PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 24 Jan 2020, 2:52 PM


PublicInvest Research Headlines - 2 Apr 2019

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Global: Factory activity weak in March as clouds gather. Factory activity remained weak around the world last month, reinforcing worries of a global slowdown as forward-looking indicators pointed to gloomy times ahead, surveys showed on Monday. Euro zone manufacturers had their weakest month for almost six years in March. While China showed a slight, surprising recovery last month, growth in new domestic and export orders was marginal, in a sign that stimulus already injected into Asia’s growth engine may not be enough. Factory activity in Germany, France, Japan, South Korea, Malaysia, and Taiwan shrank further, adding to expectations of a dovish turn from central bankers. (Reuters)

US: Factory gauge rises from two-year low. A gauge of US factories topped estimates in March, rising from a two-year low on strength in employment and orders and signaling stabilization after a rocky few months. The ISM index rose to 55.3 from 54.2 as three of five main components increased. The result topped estimates in a Bloomberg survey calling for a rise to 54.5 and remained above the 50 level that indicates expansion. Sixteen of 18 industries reported growth. Measures of deliveries and inventories decreased. The reassuring reading may signal the worst is over after months of mounting pressure in manufacturing sent the gauge tumbling from a 14-year high in Aug. The bounce brought the factory gauge back up toward its 12-month average. (Bloomberg)

US: Retail sales unexpectedly fall in Feb. US retail sales unexpectedly fell in Feb, the latest sign economic growth has shifted into low gear as stimulus from USD1.5trn in tax cuts and increased government spending fades. The Commerce Department said on Monday retail sales dropped 0.2% as households cut back on purchases of furniture, clothing, food and electronics and appliances, as well as building materials and gardening equipment. Data for Jan was revised higher to show retail sales increasing 0.7% instead of gaining 0.2% as previously reported. Retail sales in Feb advanced 2.2% from a year ago. The surprise drop in sales in Feb could partly reflect delays in processing tax refunds in the middle of the month. Cold and wet weather could also have hurt sales. (Reuters)

US: Construction spending rises to a nine-month high in Feb. US construction spending increased for a third straight month in Feb, boosted by gains in both private and public construction projects, offering some good news on the economy following a string of weak reports. The Commerce Department said on Monday construction spending rose 1.0% to a nine-month high after an upwardly revised 2.5% surge in Jan. Economists polled by Reuters had forecast construction spending falling 0.2% in Feb after a previously reported 1.3% jump in Jan. Construction spending increased 1.1% on a YoY basis in Feb. In Feb, spending on private construction projects rose 0.2% after vaulting 1.5% in Jan. Investment in private residential projects increased 0.7%, rising for a third straight month. (Reuters)

EU: Eurozone inflation unexpectedly slows in March. Eurozone inflation unexpectedly slowed in March with core price growth falling to its lowest level in a year, suggesting subdued inflationary pressures in the 19-nation economy, while the unemployment rate remained unchanged in Feb. Headline inflation slowed to 1.4% from 1.5% in Feb, preliminary data from the statistical office Eurostat showed on Monday. Economists had expected the inflation rate to remain unchanged. In Jan, price growth was 1.4%. Core inflation, which excludes prices of energy, food, alcohol and tobacco, eased to 0.8% in March from 1% in Feb. Separately, the Eurostat reported that the euro area jobless rate was 7.8% in Feb, same as in Jan. The unemployment rate is now at the lowest rate recorded in the euro area since Oct 2008. (RTT)

UK: Brexit crisis deepens as commons fails to find plan B. The UK’s deadlocked Parliament failed to agree on a new blueprint for Brexit, rejecting all the options that were put forward to replace Theresa May’s unpopular deal. The House of Commons voted on four different policies but none of them won a majority, pushing Britain’s messy divorce from the European Union deeper into crisis. The pound fell. With just 11 days left until the UK is due to exit the bloc of 28 nations, the stalemate leaves the prime minister with a crucial decision over what to do next. Her own deal has been rejected three times in parliamentary votes but she is considering trying again. May will convene a meeting of her Cabinet on Tuesday, likely to last five hours, to hash out a plan. If she can’t get her withdrawal agreement through Parliament before a summit of EU leaders on April 10, she will face a perilous set of options. (Bloomberg)

Japan: Business confidence hits two-year low as trade war stings. Japan’s business mood slumped to a two-year low in the March quarter, a central bank survey showed, underscoring concerns that Sino-US trade tensions and softening global demand were taking a toll on the export-reliant economy. The gloom was most pronounced among big manufacturers, where sentiment soured at the fastest pace in more than six years, stoking fears that uncertainty over the global outlook could discourage companies from spending on wages and expenditure. Separately, a private business survey showed manufacturing activity in Japan contracted for a second straight month in March, with output down at the sharpest rate in nearly three years. (Reuters)


Alam Maritim: Gets RM240m EPCC contract. Alam Maritim Resources has bagged a USD59m (RM240m) contract for the procurement, construction and installation of a pipeline system. The contract is for the Tembikai Non Associated Gas (TNAG) development by Vestigo Petroleum SB, a subsidiary of Petronas Carigali SB. “The TNAG pipeline system will be installed from the new TNAG unmanned wellhead platform via a 60 km, 12” pipeline and fibre optic control cable.“The rigid pipeline will be the first in offshore Malaysia installed using mechanical connectors, and specifically the NOV Tuboscope Zap-Lok connection and tied to existing processing facilities on Berantai FPSO and the Well Head Platform with flexible risers connected to the rigid pipeline with diverless connections,” Alam Maritim said. (The Edge)

Suncon: Unit gets RM99.5m hotel project in Medini Iskandar. Sunway Construction Group’s unit Sunway Construction SB has received an RM99.5m LoA by Sunway Marketplace SB for the proposed construction of a hotel in Medini Iskandar, Johor Baru. Sunway Marketplace SB is an indirect subsidiary of Sunway, which in turn is a major shareholder of SunCon, making it a related party transaction. SunCon said the project is expected to be completed by the 3QCY2020. (The Edge)

Coastal Contracts: Bags charter contracts worth RM28m. Coastal Contracts announced its units have bagged three charter contracts worth RM28m in total. According to the company, the charter contracts — awarded to its wholly-owned subsidiaries Pleasant Engineering SB, Coastal Transport (Sandakan) SB and Coastal Offshore Venture Pte Ltd — are for two units of offshore support vessels and one unit of other vessel. Two of these contracts are short-term while one is a long-term contract with a firm period of up to five years, it added. (The Edge)

Yinson: Buys loss-making Singapore liftboat operator Ezion. Yinson Holdings’s unit has acquired Singapore-based liftboats operator Ezion Holdings Ltd (EHL) by striking a deal with EHL’s lenders. Yinson said Yinson Eden Pte Ltd (YEPL) made the acquisition by entering into a conditional debt conversion agreement and conditional option agreement with EHL. Upon completion of the debts conversion, YEPL will hold a minimum 70% stake in EHL’s enlarged share capital, Yinson said. “YEPL is currently in discussion with the said lenders to acquire up to USD916m of EHL’s existing loans through debts assignment. The lenders will be paid USD200m cash and EHL shares by YEPL. “The EHL shares to be held by YEPL arises from the Conditional Debt Conversion Agreement, which allows YEPL to capitalise the debts into EHL shares at SGD0.055 per share and also the Conditional Option Agreement. (The Edge)

Suncon: Ventures into Myanmar by inking MoU with local conglomerate. Sunway Construction Group (SunCon)’s indirect unit Sunway Builders (Myanmar) Co Ltd (SBM) is entering into a MoU with local firm Capital Construction Limited (CCL) to develop major infrastructure and construction projects in Myanmar. The partnership will see SunCon and CCL, the construction arm of Myanmar conglomerate Capital Diamond Star Group (CDSG), jointly bidding for projects such as mixed-used developments, offices, hotels and hospitals in Yangon and Mandalay, as well as external infrastructure projects over the next three years. “The strategic partnership with Capital Construction Limited is expected to not only drive the business growth for Sunway Construction Group, but also the construction industry in Myanmar. (The Edge)

Market Update

The FBM KLCI might open higher today after U.S. stocks kicked off the week with strong gains on Monday after better-than expected Chinese and U.S. economic data suggested the slowdown in the global manufacturing industry may be easing. The S&P 500 climbed 1.2% to end near 2,867. The Dow Jones Industrial Average picked up 329 points, or 1.3%, to end around 26,258. The Nasdaq Composite climbed 1.3% to end around 7,829. Monday marks the best percentage gain for the blue-chip Dow since Feb. 15, and the best daily gain for the broad-based S&P since March 11. The Institute for Supply Management's manufacturing index came in at a stronger-than-expected 55.3% in March, from 54.2% in the previous month. Meanwhile, the Caixin China manufacturing purchasing managers index rose to 50.8 in March from 49.9 in February. A reading above 50 indicates growth in economic activity. Investors were also hopeful for a resolution to the U.S.-China trade conflict, with a Chinese delegation led by Vice Premier Liu He set to visit Washington later this week. European markets also finished broadly higher with shares in Germany leading the region. The DAX was up 1.35% while France's CAC 40 added 1.03% and London's FTSE 100 rose 0.52%.

Back home, the FBM KLCI closed 14.97 points or 0.91% lower to 1,628.66 points, dragged down mainly by declines in banking stocks after Bank Negara Malaysia said on Friday growth in outstanding loans moderated to 5% in February from January's 5.5% expansion. Across Bursa Malaysia, 2.63bn shares worth RM1.97bn were traded today. Despite the KLCI's decline, there were 415 gainers against 372 decliners across Bursa Malaysia. In China, the Shanghai Stock Exchange Composite added 2.58% while Hong Kong’s Hang Seng rose 1.76%. Elsewhere, Japan’s Nikkei 225 climbed 1.43% while South Korea’s Kospi tacked on 1.29%.

Source: PublicInvest Research - 2 Apr 2019

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