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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 20 Sep 2019, 10:03 AM

 

PublicInvest Research Headlines - 20 Feb 2019

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Economy

Global: WTO warns of global trade slowdown as indicator hits 9- year low. A quarterly leading indicator of world merchandise trade slumped to its lowest reading in nine years, which should put policymakers on guard for a sharper slowdown if trade tensions continue. The WTO's quarterly outlook indicator showed a reading of 96.3, the weakest since March 2010 and down from 98.6 in Nov. A reading below 100 signals below-trend growth in trade. This sustained loss of momentum highlights the urgency of reducing trade tensions, which together with continued political risks and financial volatility could foreshadow a broader economic downturn. The WTO forecast last Sept that global trade growth would slow to 3.7% in 2019 from an estimated 3.9% in 2018, but there could be a steeper slowdown or a rebound depending on policy steps. (The Edge)

US: Fed's Williams says new economic outlook necessary for rate hikes. New York Fed President John Williams said he was comfortable with the level US interest rates are at now and that he sees no need to raise them again unless economic growth or inflation shifts to an unexpectedly higher gear. Williams estimated the Federal Reserve would continue trimming its bond portfolio well into next year. He also said he felt rates had reached his current view of a lower “neutral” level, with growth and unemployment leveling off and inflation, if anything, a bit weaker than hoped. Asked if it would take some sort of shock to resume rate increases, he said it would require one or more of those factors to surprise to the upside. (Reuters)

US: Homebuilder confidence shows significant improvement in Feb. Reflecting growing consumer confidence and falling interest rates, the National Association of Home Builders released a report showing a significant increase in US homebuilder confidence in the month of Feb. The report said the NAHB/Wells Fargo Housing Market Index climbed to 62 in Feb after rising to 58 in Jan. Economists had expected the index to inch up to 59. With the increase, the index continued to recover after hitting a more than three-year low of 56 in December. The much bigger than expected increase by the headline index reflected continued gains by all of the component indices. (RTT)

EU: Eurozone current account surplus falls in Dec. Eurozone current account surplus weakened in Dec, as the surpluses in the visible trade, services and primary income accounts were partly offset by a deficit in the secondary income account, figures from the European Central Bank showed. The current account surplus declined to EUR16bn from EUR23bn in Nov, which was revised from EUR20bn. The visible trade surplus weakened to EUR16bn from EUR20bn in the previous month. The surplus in the primary income account shrunk to EUR3bn from EUR6bn, the services account surplus edged down to EUR11bn from EUR12bn in Nov. The deficit in the secondary income account narrowed to EUR13bn from EUR15bn in the previous month. (RTT)

EU: German investor confidence rises in modest sign of pickup. Investor confidence in Germany’s economic outlook improved for a fourth straight month, hinting at a modest pickup in momentum in the coming months. A gauge measuring prospects for the next half year rose to minus 13.4 in Feb, beating an estimate for a gain to minus 13.6. While the index recorded its longest streak of improvements since early 2015, the negative reading means pessimists still outnumber optimists among survey participants. ZEW President Achim Wambach said he doesn’t expect a rapid recovery. The economic situation in Germany has been weak, especially in the manufacturing sector. (Bloomberg)

UK: Employment surges to record high in Dec, pay growth fastest since 2008. The UK employment hit a record high in Decand wages grew at their fastest pace in a decade, figures from the Office for National Statistics showed. The employment rose by 167,000 to a record high of 32.60m in the 3 months to Dec. Economists were looking for an increase of 152,000. The employment rate remained at 75.8%, which was the highest since comparable records began in 1971. The number of unemployed fell by 14,000 to 1.36m from the July to Sept period. The ILO jobless rate was unchanged at 4% in the 3 months to Dec, which was the lowest since Dec 1974 to Feb 1975 period. Economists had expected the rate to remain steady. (RTT)

Markets

Pesona Metro: Bags RM409m superstructure job from MRCB. Pesona Metro Holdings has bagged a contract worth RM408.8m from Malaysian Resources Corp (MRCB) for superstructure works for a mixed development in Seksyen 98. Pesona Metro's wholly-owned subsidiary Pesona Metro SB has accepted the letter of acceptance from MRCB's wholly-owned subsidiary MRCB Builders SB. (The Edge)

GHL: Signs electronic payments deal with Indonesia’s BNI. GHL Systems has entered into a merchants and aggregator transaction acceptance agreement with Bank Negara Indonesia (BNI). The agreement will enable GHL Indonesia to manage merchant transactions and allow them to receive electronic payments through EDC terminals (electronic data capture), QR (mobile payments), mPOS (mobile sales points) or other acceptance methods as determined by both parties. (The Edge)

Suncon: Wins RM781m Tenaga campus development project. Sunway Construction Group (SunCon) has bagged a contract from Tenaga Nasional to develop a campus along Jalan Bangsar for RM781.3m. Upon the award of the project, SunCon's outstanding order book as at to-date amounts to RM6bn. The project is termed Project Platinum Main Building. The works are in respect of phase two of Tenaga's headquarters campus development and should be completed within 26 months. (The Edge)

Boustead: Accepts offer to sell Royale Chulan Bukit Bintang for RM197m. Boustead Holdings announced it is disposing of its Royale Chulan Bukit Bintang Hotel business to Singapore-based Hotel Royal Ltd for RM197m. Boustead's wholly-owned unit Boustead Hotel & Resorts SB has accepted the offer from Hotel Royal. As part of the terms in the Letter of Offer, Hotel Royal is granted an exclusivity period of one month to conduct a due diligence on the hotel. (The Edge)

Asia Brands: Aborts RM40m private placement plan. Asia Brands has aborted its plan to undertake a private placement exercise, which would have seen it issuing up to 20% of its enlarged share capital to new investors to raise RM23.27m. Asia Brands will not proceed with the implementation of the private placement as the company had achieved its objective to raise funds from the rights issue for the repayment of the IM (Tranche 1, Series 3) of RM40m due on March 18, 2019. (The Edge)

Paragon Union: To receive RM16.5m in settlement. Paragon Union will receive a reduced total sum of RM16.5m following a settlement agreement between the company and Prestamewah Development SB and Liw Jun Wai. The initial sum ordered by the Court of Appeal for Prestamewah and Liw to refund was RM18m. According to the settlement agreement, Prestamewah will pay its portion of the RM13.5m by transferring 3 units of 3-storey factories worth RM11m to Paragon Union as partial settlement. (The Edge)

Construction (Neutral): Malaysia nears deal with China to revive ECRL project. Malaysia is making progress in talks with China to revive a high-speed rail project that the government said it would cancel, according to Foreign Minister Datuk Saifuddin Abdullah. China is willing to reduce the USD20bn price tag for the ECRL project and talks are in the last mile. Discussions have been led by Tun Daim Zainuddin, an adviser to Dr Mahathir, with the aim of reaching a smaller project size and cost. (Bloomberg)

Market Update

The FBM KLCI might open higher today after US stocks edged higher on Tuesday following a long weekend as investors await a breakthrough in trade talks between Washington and Beijing. The S&P 500 index rose 0.2% to 2,779 and Nasdaq Composite added 0.2% as well, while the Dow Jones Industrial Average ended the day flat. The Stoxx Europe 600 index retreated, falling 0.2%, after Europe’s biggest bank, HSBC, warned on US-China trade tension. The almost 10% rally in Europe’s benchmark index this year had been helped by expectations that the world’s two largest economies would avoid an escalation in tariffs that, without an agreement, would begin early next month. Performance-wise, the FTSE 100 dropped 0.6%, France’s CAC 40 lost 0.2% while Germany’s DAX added 0.1%.

Back home, the FBM KLCI index gained 13.82 points or 0.82% on Tuesday. Trading volume increased to 2.81bn worth RM2.36bn. Market breadth was positive with 517 gainers as compared to 385 losers. The regional markets finished mixed with the Nikkei 225 gained 0.10% and the Shanghai Composite rose 0.05%. The Hang Seng lost 0.42%.

Source: PublicInvest Research - 20 Feb 2019

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