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Author: PublicInvest   |   Latest post: Tue, 19 Feb 2019, 10:13 AM

 

PublicInvest Research Headlines - 18 Jan 2019

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Economy

US: Jobless claims fall to five week low despite shutdown. Filings for US unemployment benefits unexpectedly fell to a five-week low, even amid a partial federal government shutdown. Jobless claims declined by 3,000 to 213,000 in the week ended Jan 12, below economist forecasts, Labor Department figures showed. The four-week average, a less-volatile measure, declined to 220,750. The latest decline in claims, which remain near a historically low level, is in line with a tight labor market as indicated in the monthly jobs report for Dec. At the same time, the partial federal-government shutdown — which affects one-quarter of agencies and is now the longest in US history — is likely to cause some filings to increase in coming weeks. (Bloomberg)

US: Economic expectations drop to two-year low amid shutdown. US consumers this month were the most downbeat on the economy since Nov 2016, a third straight drop after expectations reached a 16- year high just three months earlier, as the partial government shutdown wears on toward a fourth week. The Bloomberg Consumer Comfort Index’s monthly expectations gauge fell for a third month to 44.5 in Jan as more respondents said the US economy is getting worse, according to a report on Thursday. Meanwhile, the weekly comfort measure declined to a four-month low of 58.1 as sentiment on the buying climate fell to its lowest since Nov. (Bloomberg)

EU: Eurozone Dec inflation confirmed at 8-month low. Eurozone consumer price inflation slowed in Dec to its lowest level in eight months, latest figures from the statistical office Eurostat confirmed. The consumer price index rose 1.6% YoY following a 1.9% increase in Nov. The latest inflation rate was the lowest since April, when the rate was 1.3%. Core inflation, which excludes prices of energy, food, alcohol & tobacco, was 1% in Dec, unchanged from Nov. Both figures were in line with the flash estimates released on Jan 4. Compared to the previous, Eurozone consumer prices were unchanged in Dec, in line with economists' expectations. In Dec, energy prices registered the biggest annual increase of 5.4% versus 9.1% in November. Prices of food, alcohol & tobacco grew 1.8%, which was slower than the 1.9% gain in the previous month. (Bloomberg)

EU: Eurozone construction output falls modestly in Nov. Eurozone construction output fell for a second month in Nov, albeit modestly, reflecting a contraction in civil engineering, data from the statistical office Eurostat showed. Construction output declined a calendar and seasonally-adjusted 0.1% MoM in Nov, after a 1.6% contraction in Oct. Building construction advanced by 0.1%, while civil engineering fell by 0.2% in Nov. On a yearly basis, production in construction grew a calendar adjusted 0.9% following a 0.6% expansion in Dec. In the EU28, construction output edged up 0.2% monthly after a 1.1% decline in Oct. YoY, production rose 1.8% following a 2.3% increase. (RTT)

Indonesia: Bank Indonesia vows to remain vigilant as it leaves rate on hold. Indonesia’s central bank left its benchmark interest rate unchanged for a second month, while keeping the door open for more policy action if needed. After hiking by 175 basis points since May, Bank Indonesia kept its seven-day reverse repurchase rate at 6% on Thursday, as predicted by all 26 economists surveyed by Bloomberg. Governor Perry Warjiyo said the rate was near its peak, but the policy stance is still “hawkish” and policy makers will remain “pre-emptive and forward-looking.” “This decision is consistent with efforts to lower the current-account deficit until it reaches the safe level and to maintain the attractiveness of domestic financial assets,” Warjiyo said. (Bloomberg)

Singapore: Exports drop most since late 2016 on tech slump. Singapore’s exports dropped the most in more than two years in Dec as a fading technology boom and US-China tensions hit the trade-reliant economy. Non-oil domestic exports fell 8.5% from a year ago, the biggest decline since Oct 2016, according to data released by Enterprise Singapore. The shipments fell 5.7% on a monthly basis, the worst since June. The decline was broad-based, with both electronics (- 11.2%) and non-electronics (-7.4%) taking a hit, and weakness across categories including data processing machines, transportation equipment, and chemicals, and mineral fuels. The data is in line with trends elsewhere in Asia as export-driven economies like South Korea and Japan take a knock from the cooling tech cycle and slower global demand. (Bloomberg)

Markets

AirAsia (Outperform, TP: RM4.14): Postpones reservation system upgrade. AirAsia Group will postpone a planned upgrade of its reservation system originally scheduled over this weekend, citing unforeseen circumstances. In a statement today, the low-cost carrier said the upgrade will be carried out at a later date. All systems will function as normal this weekend, and guests will be able to book flights, check in and manage their bookings as usual. (The Edge)

Bintulu Port, Muhibbah: Authority cancels Muhibbah’s RM585m wharf contract. The Bintulu Port Authority has cancelled a RM584.84m contract with Muhibbah Engineering (M) to build a supply base wharf at the second harbour basin of the port in Sarawak. Muhibbah said its 51%-owned unit Muhibbah Viccana JV has received a notice from the Bintulu Port Authority to terminate the contract. It is expecting a fair compensation to the termination of the contract. (The Edge)

Kerjaya Prospek: Gets RM155m Cyberjaya job from HCK unit. Kerjaya Prospek secured from Aspen Entity Sdn Bhd (AESB) a RM155m project to construct the main building for a planned property development along Persiaran Bestari in Cyberjaya, Selangor. This is an expansion of the current customer base for the company. It further increases the group's order book and is expected to provide an additional stream of revenue for the group over the next three years. (The Edge)

Berjaya Land: Inks deal to develop USD1bn Four Seasons Resort in Japan. Berjaya Land (BLand) has inked a partnership with Four Seasons Hotels and Resorts to develop the Four Seasons Resort and Private Residences Okinawa in Japan with a GDV of USD1bn (RM4.11bn).It said its unit Berjaya Okinawa Development Co Ltd had inked the deal, which would take four years to complete, with a projected total development cost of USD400m. (The Edge)

Scomi: Scomi Energy clarifies Scomi Group still owes it RM47.83m Scomi Energy Services (SESB), the 65.64%-owned unit of Scomi Group, clarifies today that its parent owes it RM47.83m, and not just RM28.44m. The total outstanding sum comprises RM19.39m in relation to a shared service agreement, and RM28.44m worth of advances that Scomi Group still owes SESB under related party transactions (RPTs) as at end-2018. SESB had initially advanced RM44.94m to Scomi Group under the RPTs. (The Edge)

Xidelang: Confirms litigation matters against China unit resolved. Xidelang Holdings Ltd confirmed that all litigation matters involving its China-based subsidiary HongPeng Footware Manufacturing Co Ltd have been resolved. The shoe manufacturer said that the Chinese law firm it appointed to undertake a thorough review of matters has confirmed that the cases have been settled. (The Edge)

Sinmah Capital: To raise RM500m for healthcare venture. Sinmah Capital has earmarked RM100m in capital expenditure for the construction of a hospital in Nilai as it makes its maiden venture into healthcare. Via 70%-owned unit Sinmah Amegajaya Healthcare, the company inked a deal to acquire a property in Nilai for RM27m, and plans to redevelop it into Malaysia’s first full-service ‘Integrated Public-Private University Hospital’. The construction would be completed 28 months from March. (The Edge)

Market Update

The FBM KLCI might open with a positive bias today after US stocks ended mostly higher overnight. Media reports claiming US officials were weighing up plans to scale back tariffs on Chinese imports bolstered hopes for a breakthrough in the trade dispute between the two countries, giving shares on Wall Street a mid afternoon boost. The optimistic mood also offered some support to oil prices, while the dollar and US Treasuries were little changed from levels seen earlier in the day. The US Treasury department subsequently disputed the report, with a White House official adding that no new tariff decisions had been made. The report helped counter earlier concerns that a US investigation into Chinese telecoms equipment group Huawei could disrupt trade talks between Washington and Beijing. On Wall Street, the S&P 500 ended 0.8% higher at 2,629, after earlier hitting 2,645. The gain left the index up more than 12% from a 20-month intraday low hit on December 27. The Dow Jones Industrial Average and the Nasdaq Composite both rose 0.7%. Across the Atlantic, the Europe-wide Stoxx 600 ended fractionally higher, as Frankfurt’s Xetra Dax slipped 0.1% and the FTSE 100 in London shed 0.4%. SocGen ended 5.7% weaker, helping to pull the CAC 40 index in Paris down 0.3%.

Back home, the FBM KLCI index gained 9.89 points or 0.59% to 1,682.97 points on Thursday. Trading volume increased to 2.40bn worth RM2.04bn. Market breadth was positive with 447 gainers as compared to 331 losers. The regional markets finished lower with shares in Hong Kong leading the region. The Hang Seng was down 0.54% while China's Shanghai Composite gave away 0.42% and Japan's Nikkei 225 lost 0.20%.

Source: PublicInvest Research - 18 Jan 2019

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