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Author: PublicInvest   |   Latest post: Thu, 18 Jul 2019, 9:35 AM

 

PublicInvest Research Headlines - 28 Jan 2019

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Economy

US: Shutdown dents consumer sentiment for some republicans in poll. The US government shutdown is eroding consumer sentiment among Republicans concerned about the closure while having little impact on already-weak confidence for Democrats and independents, according to a University of Michigan survey. While 9% of Republicans spontaneously mentioned the shutdown this month compared with 20% of Democrats, those Republicans had a sentiment index 34 points lower than fellow Republicans who didn’t mention the shutdown. That compares with a 1-point gap between Democrats who did and didn’t mention the shutdown, the university said Friday in a special report based on its monthly survey of Americans. (Bloomberg)

US: Companies raising prices send mixed signals for inflation. Strong US demand and a tight job market have given companies a chance to raise prices coming into this year, and they’re testing the waters gingerly. From consumer goods and airlines to railroads, businesses made attempts to recover higher costs including rising pay for workers, or simply lifted prices to try to boost profit margins amid healthy sales. Concerns about slowing global growth, higher borrowing costs and rising uncertainty show the environment remains competitive, with companies trying to assess how much they can hike prices without turning off customers and losing market share to rivals. (Bloomberg)

UK: December mortgage approvals top expectations. Mortgage approvals for house purchase in the UK in Dec was slightly more than expected, though the figure was the lowest in three months. The seasonally adjusted number of mortgages approved for house purchase by the main high street banks fell to 38,779 in Dec from 39,205 in Nov, data from UK Finance, which represents over 250 firms in the banking and finance industry, showed. Gross mortgage lending across the residential market grew around 4.7% YoY to GBP21.1bn in Dec. For the full year 2018, gross mortgage lending rose 3.8% to GBP267.5bn. Credit card spending rose 8.8% YoY to GBP11bn in Dec. Personal borrowing through loans and overdrafts grew 3.4%. (RTT)

EU: German business morale falls 5th time in a row in January. German business morale fell for the fifth time in succession in Jan, a survey showed on Friday, suggesting that company executives expect growth in Europe’s biggest economy will continue to lose momentum. The Munich-based Ifo economic institute said its business climate index fell to 99.1, the lowest level since February 2016. This was also lower than a consensus forecast of 100.6. “Disquiet is growing among German businesses,” Ifo President Clemens Fuest said in a statement. “The German economy is experiencing a downturn.” (Reuters)

EU: Elections in May could oust those 'who really believe in Europe,' top official says. There are concerns at the heart of Brussels that upcoming elections could radically change the make-up of the EU. Amid a wave of anti-EU sentiment across many of the 28 member states, it's expected that the upcoming elections in May which elects representatives to the European Parliament will see support for parties that have railed against the institution. "We might be the last (European) Commission that really is made up of people, who really believe in Europe," Cecilia Malmstrom, the European commissioner for trade, said at a panel at the World Economic Forum (WEF) in Davos. The European Parliament, once formed, has a say on who will be the next president of the Commission and what their team will look like. (CNBC)

China: Slowing economy will make it harder for its companies to pay debts. Even as Beijing pushes out new measures to stimulate its economy, China's growth slowdown will make it harder for the country's companies to pay their debts this year, ratings agencies say. The Chinese government on Monday announced official GDP figures for last year that showed the world's second-largest economy expanded at its slowest pace in nearly three decades. And while an annual growth rate of 6.6% is a figure most countries could only dream of, it marked a continued slide for Asia's largest economy. Slower growth can mean weaker profitability for indebted companies and increased risk for those holding their bonds. (Bloomberg)

South Korea: Consumer confidence improves in January. South Korea's consumer confidence improved in Jan after easing for two months, survey data from the Bank of Korea showed on Friday. The consumer confidence index rose to 97.5 in Jan from 96.9 in Dec. Consumer sentiment regarding current living standards rose to 90, while concerning their future outlook remained the same as in December, at 91. Consumer sentiment related to household income dropped marginally to 98 from 99, while households' future spending remained same at 109. The index measuring the current domestic economic conditions climbed to 65 from 62, and that regarding future domestic economic conditions strengthened from 72 to 76. (RTT)

Singapore: Manufacturing output growth eases sharply in Dec. Singapore's manufacturing output growth slowed drastically in Dec to its weakest pace in three months, led by steep declines in manufacturing, precision engineering and electronics. Industrial production climbed 2.7% YoY in Dec. This was slower than the 7.6% increase seen in Nov. Economists had expected a growth rate of 4.0%. The pace of growth was the weakest since Sept's 0.4% increase. Among clusters, the precision engineering fell the most by 8.7% followed by 6.8% fall on electronics, general manufacturing by 5.7% and chemicals by 1.4%. Biomedical manufacturing logged the biggest YoY gain of 29.9%, followed by transport engineering with a 23.7% rise. (RTT)

Markets

MAHB: No counterclaim made in suit against AirAsia, AAX. Malaysia Airports Holdings (MAHB) said that there is no counterclaim made by AirAsia Group and its long-haul sister airline AirAsia X (AAX) for the alleged sum in excess of RM400m or details particularising the same, in response to a suit filed by the airport operator last month over airport taxes. That's because the two airlines will be availing itself for dispute resolution within the Malaysian Aviation Commission Act 2015 (Mavcom Act) to claim for the amount. MAHB said it "strongly refutes" the allegations made by AirAsia and AAX in their statement of defence. (The Edge)

Rohas Tecnic: Signs SPA for PMV stake buy. Rohas Technic's indirect wholly-owned subsidiary RBC Water SB has signed a share purchase agreement (SPA) with shareholders of Phu My Vinh Construction And Investment Corp (PMV) to buy a 40% stake in the latter for VND232m (RM41.3m). This follows the non-binding term sheet both parties had entered into in Aug last year. It said the acquisition, which will be funded via internally-generated funds, is conditional upon obtaining approvals from relevant regulatory authorities. (The Edge)

Vortex: Scraps plans to buy stake in property firm. Vortex Consolidated, formerly known as SKH Consortium, said it has scrapped plans to buy a 70% stake in property developer Rimbun Gabungan SB (RGSB) for RM12m cash. Vortex said the share sale agreement was mutually terminated as Vortex and the vendors, namely Bijak Fajar SB and Newston Development SB, were unable to reach a consensus over the terms for the post completion business arrangement between both parties pursuant to the proposed acquisition. "The monies refunded will be allocated for the working capital purposes of Vortex Group," it added. (The Edge)

Ranhill: Opens water treatment plant in Thailand. Ranhill Holdings has commenced the operations of its new reclamation water treatment plant and is now looking forward to expand its international footprint. The plant, which is located at the Amata City Rayong Industrial Estate, is capable of processing seven million litres per day (MLD). It is a build, operate and transfer (BOT) project with a 20-year concession agreement signed between Ranhill’s indirect subsidiary AnuRAK Water Treatment Facilities Co Ltd and Amata Water Co Ltd in March last year. (StarBiz)

MNRB: Plans RM320m sukuk. MNRB Holdings plans to undertake a sukuk programme of up to RM320m in nominal value. It said the programme was for the issuance of senior sukuk murabahah and/or subordinated sukuk murabahah. MNRB said each subordinated sukuk murabahah issued under the programme shall have a tenure of at least five years subject to an early redemption event whereas each senior sukuk murabahah issued under the programme shall have a tenure of at least one year. (StarBiz)

EcoFirst: 2Q net profit down 86% to RM4.06m. EcoFirst Consolidated’s net profit dropped 86.3% to RM4.06m for the 2QFY19 from RM29.6m a year ago. The group said the fall in profit was because the previous period had included a RM28.4m gain from the compulsory acquisition of land for the Sg Besi Ulu Kelang Elevated (SUKE) Expressway. Cumulative net profit for the first two quarters declined 75% to RM8.7m, from RM35.3m during the previous corresponding period, while revenue rose 19.7% to RM102million, from RM85.2m. (The Edge)

Market Update

The FBM KLCI might open higher today after reports that the Federal Reserve was considering an early end to its balance sheet reduction programme helped US and European stocks end the week on a strong note, as participants digested a mixed batch of quarterly earnings and looked ahead to US-China trade talks next week. President Donald Trump’s announcement of a short-term deal to reopen the government following a record-long shutdown came midway through the US session and provided little in the way of fresh momentum to the stock market. On Wall Street, the S&P 500 rose 0.9% to 2,664, but recorded a dip of 0.3% for the holiday shortened week. The Dow Jones Industrial Average rose 0.7% on Friday while the tech-heavy Nasdaq Composite index gained 1.3%. In Europe, the Stoxx 600 Europe index rose 0.6% to its highest close since early January. The Xetra Dax in Frankfurt climbed 1.4% but London’s FTSE 100 slipped 0.1% as sterling’s persistent strength took a toll.

Back home, the FBM KLCI index gained 7.44 points or 0.44% to 1,701.03 points on Friday. Trading volume increased to 2.48bn worth RM2.05bn. Market breadth was positive with 472 gainers as compared to 356 losers. The regional stock markets also had a solid day, Hong Kong’s Hang Seng index added 1.7%, mainland China’s CSI 300 gained 0.8%, while Japan’s Topix rose 0.9%.

Source: PublicInvest Research - 28 Jan 2019

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