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Author: PublicInvest   |   Latest post: Thu, 20 Jun 2019, 10:04 AM

 

PublicInvest Research Headlines - 31 Jan 2019

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Economy

US: Fed leaves rates unchanged, drops reference to gradual rate hikes. The Federal Reserve announced its widely expected decision to leave interest rates unchanged. The Fed said following a two-day meeting it has decided to maintain the target range for the federal funds rate at 2.25% to 2.50%. The accompanying statement included some notable changes from last month, including dropping a reference to the Fed's plan for further gradual rate increases. The central bank also removed a sentence describing the risks to the economic outlook as "roughly balanced." Instead, the Fed still sees a sustained expansion of economic activity, strong labor market conditions, and inflation near its symmetric 2% objective. (RTT)

US: Private payrolls rise strongly; housing market struggling. US private payrolls increased solidly in Jan, pointing to sustained labor market strength despite a recent easing in consumer and business confidence that has suggested a loss of momentum in the economy. The strong hiring shown in the ADP National Employment Report also suggested there had been minimal impact on the labor market from the just-ended 35-day partial shutdown of the federal government. Other data showed contracts to buy existing homes tumbled to a more than 4- 1/2-year low in Dec. Amid growing uncertainty over the economy’s outlook, the Fed on Wed kept benchmark US interest rates steady and said it would be patient in lifting borrowing costs further. (Reuters)

US: Pending home sales unexpectedly slump in Dec. Reflecting several negative factors, the National Association of Realtors released a report on Wed unexpectedly showing a continued decrease in US pending home sales in the month of Dec. NAR said its pending home sales index tumbled by 2.2% to 99.0 in Dec after falling by 0.9% to a downwardly revised 101.2 in Nov. The continued decline in pending home sales surprised economists, who had expected the index to climb by 0.5%. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. Compared to the same month a year ago, pending home sales plunged by 9.8%. (RTT)

UK: Mortgage approvals at 8-month low, says BoE. Loans approved for house purchase fell to its lowest level in eight months in Dec, figures from the Bank of England showed. The number of mortgage approvals was 63,793 in Dec, which was the lowest since April, when they totaled 63,433. Economists expected 63,000 approvals. The lending secured on dwellings grew by GBP4.1bn, which exceeded the GBP3.6bn gain economists had predicted. The net consumer credit grew GBP0.7bn, which was less than the GBP0.8bn increase expected. The annual growth rate of consumer credit fell further in Dec to 6.6%. This reflected the continuation of relatively weak flows of new lending. (RTT)

EU: Moderate inflation, upbeat shoppers bode well for German consumption. German inflation remained moderate in Jan and consumer morale improved unexpectedly heading into Feb, boding well for domestic demand, which the government expects to be the sole driver of growth this year. Data released on Wednesday by the Federal Statistics Office and the GfK consumer research group suggested that household spending will cushion the negative impact of weaker trade on Europe’s largest economy in light of tariff disputes and Brexit. German consumer price inflation, harmonized to be comparable with inflation data from other EU countries, unchanged at 1.7% YoY. (Reuters)

Japan: Consumer confidence eases for fourth month. Japan's consumer confidence weakened for a fourth consecutive month in Jan, preliminary data from the Cabinet Office showed. The consumer confidence index for households with two or more persons fell to a seasonally adjusted 41.9 from 42.7 in Dec. Economists had forecast a score of 42.4 for Jan. Among the four sub-indexes of the consumer confidence index, the index reflecting households' inclination to buy durable consumer goods declined in Jan along with those measuring expectations on employment, life style and savings, the report showed. The latest survey was conducted on January 15th and covered 8,400 households. (RTT)

Markets

Genting (Outperform, TP: RM8.80): Unit to make USD775m bond issuance . Genting announced that its subsidiary will be issuing bonds to raise USD775m to prepay some existing debt facilities and for general corporate purposes. The guaranteed secured senior notes with a coupon rate of 6.9% per annum, payable on a semiannual basis, will be issued by its 57.9%-owned indirect subsidiary, LLPL Capital Pte Ltd. The notes will have a tenure of 20 years and be unconditionally and irrevocably guaranteed by PT Lestari Banten Energi (the guarantor), which is a 55%-owned indirect subsidiary of Genting. It said the book-building process and pricing of the notes were completed on 29 Jan. (The Edge)

Chin Hin (Outperform, TP: RM1.00): Partners Singaporean firm to provide solutions for Malaysian construction players. Chin Hin Group is teaming up with a Singaporean company to provide consultancy and solutions for construction players in Malaysia. Under the agreement, Chin Hin Academy SB will gather market intelligence, provide insights, assist in the preparation of proposals, and introduce prospective customers to Bimage. Bimage, meanwhile, will prepare proposals and attend meetings related to business development, sales, technical and pricing matters, Chin Hin said. (The Edge)

Berjaya Corp: To acquire 4.61% of Berjaya Land for RM87m. Berjaya Corp (BCorp) and its wholly-owned subsidiary Juara Sejati SB have entered into an agreement with Penta Master Fund Ltd, PCM Industrial LP and Penta Asia Long/Short Fund Ltd to acquire 4.61% of Berjaya Land (BLand) for RM87.4m. The group said the 230m BLand shares will be acquired for a total purchase consideration of RM87.4m or 38 sen per share, to be fully satisfied via the issuance of 291.3m BCorp shares at an issue price of 30 sen apiece. (The Edge)

YTL Corp: Buys The Westin Perth for RM591m. YTL Corporation has purchased the Westin Perth for over AUD200m (RM591m), which is one of biggest hotel sales in Perth. According to the Australian Financial Review, Perth-based developer and construction group BGC, which was founded by the late Len Buckeridge, confirmed it had sold the hotel to two subsidiaries within YTL's hotel division, Starhill Hotel (Perth) and Starhill Hotel Operator (Perth) on Tuesday. (StarBiz)

Alam Maritim: Targets RM1bn order book by year-end. Alam Maritim Resources is aiming for an order book of RM1bn by year-end through a combination of international and domestic projects. Group CEO Datuk Azmi Ahmad said the company’s current order book stood at RM753m and RM1.3bn contract tendered. He said the contracts tendered were largely for underwater inspection, repair and maintenance (IRM), offshore support vessels (OSVs) and the execution and management of offshore installation and construction (OIC) projects. (Bernama)

Westports: FY18 net profit down on higher tax rate. Westports Holdings net profit for the FYE Dec 31, 2018 fell by 18.1% due to the lower effective rate in the previous year but it expects container throughput to grow by single-digit percentage growth this year. It said its net profit for FY18 fell to RM533.5m from RM651.5m a year ago mainly due to lower effective tax rate in FY17 due to a claim of investment tax allowance (ITA). “The group achieved profit before tax of RM701m in FY18, up by 4% compared to FY17 mainly due to the recognition of provision for custom audit of RM24m in FY17,” it said. (StarBiz)

Market Update

The FBM KLCI might open higher today after US stocks extended early earnings-driven gains and Treasury prices reversed earlier losses as the Federal Reserve left interest rates unchanged and vowed to be “patient” in determining future moves in borrowing costs. The dollar went into retreat against most of its main peers, and gold prices climbed to a fresh eight-month high. The Fed’s statement followed an encouraging round of corporate earnings announcements and came as participants waited for news from the latest trade talks between Washington and Beijing. Across the Atlantic, French luxury goods group LVMH helped soothe recent market concerns over China after it said that its fast-growing Asia business had yet to be affected by a slowing pace of growth in the country. London’s FTSE 100 index easily outperformed its continental European peers as it benefited from its relatively heavy exposure to resources stocks. On Wall Street, the S&P 500 ended 1.6% stronger at 2,681, its best close since December 6, after rising as high as 2,690. The Nasdaq Composite rose 2.2% and the Dow Jones Industrial Average gained 1.8%. The pan-European Stoxx 600 index ended 0.4% higher, although the Xetra Dax in Frankfurt slipped 0.3%. A 6.9% jump for LVMH helped propel the CAC 40 in Paris 1% higher. The FTSE 100 in London rose 1.6%.

Back home, the FBM KLCI index lost 6.30 points or 0.37% to 1,684.11 points on Wednesday. Trading volume decreased to 1.92bn worth RM1.73bn. Market breadth was negative with 320 gainers as compared to 424 losers. The regional markets finished mixed with the Hang Seng gained 0.40%, while the Shanghai Composite led the Nikkei 225 lower. They fell 0.72% and 0.52% respectively.

Source: PublicInvest Research - 31 Jan 2019

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