PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 14 Oct 2019, 9:29 AM


PublicInvest Research Headlines - 12 Feb 2019

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Global: World economy gets inflation checkup as US, China data looms. The world economy is set to get fresh insight into whether inflation is turning sluggish again as the US and China publish price data that’s set to endorse the decision of central banks to steer away from tighter monetary policy. A measure of US core consumer inflation likely eased to 2.1% on an annual basis, helping to justify the Federal Reserve’s pause in its interest-rate hike cycle, according to economists surveyed ahead of a report due Wednesday. China’s factory inflation reading on Friday will probably show a mere 0.3% increase from a year earlier -- an ominous sign given the link to export prices. Having already turned dovish in recent weeks, central banks will likely view the data as reason to keep monetary policy looser than perhaps they envisaged at the end of last year. (Bloomberg)

EU: Bank Of France sees GDP growth rising to 0.4% in 1Q. French economic growth is set to gain steam in the first three months of this year, the projection from the Bank of France indicated Monday, as domestic demand recovers from the disruptions to activity caused by the "yellow vests" protests in the fourth quarter of 2018. Bank of France on Monday predicted 0.4% growth for the French economy in the 1Q of this year, which is slightly faster than the 0.3% expansion in the final three months of 2018. 4Q expansion was largely driven by foreign trade that added 0.2 points to GDP growth. Domestic demand contributed just 0.1 points to GDP growth in the fourth quarter. The average growth rate for 2018 was 1.5%, which was much slower than the 2.3% logged in 2017. (RTT)

UK: Economy slowest since 2012, as Brexit and global worries weigh. Britain’s economy slowed sharply in late 2018, pushing full-year growth to its weakest in 6 years as Brexit worries hammered investment by companies and the global economic slowdown weighed on trade. The pace of economic growth fell to a quarterly rate of 0.2% between Oct and Dec from 0.6% in the previous quarter, in line with Reuters poll, while output in Dec alone dropped by the most since 2016. Sterling fell by a third of a cent to below USD1.29. For 2018 as a whole, growth dropped to its lowest since 2012 at 1.4%, down from 1.8% in 2017. Exports suffered from global weakness and consumers and businesses grew increasingly concerned about the lack of a plan. (Reuters)

UK: Pound drops as UK economy slows sharply. Sterling weakened on Monday after data showed that Britain’s economy last year grew at its slowest since 2012, with Brexit uncertainty hitting investment and the slowdown accelerating at the end of 2018. The Oct - Dec quarterly numbers followed other data in recent weeks that painted a picture of a UK economy slowing into 2019, as businesses and consumers grow increasingly nervous about Britain’s departure from the European Union. The pound dipped to below USD1.29 from levels of around USD1.2923 before the data was released, later dropping as low as USD1.2867 as the dollar broadly strengthened. (Reuters)

China: Jan FOREX reserves rise more than expected to USD3.088trn. China's foreign exchange reserves rose slightly more than expected in Jan as the yuan rallied on hopes for progress in Sino - US trade talks that could lift some pressure on the cooling Chinese economy. China's reserves rose by USD15.2bn in Jan - the biggest increase in a year, to USD3.088trn. That compared with a rise of USD11bn in Dec. Economists polled by Reuters had expected an increase of USD9.3bn. The relatively modest rise in China's reserves in Jan was due to an appreciation of non-dollar currencies and increases of the prices of financial assets it holds. China struck an upbeat note as trade talks resumed with the US, but also expressed anger at a US Navy mission through the disputed South China Sea. (Reuters)

China: Retail earnings up 8.5% during New Year holiday. China's retailer and catering enterprises earned over Y1trn (USD148.3bn) during the Lunar New Year holiday, defying an economic slump to rise 8.5% from last year, the country's commerce ministry said. The increase was down to the rapid growth in sales of new-year gifts, traditional foods, electronic products and local speciality products over a six-day holiday period ending on Saturday, the Ministry of Commerce said in a notice on its website. Domestic tourism during the New Year break generated total revenues of Y513.9bn, up 8.2% on the year, with the number of trips rising 7.6% to 415 million. (RTT)

Indonesia: Bank Indonesia says stability is key with rupiah still at risk. Bank Indonesia won’t compromise on economic stability with the nation’s currency seen still under pressure from risks of a raging US China trade war, a top official said. While a pause in US interest rate hikes has given emerging markets some respite, Indonesia’s “economic stability is not negotiable,” Deputy Governor Dody Waluyo said. “What good is 6-7% growth if the rupiah weakens sharply?” The comments indicate policy makers in Southeast Asia’s biggest economy are far from ready to follow India’s example of easing monetary policy. Bank Indonesia raised rates six times last year to bolster the currency, which slumped to a two-decade low amid a broader emerging market selloff. (Bloomberg)


Kelington: Secures RM93m contract in Singapore. Kelington Group’s unit has received a SGD31m (RM93m) contract in Singapore to provide turnkey construction and engineering services in Singapore for one of the world’s largest gas companies. It said its unit Kelington Engineering (S) Pte Ltd would design and build an ultra high purity (UHP) electronics special gases plant in Singapore. The contract is expected to be completed by end of 2019. (StarBiz)

UOA Development: Slapped with additional RM39.6m tax bill on property valuations. UOA Development said two of its wholly owned units have been served with notices of additional assessment for additional income tax and penalties totaling RM39.6m. The notices were served for the year of assessment 2013 by the Inland Revenue Board, the group said. The group said that its subsidiaries have appealed to dispute the notices of additional assessment. (The Edge)

Scientex: Serves MGO notice to Daibochi to buy shares at RM1.59 apiece. Scientex has served its mandatory general take-over offer (MGO) to Daibochi (Daibochi) to acquire all the remaining shares it does not hold in the latter. It obtained shareholders’ approval at its EGM for the acquisition of a 42.4% controlling stake in Daibochi for RM221.1m from certain shareholders of Daibochi. Scientex said the MGO entailed an offer price of RM1.59 for every Daibochi share. (The Edge)

Barakah Offshore: Bags five-year contract . Barakah Offshore Petroleum has bagged a Farm-In Agreement from IPC Malaysia BV. The contract is for Barakah to provide maintenance, construction and modification services in the oil & gas fields offshore of Peninsular Malaysia to IPC Malaysia’s client, Pan Malaysia. The tenure of the contract is from November 2018 to July 2023. However, there has no firm contract value mentioned. (The Edge)

Berjaya Sports Toto: Inks JV to explore business opportunities in Sri Lanka. Berjaya Sports Toto (BToto) has inked an agreement to set up a JV company to explore business opportunities, as well as to undertake projects in Sri Lanka. Its unit, FEAB Equities SB, entered into the shareholders agreement with PP Cylabs (M) SB (PPC) on a 50:50 JV basis to set up the JV company. (The Edge)

Globaltec: NuEnergy converts Indonesian Muralim PSC to gross split PSC. Globaltec Formation’s Australia-listed unit NuEnergy Gas Ltd has signed a gross split production sharing contract (PSC) for its Muralim PSC with the Indonesian Ministry of Energy and Mineral Resources. The gross split PSC replaces Indonesia’s previous cost recovery scheme for oil and gas contractors in favour of a higher contract share of revenues. (The Edge)

ATA IMS: Reports fire incident in JB factory. A fire broke out in a small section of one of ATA IMS’ rented factories in Taman Gembira, Tampoi, in Johor Baru on Feb 8. The group said the Fire and Rescue Department arrived promptly and brought the fire under control in the premise, which is occupied by ATA Industrial (M) SB. The fire affected a small part of the storage room in the secondary process area. Cause of the fire is still under investigation by the Fire and Rescue Department while a police report has also been filed. The Company shall restore back the operations at the affected area as soon as possible. (StarBiz)

Market Update

The FBM KLCI might open flat today after US stocks were mixed on Monday, struggling to maintain the momentum from gains in global stock markets as initial US-China trade talks got under way. A cautious mood hung over markets ahead of planned meetings this week between Robert Lighthizer, the US trade representative, Steven Mnuchin, the US Treasury secretary, and Chinese vice-premier Liu He as the separate threat of another US government shutdown also hung in the balance. Wall Street’s S&P 500 eked out a 0.1% gain alongside a similar rise in the Nasdaq Composite while the Dow Jones Industrial Average fell 0.2%. Across the Atlantic, the Europe-wide Stoxx 600 added 0.9%, with sectors exposed to the trade war rising. Italy’s FTSE MIB was the region’s top climber, adding 1.5% to 19,648.13, while France’s CAC 40 rose 0.8% to 5,000.43, Germany’s DAX 30 added 0.7% to 10,983.80 and the FTSE 100 gained 0.4% to 7,098.14

Back home, the FBM KLCI index gained 2.04 points or 0.12% to 1,688.56 points on Monday. Trading volume increased to 2.58bn worth RM1.66bn. Market breadth was positive with 489 gainers as compared to 351 losers. The CSI 300 index of mainland Chinese stocks closed up 1.8%, its highest point in almost three months, after opening lower as trading resumed following the lunar new year holiday. In Hong Kong, the Hang Seng index was up 0.6%, helped by technology stocks. Markets in Japan were closed for National Foundation Day.

Source: PublicInvest Research - 12 Feb 2019

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