PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 20 Jan 2020, 9:05 AM


PublicInvest Research Headlines - 8 Oct 2019

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  • Global: World Bank joins warning about dimming global growth prospects. World Bank President David Malpass said the global economic outlook is deteriorating amid Brexit-related uncertainty, trade tensions and a downturn in Europe. The world economy now looks even weaker than the bank’s June forecast for 2.6% growth in 2019, “hurt by Brexit, Europe’s recession and trade uncertainty,” he added. Malpass renewed his global growth warning as investors are keeping an eye on several major issues that could come to a head this month. High-level US-China trade talks resume this week before the next planned tariff escalation and UK Prime Minister Boris Johnson has pledged to take Britain out of the European Union on Oct 31 without a deal if necessary. (Bloomberg)  
  • US: Consumer credit climbs more than expected in August. After reporting a sharp jump in US consumer credit in the previous month, the Federal Reserve released a report showing another bigger than expected increase in consumer credit in the month of August. The Fed  said consumer credit climbed by USD17.9bn in August after surging up by a revised USD23.0bn in July. Economists had expected credit to increase by USD15.5bn compared to the USD23.3bn spike originally reported for the previous month. Non-revolving credit, such as student loans and car loans, led the way higher, jumping by USD19.9bn in August after climbing by USD13.7bn in July. On the other hand, the report said revolving credit dipped by USD2.0bn in August after rising by USD9.4bn in the previous month. (RTT)  
  • EU: House prices growth rises slightly in 2Q. Eurozone house prices increased at a slightly faster pace in the second quarter, data from Eurostat showed. House prices logged an annual growth of 4.2% after posting 4.1% rise in 1Q. On a quarterly basis, house prices rose 1.7% in the 2Q, much faster than the 0.3% rise in the 1Q. In the EU28, house prices gained 1.6% QoQ, taking the annual growth to 4.2% in the 2Q. Among member states, the highest annual increase of 14% was recorded in Hungary, followed by Luxembourg and Croatia, data showed. (RTT)  
  • EU: Germany’s factory orders decline on weak domestic demand. Germany's factory orders declined more-than-expected in August on weak domestic demand, figures from Destatis revealed. German investor confidence deteriorated sharply in October to the weakest since July 2009 despite stimulus measures announced by the ECB, survey results from Sentix showed. Factory orders decreased 0.6% MoM, bigger than the expected 0.4% drop but slower than the revised 2.1% decline seen in July. The monthly fall in August was driven by a 2.6% decrease in domestic orders, while foreign orders grew 0.9%. Orders from euro area and the non-euro area advanced 1.5% and 0.4%, respectively. (RTT)  
  • China: Forex reserves decline in September. China's foreign exchange reserves declined in September, figures from the People's Bank of China (PBoC) showed over the weekend. Forex reserves totaled USD3.092trn at the end of September compared to USD3.107 trn in August. The expected level was USD3.105trn. The currency exchange rate and changes in asset prices affected the level of foreign exchange reserves. An economist said the central bank relied on state banks during August to contain forex volatility, but the latest forex reserves figures suggests that last month this may have been either replaced with, or supplemented by, direct forex sales by the PBoC. (RTT)  
  • Japan: Leading index lowest since November 2009. Japan’s leading index fell to the lowest level in nearly a decade in August, preliminary data from the Cabinet Office showed. The leading index, which measures the future economic activity, fell to 91.7 in August from 93.7 in July. That was in line with economists' expectations. The latest index was the lowest since November 2009, when the reading was 90.5. The coincident index that reflects the current economic activity decreased to 99.3 in August from 99.7 in the preceding month. (RTT)  
  • Japan: Real wages drop for eighth straight month in August. Real wages in Japan adjusted for inflation fell for an eighth straight month in August, raising worries about the resilience in consumer spending after an increase in sales tax and weakening global demand. Real wages dipped 0.6% YoY in August, labour ministry data showed, following a revised 1.7% annual drop in July. Monthly wage data showed nominal total cash earnings fell 0.2% in August, down for a second straight month. Regular pay was up 0.3%, rising for a second month in a row. One-off special payments declined 11.4% YoY in August, after a revised 3.3% decline in July. (Reuters)


  • Hibiscus (Outperform, TP: RM1.73): Buys more O&G rights in North Sea for USD5m . Hibiscus Petroleum is acquiring more oil and gas rights from United Oil & Gas PLC and Swift Exploration Ltd for up to USD5m cash. The latest two blocks are located offshore in the UK sector of the North Sea, 250km northeast of Aberdeen. The blocks include the Crown Discovery, which consists of 2C contingent resources that range between 4m and 8m barrels of oil. (The Edge)  
  • OCK: To raise up to RM62.5m via private placement. OCK Group has proposed to raise up to RM62.46m via a private placement to fund its development and acquisition of green energy assets, as well as for working capital. The issue price has yet to be determined but will be issued based on a discount of not more than 10% to its five day volume-weighted average market price, immediately preceding the price-fixing date. (The Edge)  
  • Ann Joo Resources, Southern Steel: To form JV in RM1.65bn deal . Ann Joo Resources and Southern Steel will set up a JV company to focus on their long product steel manufacturing businesses in a RM1.65bn deal. Ann Joo said the corporate exercise would see it selling its entire stakes in Ann Joo Integrated Steel SB, Ann Joo Steel and Saga Makmur Industri SB to the JV company for RM907.50m. (The Star)  
  • YTL Land: Set to delist as YTL Corp has 90.45% of company. Trading of securities in YTL Land & Development will be suspended from next Monday (Oct 14), being the expiry of five market days from the final closing date. This is as YTL Corp has secured 90.45% of YTL Land, as at the close of its takeover offer today. As at 5pm, YTL Corp had received valid acceptances resulting in it holding 749.95m YTL Land shares and 902.9m YTL Land irredeemable convertible unsecured loan stocks (ICULS). (The Edge)  
  • Econpile: Secures RM20.8m contract . Econpile Holdings has been awarded a contract worth RM20.8m to undertake earthworks, soil nailing works, piling and pile cap, as well as basement lowest floor slab works for a proposed commercial development in Subang Jaya. The contract, which was awarded to its wholly-owned subsidiary Econpile (M) SB by Tropicana Metropark SB, is for 12 months. Econpile expects the contract to contribute positively to its revenue and earnings for the financial year ending June 30, 2020. (The Edge)  
  • Priceworth: Innoprise to own 30% under log supply agreement. Priceworth International signed a log supply agreement with a unit of Innoprise Corp SB under which Priceworth will issue new shares to Innoprise, amounting to a 30% stake in the company, for logs supplied. Priceworth said it had entered the log supply agreement with Rakyat Berjaya SB (RBSB), a subsidiary of Innoprise, the investment holding vehicle of Yayasan Sabah, pursuant to a memorandum of understanding signed earlier. (The Edge)  
  • Sumatec: CaspiOil terminates joint investment pact. Sumatec Oil And Gas LLP (SOG), a wholly owned subsidiary of Sumatec Resources has received a notice from CaspiOilGas LLP (COG) terminating its joint investment agreement and novation agreement effective Oct 17. In the termination notice, COG highlighted the constraints faced under Sumatec’s current financial and legal predicaments which impacted SOG’s ability to comply with its obligations. (SunBiz)

Market Update

The FBM KLCI might open lower today after Wall Street ended in the red having spent most of Monday fluctuating between losses and gains as investors refocused on US-China trade tensions ahead of a meeting between the two countries later this week. The S&P 500 shed 0.5% with communications services the only major sector in the black, while energy was the biggest loser with a decline of 0.9%. Meanwhile the Nasdaq Composite ended 0.3% lower. Both indices had come off their lows to trade as much as 0.3% and 0.4% higher respectively, but failed to hold on to those gains. The choppy moves in equities came amid reports the Chinese Commerce Ministry is prepared to a deal with the US on parts of negotiations both sides agree upon, and that they are prepared to set out a timetable for harder issues to be worked out next year. Stocks had come under pressure earlier in the day following a report Beijing is reluctant to agree to a broad deal with Washington and that the scope of topics for any potential agreement have narrowed considerably in recent weeks. Trade negotiators from both sides are set to resume talks in the US capital from October 10. In Europe, the Stoxx Europe 600 reversed early losses to end 0.7% higher by late morning on Monday. On an otherwise quiet day for economic data, figures showed German industrial orders have continued their decline, dropping by 0.6% in August from the previous month.

Back home, the FBM KLCI index gained 1.33 points or 0.09% to 1,559 points on Monday. Trading volume increased to 2.17bn worth RM1.33bn. Market breadth was negative with 355 gainers as compared to 416 losers. Elsewhere in region, Japan’s benchmark Topix was flat, while equity markets in Hong Kong, which was rocked by further political unrest over the weekend, and mainland China remained closed for a holiday.

Source: PublicInvest Research - 8 Oct 2019

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