the first time in 10 months. It was nevertheless the 53rd straight month of black ink, helped by primary income, which registered a surplus of JPY1.44trn, reflecting solid returns on overseas investments. Among other key components, the country had a goods trade deficit of JPY559.1bn, marking red ink for the second month in a row, according to a preliminary report released by the Finance Ministry. (Nikkei Asian Review)

Japan: Nov household spending falls for 3rd straight month. Japan’s household spending fell more than expected in Nov to mark the third straight month of year-on-year declines, government data showed on Friday, adding to growing uncertainties about the country’s fragile economic recovery. Household spending in Nov fell 0.6% from a year earlier, more than a median market forecast for a 0.1% drop and bigger than the previous month’s 0.3% decline. A pick-up in consumption is crucial for the BOJ to achieve its long-elusive 2% inflation target. Weak spending has discouraged firms from raising prices for fear of losing cost-sensitive households as customers. (Reuters)

Singapore: Retail sales falls in Nov. Singapore retail sales declined in Nov, primarily due to a sharp contraction in automobile sales, data from the Department of Statistics showed. Retail sales fell 3.0% YoY in Nov, reversing a 0.1% rise in Oct. Automobile sales tumbled 15.1% YoY after a 2% drop in the previous month. Excluding motor vehicles, retail sales declined 0.2% annually after rising 0.6%. Computer and telecommunications equipment sales declined 22.1%. (RTT)


TNB (Outperform, TP: RM16.86): Introduces blended coal at Lumut plant. Tenaga Nasional (TNB) is introducing blended coal at its coal-fired power plant in Lumut, Perak, as part of a continuous effort to ensure a sustainable coal supply for electricity generation. The introduction of blended coal for the Sultan Azlan Shah Power Station, which produces 20% of Peninsular Malaysia's energy generation, will help secure coal supply for the power plant going forward. (Bernama)

IJM Corp (Neutral, TP: RM2.00): IJM Land plans to launch RM1.7bn worth of properties in FY2020. IJM Land plans to launch properties worth RM1.7bn GDV in its FY20 ending March 31, 2020. “For FY19, we launched projects with an estimated total GDV of RM1.6bn in Penang, Klang Valley, Seremban, Johor and Sabah,” IJM Land CEO Edward Chong said. “More new phases will be launched in FY20 from the projects we introduced in FY19,” said Chong. (The Edge)

Genting (Outperform, TP: RM8.80): Tells Wynn that its Las Vegas casino resort will look 'dramatically different'. Genting has argued that its upcoming hotel and casino resort in Las Vegas will look “dramatically different” from Wynn Resorts Holdings LLC when it opens for business in late 2020. Wynn Resorts’ claim has been predicated on speculative extrapolation regarding the appearance of its unfinished resort and casino, which is still in an early stage of construction with nearly two years left to go before the opening. (The Edge)

Scomi Energy: Investigates the RM64.33m advance to parent Scomi Group, and cuts ties with it. Scomi Energy Services board has commenced an investigation into the RM64.33m lent to its parent company Scomi Group as the advances were made without board approval. The advances without board approval have dragged SESB into deeper financial trouble as Scomi Group has not been able to repay the outstanding amount. (The Edge)

Perisai Petroleum: Bursa wants to delist Perisai Petroleum after its regulation plan is rejected. Perisai Petroleum Teknologi will be suspended from trading effective Jan 22 after the stock exchange rejected the group’s proposed regularisation plan. The Practice Note 17 company will be delisted from the Main Market of Bursa Malaysia on Feb 13 unless Perisai appeals against the exchange’s decision before Feb 10. (The Edge)

PUC: Ropes in asset management firm for micro financing funds. PUC has signed a memorandum of understanding (MoU) with Chiyo Asset Management KK to help obtain institutional capital as a source of funding to grow its financial services business. This is in relation to the partnered micro financing programme between the Malaysian Workers Foundation (Yapem) and PUC’s wholly-owned money-lending unit Wealth Pursuit SB, which was announced just a week ago. (The Edge)

NTPM: Investing USD30m to expand in Malaysia, Vietnam. NTPM Holdings is investing over USD30m to expand its tissue paper production facilities in Malaysia and Vietnam for the 2019. Group MD Lee See Jin said the bulk of the budget, about two thirds, went towards the expansion of the Vietnam facility. “The new production line for the Vietnam facility, which is being installed currently, would be ready to commence production in May,” he said. In Malaysia, the group is expanding the Nibong Tebal facility. (StarBiz)

Market Update

The FBM KLCI might open flat today after a five-session winning streak for global stocks ran out of steam as participants took a more cautious stance ahead of last weekend and the start of the US quarterly earnings season this week. The US government shutdown drama provided a further reason for wariness. However, the underlying mood across stock markets remained broadly positive, given persistent hopes for a breakthrough in the US China trade dispute and signs that the Fed was prepared to be “patient” with regard to further interest rate rises. Beijing and Washington held three days of trade talks last week and, while few details emerged, both sides struck a positive tone. On Wall Street, the S&P 500 ended the day with a marginal loss, at 2,596, but recorded a weekly gain of 2.5%. The Dow Jones Industrial Average slipped slightly, while the Nasdaq Composite shed 0.2%. In Europe, the Xetra Dax fell 0.3% and London’s FTSE 100 shed 0.4%, although the region-wide Stoxx 600 index eked out a 0.1% gain.

Back home, the FBM KLCI index gained 4.34 points or 0.26% to 1,683.22 points on Friday. Trading volume decreased to 2.89bn worth RM2.17bn. Market breadth was positive with 569 gainers as compared to 294 losers. In China, the CSI 300 index gained 0.7% and Hong Kong’s Hang Seng index rose 0.6%. Tokyo’s Topix added 0.5%.

Source: PublicInvest Research - 14 Jan 2019

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