PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 15 Oct 2019, 9:05 AM


PublicInvest Research Headlines - 8 Feb 2019

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US: Weekly jobless claims retreat from one-and-a-half-year high. The number of Americans filing applications for unemployment benefits dropped from near a 1-1/2-year high last week, but the decline was less than expected, suggesting some moderation in the pace of job growth. Still, the Labor Department’s report on Thursday continued to point to strong job market conditions, which should underpin the economy amid rising headwinds, including a fading fiscal stimulus boost and a trade war between Washington and Beijing, as well as slowing growth in China and Europe. “Labor market conditions remain quite positive, good news for workers, for the consumer sector and the economy more broadly,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan. (Reuters)

US: Consumer credit climbs slightly less than expected in Dec. Consumer credit in the US increased by slightly less than expected in the month of Dec, according to a report released by the Federal Reserve on Thursday. The Fed said consumer credit climbed by USD16.6bn in Dec after jumping by an upwardly revised USD22.4bn in Nov. Economists had expected credit to increase by USD17bn. The report said non-revolving credit such as student loans and car loans rose by USD14.9bn in Dec after surging up by USD17.5bn in Nov. Revolving credit, which largely reflects credit card debt, edged up by USD1.7bn in Dec after rising by USD4.9bn in the previous month. (RTT)

US, China: No talks between Trump and China's Xi before trade deadline. President Donald Trump said on Thursday he did not plan to meet with Chinese President Xi Jinping before a March 1 deadline set by the two countries to achieve a trade deal. Asked during an event in the Oval Office whether there would be a meeting before the deadline, Trump said: “No.” When asked whether there would be a meeting in the next month or so, Trump said: “Not yet. Maybe. Probably too soon. Probably too soon.” Late last year during a dinner between Trump and Xi in Argentina, the two men agreed to take a 90-day hiatus in their trade war to give their teams time to negotiate an agreement. If the talks do not succeed, Trump has threatened to increase US tariffs on Chinese imports. (Reuters)

EU: Slashes Eurozone growth forecasts, sees slowing inflation. The European Commission slashed the euro area growth forecasts for this year and next, citing a high level of uncertainty and downside risks to the outlook. In its winter economic forecast, the executive arm of the EU cut the Eurozone growth forecast for this year to 1.3% from 1.9%. The growth projection for next year was trimmed to 1.6% from 1.7%. Growth in both the euro area and the EU28 likely slowed to 1.9% in 2018 from 2.4% in 2017, the EU said. The earlier projection for 2018 expansion for both regions was 2.1%. "This slowdown is set to be more pronounced than expected last autumn, especially in the euro area, due to global trade uncertainties and domestic factors in our largest economies," EU Economic Affairs Commissioner Pierre Moscovici said. (RTT)

UK: BOE sees weakest outlook since 2009 amid Brexit uncertainty. The BOE warned on Thursday the UK is on track to register its weakest economic growth in a decade, blaming mounting Brexit uncertainty and a global slowdown. With just 50 days to go before the country leaves the European Union, the BOE's nine-member Monetary Policy Committee (MPC), led by Mark Carney, unanimously voted to leave interest rates unchanged at 0.75%. "UK economic growth slowed in late 2018 and appears to have weakened further in early 2019," policymakers at the central bank said. "This slowdown mainly reflects softer activity abroad and the greater effects from Brexit uncertainties at home," they added. The BOE sharply downgraded its 2019 economic outlook to 1.2% on Thursday. (CNBC)

UK: House-price growth slows further at the start of the year. The UK housing market cooled as 2019 got under way as Brexit cast a shadow over the economy. Prices gained 0.8% in the three months through Jan compared with a year earlier, compared with 1.3% in Dec, mortgage lender Halifax said Thursday. Monthly figures, which can be volatile, showed a 2.9% drop to an average GBP223,691 (USD289,000). The property market is expected to remain sluggish this year as Brexit uncertainty puts off buyers. Still, low interest rates, record employment and faster wage growth will probably prevent any sharp declines. Halifax expects growth between 2% and 4% in 2019, compared with rates more than twice that high just a few years ago. (Bloomberg)

India: Cuts key rate in surprise move, shifts policy stance to 'neutral'. India's central bank unexpectedly cut its key interest rate in Feb, after holding it steady in the previous two policy sessions, and changed the monetary policy stance to "neutral" from "calibrated tightening". The Monetary Policy Committee decided to reduce the repo rate by 25 basis points to 6.25% with immediate effect, the Reserve Bank of India said. Amid high core inflation, economists had expected the rate to remain unchanged in the Feb policy session, which was the first chaired by the new RBI Governor Shaktikanta Das. Several economists had expected the change in the policy stance. A rate cut now will do little to boost the economy before the election, but it might give a lift to financial markets and investor sentiment, Capital Economics economist Mark Williams said. (RTT)


DKSH (Outperform, TP: RM3.00): Purchase of Auric Pacific for RM480.9m fair, reasonable. DKSH Holdings (Malaysia) proposed purchase of Auric Pacific (M) SB (APMSB) from its Singapore shareholder for SGD157.67m (RM480.9m) cash is “fair and reasonable”, the independent adviser to minority shareholders said. According to the circular to shareholders issued, the proposed acquisition was expected to contribute positively to the earnings of the enlarged DKSH Group with the expected income from APM Group in the near future. (StarBiz)

TSH (Neutral, TP: RM0.98): Sets up RM3m Indonesian subsidiary. TSH Resources has incorporated a new subsidiary in Indonesia for the development of industrial estate and ownership and leasing of real estate. PT Aman Mulia Gemilang will have a share capital of Rp10bn (RM2.92m) comprising of 10,000 shares of Rp1m each and a paid-up capital of Rp2.5bn divided into 2,500 shares of Rp1m each. It has subscribed for a total of 1,625 shares representing 65% of the entire issued and paid-up capital of the subsidiary for a total consideration of Rp1.625bn. (StarBiz)

CCM Duopharma: Gets approval for new drug. CCM Duopharma Biotech has secured approval from the National Pharmaceutical Regulatory Authority (NPRA) for its biosimilar erythropoietin (EPO), which adjusts red blood cell generation according to a human body's oxygen requirement. When the group first announced the successful completion of the third phase of the multinational clinical trial for the drug on Feb 15, 2017, the group had highlighted that upon receiving the marketing authorisation from the NPRA for the EPO product code named PDA10 but now given the commercial name ERYSAA, will be launched in the Malaysian market. (The Edge)

Tropicana Corp: Calls off Johor land sale. Tropicana Corporation is discontinuing its proposed disposal of 251.58 acres of freehold land in Johor Bahru district for RM569.87m. The conditions precedent to the sales and purchase agreement (SPA) had not been fulfilled on Feb 1. It said the vendor Tropicana’s indirect wholly-owned unit Desa Mentari SB, and the purchaser Tiarn Oversea Group SB, have mutually agreed not to extend the conditions' precedent period. (The Edge)

GFM: Bags RM69m facility management service contracts from BNM. GFM Services has won two contracts from Bank Negara Malaysia (BNM) to provide comprehensive facility management services at selected premises of the bank for a combined value of RM69m. The contracts, awarded to GFM’s wholly-owned subsidiary Global Facilities Management SB, are for a three-year period expiring on Dec 31, 2022. GFM has successfully maintained a 100% contract renewal and extension rate in 2018. (The Edge)

PJBumi: Gets RM18m building refurbishment project. PJBumi’s unit, PJBumi Construction SB, has bagged an RM18.7m contract to refurbish 84 units of residential and commercial buildings as well as infrastructure in Chenor, Pahang. The contract was awarded by Salam Properties SB, the engineering and construction services. It said the tenure of the contract is for a period of 36 months from the date of site possession. The board is of the opinion that the contract will contribute positively to the EPS and the future earnings of the Group. (The Edge)

Market Update

The FBM KLCI might open lower today after US and European stocks retreated on Thursday on growing concerns about US-China trade tensions and slowing economic growth. The S&P 500 lost 0.9% on the day after having dipped as low as 1.6% after news reports that President Donald Trump is unlikely to meet Xi Jinping, his Chinese counterpart, delaying a potential end to Sino-US trade disputes. The benchmark index is coming off its best January since 1987. The Dow slid 220.77 points, or 0.9%, to 25,169.53 while the Nasdaq Composite Index fell 86.93 points, or 1.2%, to 7,288.35.

In Europe, government bonds rallied and equities weakened after the European Commission cut its economic growth forecasts for the Eurozone. The Eurozone economy would expand just 1.3% this year, the commission forecast, down from a projection of 1.9% in November. The Stoxx Europe 600 fell by 1.5% after closing up 0.15% on Wednesday. Germany’s DAX 30 was the region’s biggest decliner, dropping 2.7%, followed by Italy’s FTSE MIB which fell 2.6%. Meanwhile France’s CAC 40 lost 1.8% and the FTSE 100 was down 1.1%.

Back home, the FBM KLCI index gained 9.78 points or 0.58% to 1,693.39 points on Thursday. Trading volume increased to 1.43bn worth RM1.20bn. Market breadth was positive with 443 gainers as compared to 261 losers. Markets in Hong Kong and China were closed for the lunar New Year but stocks in Seoul put in a weak showing after returning from the holiday, with the Kospi index up 0.1%.

Source: PublicInvest Research - 8 Feb 2019

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