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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 19 Apr 2019, 10:04 AM

 

PublicInvest Research Headlines - 22 Mar 2019

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Economy

Global: Inflation weakness pushes central bankers closer to reversal. Central banks from the U.S. to Asia are turning dovish as they increasingly fret about getting inflation to pick up in a bruised global economy. Fed Chairman Jerome Powell effectively extended the U.S. central bank’s pause on interest-rate increases on Wednesday, even opening the possibility that the next move could be a cut. On Thursday, central banks in Indonesia and the Philippines -- among the most aggressive rate hikers last year -- kept policy on hold, as did the Swiss National Bank. Global growth is under pressure after a sharp slowdown in 2018, and policy makers are waiting for clarity on issues from trade tariffs to Brexit. But inflation in particular is dominating concerns, with little sign that the post-crisis recovery, extreme monetary stimulus and a decline in unemployment is driving up price pressures. (Bloomberg)

US: Jobless claims fall more than expected to four-week low. Filings for US unemployment benefits fell more than expected to a four week low, as the labor market tightens further following the end of a five-week government shutdown. Jobless claims fell to 221,000 in the week ended Mar 16, beating economist forecasts for 225,000, Labor Department figures showed Thursday. The four-week average, a less volatile measure, ticked up to 225,000 and has steadily increased since Oct. The decline in claims indicates the labor market remains solid as companies seek and hold onto skilled workers. At the same time, claims levels remain higher than before the partial government shutdown that ended in Jan and the four-week average continues to inch up. (Bloomberg)

UK: Bank of England holds interest rates steady amid Brexit chaos. The Bank of England (BOE) held interest rates steady on Thursday, amid intensifying uncertainty over Britain’s departure date from the European Union. With just eight days to go before the country is set to leave the bloc, the BOE’s nine-member Monetary Policy Committee (MPC), led by Mark Carney, unanimously voted to leave interest rates unchanged at 0.75%. The BOE had expected this to be their final meeting before Brexit, but Prime Minister Theresa May has asked the EU for an extension to the deadline. It means policymakers at the central bank have been left in limbo when it comes to implementing their plan for limited and gradual rate hikes over the coming months. “The economic outlook will continue to depend significantly on the nature and timing of the EU withdrawal,” the BOE said. (CNBC)

EU: EU gives Theresa May another two weeks to avoid a No-Deal Brexit. European Union leaders staved off the threat of the U.K. crashing out of the bloc without a deal next Friday by giving Theresa May an extra two weeks to work out what to do. At a summit in Brussels on Thursday, the leaders told May that if U.K. lawmakers don’t endorse her Brexit deal next week, she’ll have until April 12 to decide whether to leave without agreement or request a much longer extension. The decision removes the immediate possibility of a no-deal Brexit in seven days’ time. It also gives May a powerful threat to issue to pro-brexit hardliners in her party: Back the deal or risk being trapped in the EU for much longer. May said she’ll put the unpopular accord back to parliament next week. More than seven hours of discussion began with May delivering her most extensive pitch yet to the 27 remaining leaders before she was asked to leave the room while they thrashed out their response. "The cliff edge will be delayed," EU President Donald Tusk said after May accepted the proposal. "I was really sad before our meeting, now I’m much more optimistic." If May manages to pass a deal which has already suffered two thumping defeats in the House of Commons, the EU will let Britain remain in the bloc until May 22 to complete the formalities. (Bloomberg)

Japan: Overall inflation rises just 0.2% on year in Feb. Overall nationwide inflation in Japan was up 0.2% on year in Feb, the Ministry of Internal Affairs and Communications said on Friday. That was shy of expectations for an increase of 0.3% and unchanged from the Jan reading. Core inflation, which excludes volatile food prices, advanced an annual 0.7% - again missing expectations for 0.8%, which would have been unchanged. Individually, prices for food and transportation were down YoY, and higher for fuel, recreation, medical care and furniture. On a monthly basis, overall inflation was unchanged and core CPI added 0.1%. (RTT)

Markets

Dayang (Neutral, TP: RM1.25), Perdana Petroleum: Perdana wins RM17.7m charter contract from Dayang. Perdana Petroleum has accepted the letters of award for the charter of 2 units of accommodation workbarges to Dayang Enterprise for RM17.7m. The first AWB would be chartered for a period of 120 days with an extension option, beginning March 29, 2019. The second AWB will be chartered for 200 days with an option period of 15 plus 15 days, and the contract is effective from April 1, 2019 (The Edge)

MCE: Bags contracts from Proton and Perodua. MCE Holdings has secured two contracts to supply various electronic and mechatronic components and parts for Proton and Perodua new car models. The tenure of Proton’s contract is between 6 and 9 years in respect of the relevant parts supplied, commencing in the 1QFY20. The contract will generate total revenue of RM35m over the 9-year period, while the estimated total investment cost to be incurred will be RM3.8m. (The Edge)

Progressive Impact: Bags RM31m job from Chevron. Progressive Impact Corp has bagged a Rp109.22bn (RM31.35m) contract from Chevron Corp to undertake environmental sampling and laboratory analysis for its Sumatera operation in Indonesia. The award is a continuity of the existing business that its subsidiary PT ALS Indonesia has with Chevron. Additionally, the contract serves as a business expansion in a foreign market, that is, Indonesia. (The Edge)

Mudajaya: Milestone for India power plant as final unit attains commercial operations. Mudajaya Group said the fourth and final unit of its long-delayed coal-fired thermal power plant in India has achieved its commercial operation date (COD). Mudajaya Corp was notified by RKM Powergen Pvt Ltd, informing that the unit has achieved COD on March 20. The first three units of the power plant, located in the centre-east state of Chhattisgarh, had secured power purchase agreements (PPAs) through open tender. (The Edge)

Vizione: Wira Syukur exceeded profit guarantee. : Vizione Holdings said Wira Syukur (M) SB, a construction firm injected into Vizione for RM280m, has exceeded its profit guarantee by RM3.31m. Wira Syukur reported a profit after tax of RM57.33m for the FY18. This brings Wira Syukur’s 2-year net profit for FY17 and FY18 to RM85.91m, exceeding the guarantee amount of at least RM82.59m. The acquisition fits well into Vizione’s culture as like Vizione. (The Edge)

United Malacca: Net profit down after MFRS adoption on top of low selling prices. Plantation group United Malacca saw its net profit slide to RM2.36m for the 3QFY19 from RM10.29m in the previous corresponding quarter, partly due to its adoption of the Malaysian Financial Reporting Standards (MFRS) framework. Excluding the impact of MFRS adoption, its pre-tax profit would be RM9.88m, compared with RM3.3m. Quarterly revenue fell 17% to RM53.48m from RM64.44m a year earlier. (The edge)

Market Update

The FBM KLCI might open higher today after US stocks rose sharply on a boost from the technology sector, while sovereign debt and the US dollar also rallied as investors digested a dovish shift at the Federal Reserve. The S&P 500 was 1.1% higher. The Dow Jones Industrial Average climbed 0.8%, and the tech-heavy Nasdaq Composite surged 1.4%. The broad rally came one day after the Fed signalled no rate rises this year, bringing its projections more in line with market expectations. Policymakers raised rates four times last year and forecast two additional rate rises for 2019 as recently as December. The central bank also said it will slow the monthly reduction of its Treasury holdings starting from May with a cut from $30bn to $15bn, and will cease trimming its balance sheet in September. London’s FTSE 100 outperformed wider European equities benchmarks with a rise of 0.9%, helped by sustained pressure on the pound as investors tracked the UK’s fraught domestic politics. With the Brexit deadline looming and no clarity on any extension to it, investors moved into the relative safety of UK government debt and at a faster pace than the rally for its eurozone neighbours.

Back home, the FBM KLCI index lost 20.55 points or 1.22% to 1,663.66 points on Thursday. Trading volume increased to 2.97bn worth RM2.15bn. Market breadth was negative with 302 gainers as compared to 547 losers. The regional markets saw a mixed session Thursday after the U.S. Federal Reserve kept interest rates unchanged and indicated there would be no rate hikes for the rest of the year. Japan’s Nikkei wasn’t trading due to a holiday. Hong Kong’s Hang Seng finished down 0.9%. The Shanghai Composite gained 0.4% and South Korea’s Kospi rose the same. Stocks were flat in Australia.

Source: PublicInvest Research - 22 Mar 2019

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