PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 24 Nov 2020, 10:34 AM


PublicInvest Research Headlines - 27 Aug 2019

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US: Business investment appears to struggle in 3Q. New orders for key US made capital goods rose modestly in July while shipments fell by the most in nearly three years, pointing to continued weakness in business investment and a slowdown in economic growth early in the 3Q. Coming against the backdrop of an escalation in US-China trade tensions, the report could provide more ammunition for the Federal Reserve to cut interest rates again next month. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, increased 0.4% last month driven by strong demand for electrical equipment, appliances and components. Data for June was revised down to show these so-called core capital goods orders advancing 0.9% instead of surging 1.5% as previously reported. Core capital goods orders increased 1.5% on a YoY basis. (Reuters)

US: Durable goods orders jump much more than expected in July. Reflecting a continued spike in orders for transportation equipment, the Commerce Department released a report showing new orders for US durable goods jumped much more than expected in the month of July. The report said durable goods orders surged up by 2.1% in July following a downwardly revised 1.8% increase in June. Economists had expected orders to climb by 1.1% compared to the 1.9% jump that had been reported for the previous month. Excluding the spike in orders for transportation equipment, however, durable goods orders fell by 0.4% in July after rising by 0.8% in June. The pullback came as a surprise to economists, who had expected ex-transportation orders to inch up by 0.1%. (RTT)

US, Japan: Trump rejects new tariffs on Japan auto imports `at this moment'. President Donald Trump says he is not “at this moment” considering fresh tariffs on imported autos and parts from Japan that he has threatened, citing an agreement in principle with Japan on trade announced over the weekend. The threat of steep new US tariffs on imported automobiles and components has loomed over the auto industry and major US trading partners since the US Commerce Department found those imports could impair national security. Trump backed that finding in May, but delayed imposing new levies on the sector through least mid-Nov to allow US negotiators to pursue trade deals with Japan and the European Union. Trump had earlier said there would be no change to US tariffs on Japanese autos. (Bloomberg) 

EU: German business morale falls as 'export boomerang' hits. German business sentiment deteriorated more than expected in August to hit its lowest in nearly seven years, a survey showed, in a further sign that escalating trade disputes are pushing Europe’s largest economy toward a recession. The country’s manufacturers - whose exports have been a bedrock of German economic strength - are now struggling with weaker foreign demand, tariff disputes sparked by US President Donald Trump’s ‘America First’ policies and business uncertainty linked to Britain’s decision to leave the European Union. German companies have to buckle up in the coming quarters. As bitter as it sounds, the export dependence of the German economy is currently becoming a boomerang. The automobile sector is also having trouble adjusting to stricter regulation. (RTT)

China: Hong Kong trade deficit narrows in July. Hong Kong's trade deficit narrowed in July with imports falling more than exports, data from the Census and Statistics Department showed. The trade deficit fell to HKD32.1bn in July from HKD47.1bn in the same period last year. Economists had expected a deficit of HKD46.7bn. In June, the trade deficit was HKD55.1bn. Exports declined 5.7% annually in July. Economists had expected a 9.7% fall. Imports decreased 8.7% in July. Economists had expected a fall of 8.6. On a monthly basis, exports and imports rose 9.4% and 1.6%, respectively, in July. For the May to July period, the trade deficit fell to HKD122.7bn from HKD144.6bn in the same period last year. Exports and imports decreased 5.7% and 6.8%, respectively. (RTT)

India: GDP growth forecast to accelerate in June quarter - FICCI. India's economy is forecast to expand at a faster pace in the June quarter after easing to a five-year low, as farm sector, strengthening micro, small and medium enterprises and market reforms are set to underpin growth. According to the FICCI Economic Outlook Survey, GDP will grow 6% in the June quarter. GDP had advanced 5.8% in the March quarter. The statistical office is set to release GDP data next week. The lobby pegged the growth at 6.9% for 2019-20. The survey was conducted during June and July. The median growth forecast for agriculture and allied activities has been put at 2.2% for 2019-20. At the same time, the industry and services sector are expected to grow by 6.9% and 8.0% respectively during the current financial year. The CPI has a median forecast of 3.7% for 2019-20. (RTT)

Japan: Leading index lowest since February 2010. Japan's leading index eased to the lowest level in nearly nine-and-a-half years in June, as initially estimated, final data from the Cabinet Office showed on Monday. The leading index, which measures the future economic activity, fell to 93.3 in June from 94.9 in May. This was the lowest since February 2010, when the score was 92.5. The coincident index that reflects the current economic activity decreased to 100.4 in June from 103.4 in the preceding month. Both leading and coincident readings were confirmed. The lagging index remained unchanged at 104.5 in June. The reading was revised up from 104.1. (RTT)

Singapore: Industrial production falls less than forecast. Singapore's industrial production declined at a slower-than-expected rate in July, data from the Economic Development Board showed on Monday. Manufacturing output dropped 0.4% YoY in July, following an 8.1% fall in June. Economists had expected a 4.9% decline. On a MoM basis, manufacturing output increased a seasonally adjusted 3.6% in July, after a 0.3% decrease in the previous month. Economists had expected a fall of 2.8%. Excluding bio-medical manufacturing, output fell 0.7% YoY but rose 9.4% MoM. The general manufacturing, biomedical manufacturing and chemicals logged output growth, while the rest of the manufacturing clusters contracted from last year. (RTT) 


Globaltec: To submit appeal after Indonesian PSC terminated. Globaltec Formation’s wholly owned subsidiary NuEnergy Gas Ltd has received a notice of termination for the Bontang Bengalon production sharing contract (PSC) in Indonesia. “The Bontang Bengalon PSC was terminated on the grounds of non-discovery of coal bed methane at the end of the sixth contract year and it is required to relinquish the remaining contract area and to fulfil its remaining obligation under the contract,” Globaltec said. It said the contract has a net carrying value of USD798k (RM3.3m) and there will be no operational impact on the group after the termination. (SunBiz)

Barakah Offshore: Disputes RM85m claim. Barakah Offshore Petroleum and its wholly owned subsidiary PBJV Group SB have disputed the claim notices by PRPC Utilities and Facilities SB for RM85.2m in relation to the P14 contract. PBJV also issued a demand notice dated Aug 22, 2019 to PRPC. PBJV has demanded PRPC to pay RM6.6m and to withdraw the discontinuance letter within seven days from the date of PBJV’s notice. Further, PRPC has been demanded to process the Progress Claim No 10 within 15 days from the date of the receipt of the said notice. (SunBiz)

Al-'Aqar Healthcare REIT: Acquires KPJ Batu Pahat Specialist Hospital for RM78m cash. Al-'Aqar Healthcare REIT is acquiring another hospital, KPJ Batu Pahat Specialist Hospital for RM78m cash, to add to its list of properties under management. Barring any unforeseen circumstances, the proposed acquisition is expected to be completed by year-end. (The Edge)

Asdion: To kick off Tumpat supply base project in 4Q. Asdion’s JV partner to develop and manage the Tumpat Supply Base (TSB) project in Kelantan, Kingdom Infra Holdings SB (KIHSB), has received the relevant land titles from the state government, setting the stage for the project’s imminent construction and commencement. "With the imminent issuance of the project Development Order and a routine Traffic Impact Assessment to take place, we fully expect work on the project to commence by the 4Q, if not earlier,” its ED Razmi Alias said. (StarBiz)

RHB: 2Q earnings rise 7.9% to RM615.4m. RHB Bank's net profit for the 2QFY19, was 7.9% higher from the previous corresponding quarter at RM615.4m on the back of higher non-fund based income and lower expected losses on loans. The group declared an interim dividend of 12.5 sen per share, which represented a 40.2% payout based on its 1H results, it said. (Bernama)

Aeon Co: 2Q net profit doubles but expects softer 2H. Aeon Co (M) doubled its net profit to RM19.4m for the 2QFY19, from RM9.8m a year earlier, due to the absence of impairment losses at an associate, which had impacted its results in the previous year’s corresponding quarter. While the Malaysian economy saw betterthan-expected growth in the 2Q, the group expects conditions to soften in the 2H of the year, due to both internal and external factors, including the global trade disputes. (The Edge)

GDex: 4Q net profit rises, pays 0.25 sen dividend. GD Express Carrier (GDex) saw its net profit rise over 50% YoY to RM9.9m in 4QFY19, on reversal of tax penalty arising from underprovision of income tax expense in prior years. It also declared a final dividend of 0.25 sen per share for the FY19, which is subject to shareholders' approval at the forthcoming annual general meeting. (The Edge) 

Market Update

The FBM KLCI might open higher after hopes of fresh trade talks between the US and China buoyed Wall Street and helped stem a sharp sell-off in Asia, as comments from President Donald Trump on Monday breathed new life into risk assets. Mr Trump’s intervention stabilised global markets, with European stocks mostly pushing higher and US equities clawing back some of Friday’s losses after another bruising session in Asia-Pacific. The UK’s market was closed for a bank holiday. The S&P 500 snapped a two-day losing streak with its best showing in a week. The index rallied 1.1% to close near session highs, led by gains in the technology sector, which is considered particularly sensitive to US and China tariffs. The tech-heavy Nasdaq Composite was up 1.3%. In Europe, the Stoxx Europe was flat while the Dax rose 0.4%.

Back home, the FBM KLCI index lost 8.80 points or 0.55% to 1,600.53 points on Monday. Trading volume increased to 2.21bn worth RM1.84bn. Market breadth was negative with 211 gainers as compared to 661 losers. Equities in region also took a hit after sharp falls on Wall Street on Friday. The CSI 300 of Shenzhen and Shanghai stocks were 1.4% lower while Japan’s Topix was down 1.6%. The Hang Seng index in Hong Kong was down 1.9% after anti-government protests turned violent again over the weekend following a week of milder demonstrations.

Source: PublicInvest Research - 27 Aug 2019

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