PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 25 Feb 2020, 9:35 AM


PublicInvest Research Headlines - 18 Apr 2019

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US: Trade deficit falls in Feb as shortfall with China decreases 28%. The US trade deficit fell to USD49.4bn in Feb, the lowest level since June 2018 and well below what economists had expected. A 28.2% in the goods deficit with China led the decline, along with a surge in aircraft exports. Exports to China rose USD1.6bn to USD9.2bn while imports fell USD1.5bn to USD39.3bn. That brought the total deficit with China to USD30.1bn. On a YTD basis, the goods and services deficit fell 7.6%, or USD8.3bn, from the same period in 2018. Exports rose USD11.1bn, or 2.7%, while imports increased USD2.8bn, or 0.5%. (CNBC)

US: Labor market remains tight, economy continues to grow, Fed says . Labor markets remained tight across the US as businesses struggled to find skilled workers and wages grew modestly, the Federal Reserve said on Wednesday in its latest report on the economy. The US central bank’s “Beige Book” report, a glimpse of the economy based on conversations with business contacts across all 12 of the Fed’s districts, found economic activity grew at a slight-to-moderate pace in Mar and early April. Wages grew moderately in most districts for both skilled and unskilled workers, with only three reporting slight growth in workers’ pay, the Fed said. (CNBC)

US: 1Q US GDP looks stronger after trade gap narrows. Economists are more upbeat about 1Q US GDP after Wednesday’s report showing the trade deficit unexpectedly narrowed in Feb, reducing the chances that growth slowed from the prior period. JPMorgan Chase & Co economists raised their GDP forecast following the report to about a 2.5% annualized growth pace in the 1Q from 2%. Goldman Sachs Group Inc forecasters boosted their tracking estimate to 2.1% from 1.7% and said they now expect a positive contribution from net trade to GDP growth, while the Federal Reserve Bank of Atlanta’s GDPNow model estimate increased to 2.4%. (Bloomberg)

US, China: To aim for early-May announcement on trade deal. Senior US and Chinese officials are scheduling more face-to-face trade talks in an effort to reach a deal by early-May that President Donald Trump and his Chinese counterpart Xi Jinping could sign later that month, two people familiar with the plans said. US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin plan to travel to Beijing the week of April 29, according to the people, who spoke on condition of anonymity to discuss internal deliberations. The next week Chinese Vice Premier Liu He will come to Washington for negotiations. During his visit, officials want to announce the sides have struck a deal and details of a signing summit, probably set for late May, they said. (The Edge)

EU: Eurozone inflation confirmed at 1.4% in Mar. Eurozone headline inflation slowed in Mar and core price growth eased to its lowest level in a year, as initially estimated, latest data from Eurostat confirmed on Wednesday. Headline inflation slowed to 1.4% from 1.5% in Feb. In Jan, price growth was 1.4%. Compared to the previous month, the CPI rose 1%. Core inflation, which excludes prices of energy, food, alcohol and tobacco, eased to 0.8% in Mar from 1% in Feb. The core inflation rate was the lowest since April 2018, when it was at 0.7%. In Mar, an acceleration in energy inflation, from 3.6% to 5.3%, was offset by a slowing in the pace of price growth in food, alcohol and tobacco, from 2.3% to 1.8%. Services costs grew 1.1%YoY versus 1.4% in Feb. Prices of non-energy industrial goods edged up 0.1% after a 0.4% increase in the previous month. (RTT)

Malaysia: Chinese businesses in Malaysia watch cautiously as Mahathir, Beijing move ahead on railway . Malaysia’s relationship with China is under scrutiny in the Southeast Asian country ahead of Prime Minister Mahathir Mohamad’s expected April visit to Beijing. Mainland Chinese businesses in Malaysia, in particular, are hopeful that the 93-year-old leader will be able to smooth ties with Asia’s dominant economic power. There are already positive signs as the two countries renegotiated a previously stalled multibillion-dollar rail project that caused uncertainty in the bilateral relationship. (CNBC)


AirAsia ( Outperform, TP: RM3.50): Abandons Vietnam venture. AirAsia’s wholly-owned unit, AirAsia Investment Ltd, together with Gumin Company Ltd and Hai Au Aviation Joint Stock Company, have mutually agreed to terminate the agreement to set up a joint venture in Vietnam. "The company, nonetheless, remains interested in operating a low-cost airline in Vietnam due to its favourable geographical location, expanding aviation market and overall growth potential,” it said. (StarBiz)

Daya Material (Neutral, TP: Under Review): Gets demand, repossession notices. Daya Materials’ subsidiary Daya Proffscorp SB has received a demand and repossession notices from Malayan Banking and MBSB for defaulting on installments for its hire-purchase facilities. The outstanding amount owed to Maybank is RM2,587.70, while the sum due to MBSB is RM122,156.07. (StarBiz)

Axiata (Underperform, TP: RM3.65): Ncell ordered to pay RM1.45bn capital gains tax in seven days. Axiata Group says that its subsidiary Ncell Private Ltd has received a letter issued by the Nepalese Large Taxpayers Office (LTPO) to pay an outstanding sum of capital gains tax of NPR39.06bn (approx. RM1.45bn). The tax to be collected from Ncell is in relation to the indirect transfer to Axiata Investments UK Ltd (Axiata UK) of an 80% stake in Ncell, following Axiata UK's acquisition of Reynolds Holdings Ltd from TeliaSonera Norway Nepal Holdings AS. (The Edge)

HSS Engineers: Eyes vastpotential in Asean region. HSS Engineers is eyeing the vast potential in the Asean region, particularly Indonesia and the Philippines, in addition to India. HSS said the increased attention to the Asean region is in light of the significant public investments in large-scale transportation infrastructure, private sector projects and overall economic development. (StarBiz)

Seacera: EGM resolutions rejected. The two resolutions raised at Seacera Group’s EGM on Tuesday have been rejected and have not been carried out. The board had adjourned the EGM claiming they received a court order not to proceed and then they walked out of the meeting. However, all present shareholders insisted on continuing the EGM, having been advised they have the legal right to proceed and voted, and appointed Shirley Tan Lee Chin to take over as chairman of the EGM. (StarBiz)

Guocoland: Sinks into fourth straight quarter of losses on lower sales of completed units. Guocoland (Malaysia) has sunk into its fourth straight quarter of losses, posting a net loss of RM6.96m in its 3QFY19, against a net profit of RM63.58m in the previous corresponding quarter last year, due to lower sales of completed units. The property developer will time new launches in line with market sentiments. (The Edge)

Automotive (Neutral): Total vehicle sales up by 10% in March. Total vehicle sales rose 10% to 54,776 units last month from 49,987 units a year earlier, mainly due to the rush for deliveries by companies with their financial year ending on March 31, according to the Malaysian Automotive Association (MAA). Sales in March were higher compared with Feb due to the former being a longer working month. (StarBiz)

Market Update

The FBM KLCI might ease at the opening today after US stocks closed lower Wednesday as the health-care sector slumped on concerns over potential adverse impact from future policy changes. Investors also parsed a steady stream of corporate earnings and the latest snapshot of the economy via the Federal Reserve’s Beige Book. S&P 500 index shed 6.61 points, or 0.2%, to 2,900.45, and the Dow Jones Industrial Average fell 3.12 points to 26,449.54. The Nasdaq Composite Index declined 4.15 points to 7,976.08. The US trade deficit fell 3.4% in February to the lowest level in eight months, the Commerce Department said. Meanwhile, wholesale inventories in the US rose a mild 0.2% in February and sales increased 0.3%. In Europe, stocks edged higher, with the Stoxx Europe 600 up 0.1%.

Back home, the FBM KLCI index lost 8.56 points or 0.53% to 1,620.90 points on Wednesday. Trading volume increased to 3.10bn worth RM1.85bn. Market breadth was negative with 208 gainers as compared to 661 losers. Stocks in region closed mostly higher however, with China’s Shanghai Composite Index and Japan’s Nikkei 225 both rising 0.3%. Hong Kong’s Hang Seng Index, meanwhile, ended the day flat.

Source: PublicInvest Research - 18 Apr 2019

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