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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 22 Feb 2019, 10:08 AM

 

PublicInvest Research Headlines - 22 Jan 2019

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Economy

Global: UN sees global economy growing 3% in 2019 but beset by risk. The United Nations expects the global economy to grow 3% this year and in 2020, slightly below a 3.1% expansion in 2018, it said on Monday. But urgent and concrete policy action is needed to put the world on track to meet the UN’s goals for eradicating poverty by 2030, it said. “There are plenty of yellow lights flashing and some of those yellow lights are almost certainly likely to turn red over the coming year, with very unpredictable consequences,” said Richard Kozul-Wright, head of globalization and development strategies at the UN economic agency UNCTAD. “Growth is fragile, huge uncertainties remain, risks are looming. We have not broken away from the legacy of the financial crisis of 2008-2009. We are still in a new abnormal.” (Reuters)

Global: IMF fears trade war and weak Europe could trigger sharp global slowdown. The IMF on Monday cut its world economic growth forecasts for 2019 and 2020 due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions could further destabilize a slowing global economy. In its second downgrade in three months, the global lender also cited a bigger-than-expected slowdown in China’s economy and a possible “No Deal” Brexit as risks to its outlook, saying these could worsen market turbulence in financial markets. The IMF predicted the global economy to grow at 3.5% in 2019 and 3.6% in 2020, down 0.2 and 0.1 percentage point respectively from last Oct’s forecasts. The new forecasts, released on the eve of this week’s gathering of world leaders and business executives in the Swiss ski resort of Davos, show that policymakers may need to come up with plans to deal with an end to years of solid global growth. (Reuters)

US: Consumer sentiment plunges to lowest level since Trump's election. Consumer sentiment in the US has seen a substantial deterioration in the month of Jan, according to a report released by the University of Michigan on Friday. The preliminary report said the consumer sentiment index plummeted to 90.7 in Jan from the final Dec reading of 98.3. Economists had expected the index to dip to 97.0. With the much steeper than expected drop, the consumer sentiment index tumbled to its lowest level since hitting 87.2 in Oct of 2016. (RTT)

US: Industrial production rises slightly more than expected in Dec. With jumps in manufacturing and mining output more than offsetting a sharp pullback in utilities output, the Federal Reserve released a report on Friday showing industrial production in the US increased by slightly more than anticipated in the month of Dec. The Fed said industrial production rose by 0.3% in Dec after climbing by a downwardly revised 0.4% in Nov. Economists had expected industrial production to edge up by 0.2% compared to the 0.6% advance originally reported for the previous month. (RTT)

UK: Households remain gloomy at start of 2019. A measure reflecting UK households' perceptions regarding their finances in the coming 12 months remained subdued and they continue expect further deterioration in finances this year, survey data from IHS Markit showed on Monday. The IHS Markit UK household finance index rose to a three-month high of 44.8 in Jan from 44 in Dec. However, the reading remained below the 50-mark, suggesting pessimism towards current financial prospects. However, when compared with the average seen across 2018, UK households have started the year in a relatively upbeat manner, IHS Markit said. In Jan, households remained pessimistic amid heightened worries over job security, lower cash availability and weakened optimism about the future of the UK housing market. (RTT)

China: 2018 growth slows to 28-year low, more stimulus seen. China’s economy cooled in the 4Q under pressure from faltering domestic demand and bruising US tariffs, dragging 2018 growth to the lowest level in nearly three decades and pressuring Beijing to roll out more stimulus to avert a sharper slowdown. Growing signs of weakness in China, which has generated nearly a third of global growth in recent years, are fueling anxiety about risks to the world economy and are weighing on profits for firms ranging from Apple to big carmakers. (Reuters)

Markets

MRCB, George Kent: Not seeking any compensation from Prasarana, government. MRCB George Kent SB, the turnkey contractor for the LRT3, will not be seeking any compensations from either Prasarana Malaysia or the government, following the remodeling of the project delivery partner contract into a fixed price contract for the LRT3 project. In a statement regarding the signing of the fixed price contract between the company and Prasarana for the LRT3 project, the firm is optimistic that the contract will be signed by the end of this month. (The Edge)

Mesiniaga: Bags RM1.9bn EM-IIG contract. Mesiniaga has secured a contract worth RM1.9bn for the Malaysia International Internet Gateway (EM-IIG) project undertaken by Xiddig Cellular Communications SB. The contract is for the commissioning of the core, metro distribution and access network with related support systems for the EM-IIG project. The contract will end on March 31, 2020 and is expected to contribute positively to the company's earnings and net assets over the contract period. (The Edge)

Berjaya Corp: Signs MoU with China's SAIC to sell MG cars. Berjaya Corp (BCorp) is seeking to collaborate with China's SAIC Motor Passenger Vehicle Co (SMPV) on the manufacture, assembly and sale of British car marque Morris Garages (MG), as well as to provide after sale services in Malaysia. It has entered into a nonbinding memorandum of understanding (MoU) with SMPV for the proposed collaboration. A separate announcement will be made once the parties entered into the definitive agreements. (The Edge)

Scomi: India's Axis Bank sues Scomi Group's Indian unit for loan default. India's Axis Bank Ltd has filed a lawsuit against Scomi Group’s two subsidiaries, claiming R624.64m (RM36.15m) for failing to pay the amount due to the bank. The default arose due to the failure by its indirect wholly-owned subsidiary Urban Transit Pte Ltd (UTPL) in India to pay the debt, while Scomi Engineering had served as the guarantor. UTPL is a wholly-owned subsidiary of SEB, which in turn is wholly-owned by Scomi Group. (The Edge)

OSK Ventures: Invests in Singapore waste management firm. OSK Ventures International has invested in Blue Planet Environmental Solutions, to acquire innovative technologies. However, the investment amount was not disclosed. Blue Planet is a regional waste management company focusing on technology-driven end-to-end waste solutions. the prospective technologies may include solutions to convert thin-film plastic waste into commercial-use diesel and processing municipal grade organic waste into compost and biogas. (The Edge)

Eastland Equity: Aborts rights issue as proposed development project faces hiccups. Eastland Equity has aborted the rights issue with warrants it had proposed to raise funds to pay for part of its RM23.27m land acquisition in Sabah. It has aborted for two reasons — hiccups in the proposed development at the land it wanted to acquire, and that the amount raised may not be enough for company requirements. In Nov 2017, Eastland had entered a SPA with the landowner PCK Properties SB to acquire the 2,181 sq metre land. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today after European stock markets made a cautious start to the week as the latest economic data out of China highlighted risks to the global growth outlook and as participants awaited the latest Brexit developments in Westminster. Trading activity was relatively light given the closure of US markets for the Martin Luther King, Jr holiday. The early focus was firmly on China, as official data showed the country’s economy growing at an annual rate of 6.6 percent in 2018 — down from 6.8 percent in 2017, and the slowest pace since 1990. Growth in the fourth quarter slowed to 6.4 percent. The region-wide Stoxx Europe 600 index ended 0.2% lower, having been down 0.4% at one stage. Worries about China hurt metals and mining stocks. The Xetra Dax in Frankfurt fell 0.6%, while France’s CAC 40 shed 0.2%. The FTSE 100 in London finished flat.

Back home last Friday, the FBM KLCI index gained 9.25 points or 0.55% to 1,692.22 points. Trading volume increased to 3.05bn worth RM2.12bn. Market breadth was positive with 486 gainers as compared to 369 losers. Following China’s GDP release, the Hang Seng index in Hong Kong was 0.8% higher before pulling back to close up 0.4%. The CSI 300 index of stocks listed in Shanghai and Shenzhen closed up 0.6%, having been 1% stronger beforehand. The Topix index in Tokyo rose 0.6%.

Source: PublicInvest Research - 22 Jan 2019

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