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PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 20 Feb 2020, 9:10 AM

 

PublicInvest Research Headlines - 6 Sept 2019

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Economy

US: Factory orders jump more than expected in July. New orders for US manufactured goods jumped more than expected in the month of July, the Commerce Department revealed in a report released. The report said factory orders surged up by 1.4 % in July after climbing by a downwardly revised 0.5% in June. The bigger than expected increase in factory orders came as orders for durable goods spiked by 2.0%, led by orders for transportation equipment. Orders for non-durable goods also climbed by 0.8%. The Commerce Department said inventories of manufactured goods also rose by 0.2% in July after inching up by 0.1%. (RTT)

US: Service sector growth re-accelerates more than expected in August. The Institute for Supply Management released a report on Thursday showing a notable acceleration in the pace of growth in US service sector activity in the month of Aug. The ISM said its non manufacturing index climbed to 56.4 in August after falling to 53.7 in July. The bigger than expected increase by the non-manufacturing index came after it dropped to its lowest level since August of 2016 in the previous month. "The non-manufacturing sector's rate of growth rebounded after two consecutive months of cooling off," said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee. He added, "The respondents remain concerned about tariffs and geopolitical uncertainty; however, they are mostly positive about business conditions." (RTT)

US, China: To hold trade talks in October . China and the US agreed to hold high-level trade talks in early Oct in Washington, China's commerce ministry said, amid fears that an escalating trade war could trigger a global economic recession. The announcement followed a call earlier in the day between China's Vice Premier Liu He and US Trade Representative Robert Lighthizer and US Treasury Secretary Steven Mnuchin, the Ministry of Commerce said in a statement on its website. China's central bank governor Yi Gang was also on the call. Trade teams from the two countries will hold talks in mid-Sept before the high level talks next month, the ministry said. A spokesman for the US Trade Representative's office confirmed that Lighthizer and Mnuchin spoke with Liu and said they agreed to hold ministerial-level trade talks in Washington "in the coming weeks". (Reuters)

EU: German factory orders decline most in 5 months . Germany's factory orders decreased the most in five months in July, largely due to a marked contraction in foreign demand, data from Destatis revealed. Factory orders decreased by a more-than-expected 2.7% over the previous month in July, offsetting a revised increase of 2.7% seen in June. This was the biggest drop since Feb. Domestic orders dropped 0.5% and foreign orders decreased 4.2% in July. New orders from the euro area gained 0.3%, while demand from other countries fell 6.7 %. On a yearly basis, overall manufacturing new orders decreased 5.6%, faster than the 3.5% fall logged in June. (RTT)

EU: German construction slowdown worst in over 5 years. Germany's construction sector activity fell at the fastest rate in over five years in Aug, led by civil engineering, as order books continued to fall and expectations deteriorated, survey data from IHS Markit. The IHS Markit construction purchasing managers' index, or PMI, fell to 46.3 in August from 49.5 in July. The reading was the lowest since June 2014. All three broad construction categories reported declines in activity for the first time since the snow-related disruption in March 2018. Civil engineering work fell for the fifth straight month in Aug and at the quickest pace in almost one-and-a-half years. Commercial activity dropped sharply and at the fastest pace since March 2013. Work on housing projects contracted modestly, but the fall was the worst since May 2014. (RTT)

US, Japan: Rush to finish trade deal by Trump’s tight deadline . The US and Japan are still thrashing out details of a trade deal that President Donald Trump wants to sign this month, including the crucial issue of whether he’ll refrain from imposing higher tariffs on imported cars, according to people familiar with the matter. But people familiar with the talks said the leaders only agreed on the broad strokes of a trade deal. Negotiators are now finalizing many of the core elements, including how much Japan is willing to open its agriculture market to US imports, cuts to industrial tariffs, and the treatment of digital trade that could impact US technology giants. Several people involved in and close to the US-Japan trade talks said that given the tight timeline, it will be challenging to conclude a deal within the next couple of weeks before the UN gathering. (Bloomberg)

Indonesia: Consumer confidence eases slightly in August . Indonesia's consumer confidence eased slightly in Aug, but households remained optimistic, the Bank Indonesia. The consumer confidence index fell to 123.1 from 124.8 in July, the survey from the central bank showed. Consumers have remained upbeat based on their perception of current economic dynamics and were more optimistic regarding job prospects, the bank said. Households also felt that it was a favorable time to purchase durable goods. (RTT)

Markets

DNeX: Hopes Budget 2020 includes more technology-related projects. Dagang NeXchange (DNeX) hopes the government would roll out more projects related to technology in the upcoming Budget 2020. This particularly referred to projects which the DNeX team had the capability and was ready to take on. For example, projects related to blockchain and artificial intelligence where it needs workers, especially youth, to have the skills, capability and knowledge to do the services. DneX was preparing its employees to embrace and adopt the Fourth Industrial Revolution in order to be well-positioned for the future. (The Edge)

Suria Capital: Seeks port tariff hike at Sabah ports. Suria Capital Holdings is appealing to the Sabah state government to increase port tariffs at its ports in the state. The company submitted the application to the state government last month. In the privatisation agreement, there is a provision that allows us to apply for a revision after five years into the concession period. The proposed tariff revision includes container and general cargo tariffs. On another development, Suria Capital was not in talks to sell a stake in SPSB, its wholly-owned subsidiary. (Star Biz)

Lotte Chemical Titan: US JV plants start commercial operations. Lotte Chemical Titan (LCTitan) said its US-based JV company Lotte Chemical USA Corp's (LC USA) ethane cracker and monoethylene glycol (MEG) plants had started commercial operations in Aug 2019 on an integrated basis. LC USA is a 40:60 JV between LCTitan and Lotte Chemical Corp. The US ethane cracker plant will use ethane gas and process it into ethylene whereby 50% of the ethylene produced will be off taken by Axiall Corp and the other 50% will be consumed by the USA MEG plant as the primary feedstock. (The Edge)

Heng Huat: To become country's largest coconut fibre producer. Heng Huat Resources is acquiring 97% equity in Sabut Kelapa Terengganu SB (SKT) for RM200,000 in a deal that will make it the country's single-largest market leader in coconut fibre production. The purchase of the coconut biomass materials producer would give it a total market share of about 80% of the Malaysian coconut fibre scene. SKT's manufacturing plant would ensure a huge and constant supply of raw materials such as coconut husks at a cost-effective price. (StarBiz)

Priceworth: Slips into the red due to interruptions in logging operations. Priceworth International slipped into to the red for the 4QFY19 due to temporary interruptions in its logging operations and the impairment on goodwill. It posted a net loss of RM90.41m for the quarter compared to RM3.54m net profit in the corresponding quarter last year. This translated into a loss per share of 2.21sen as against EPS of 0.34sen previously. Revenue for the quarter declined 66.4% to RM14.45m from RM42.99m previously. (The Edge)

APFT: External auditors doubt its ability to continue as a going concern. The external auditors of APFT have expressed doubts over the flight training company’s ability to continue as a going concern, as they are unable to issue an opinion on the group’s financial statements for the period Feb 1, 2018 to April 30, 2019. As of April 30, 2019, the gr current liabilities exceeded their current assets by RM10,159,991 and RM8,135,499, and registered a shareholders’ deficit of the group and the company of RM3,723,146 and RM2,823,191. (The Edge)

Market Update

The FBM KLCI might open higher today as global stocks advanced on Thursday, with Wall Street cruising to one-month highs, amid optimism of thawing geopolitical tensions after the US and China announced that they would resume trade negotiations next month. The risk-on mood among investors was prompted by the announcement Chinese officials would hold high-level talks with US trade negotiators in Washington in early October, in the latest effort at seeking a resolution to the trade war between the world’s top two economies. The US later confirmed the talks. All three major US indices traded at their highest levels in more than a month and took a step closer to their record highs. The S&P 500 rallied 1.3% for what marked its biggest one-day gain in about three weeks, backed by strong performances in technology, consumer discretionary and financial shares. Wall Street’s benchmark is now 1.7% from its record closing high. Sentiment was also boosted as fears receded that the UK will leave the EU without a deal on October 31. In Europe, the continent-wide Stoxx 600 climbed 0.7%, while Frankfurt’s Xetra Dax rose 0.9%. The FTSE 100 fell 0.6%.

Back home, the FBM KLCI index lost 0.14 point or 0.01% to 1,599.75 points on Thursday. Trading volume decreased to 1.85bn worth RM1.58bn. Market breadth was negative with 308 gainers as compared to 431 losers. China’s CSI 300 of Shanghai and Shenzhen-listed stocks rose 1%, with indications Beijing was preparing new stimulus providing a further bullish cue. Japan’s Topix led the region rallying 1.8%. Hong Kong’s Hang Seng index was roughly flat following Wednesday’s 3.9% rally, its best one-day performance in 2019. Carrie Lam, the territory’s leader, had announced she will officially withdraw an extradition bill, raising hopes of an eventual resolution to a three-month long political crisis. Australia’s S&P/ASX 200 and South Korea’s Kospi added 0.9% and 0.8%, respectively.

Source: PublicInvest Research - 6 Sept 2019

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