PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 17 Jan 2020, 9:48 AM


PublicInvest Research Headlines - 1 Nov 2019

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US: Weekly jobless claims edge up to 218,000. With the more closely watched monthly jobs report looming, the Labor Department released a report on Thursday showing a modest increase in first-time claims for US unemployment benefits in the week ended October 26th. The report said initial jobless claims rose to 218,000. Meanwhile, the Labor Department said the less volatile four-week moving average edged down to 214,750. (RTT)

US, China: Trade talks to go on despite uncertainty on where Trump and Xi can meet . Lead negotiators from the US and China will hold trade talks on the phone on Friday, China’s Ministry of Commerce said. “The Chinese and US trade delegations remain in close communication, (and) at this time there is smooth progress on negotiations,” the commerce ministry said. “Both sides will continue to push ahead with the negotiations and other work as originally planned,” adding the leaders of the discussions are set to hold a phone call on Friday. (CNBC)

EU: Eurozone 3Q GDP growth exceeds expectations . The euro area economy grew more than expected in the third quarter, despite a global slowdown and uncertainties surrounding Brexit. Separate data showed that inflation in the region eased to the lowest level in nearly three years in Oct, but core price growth accelerated, while the jobless rate held steady at the lowest level in more than a decade. GDP expanded 0.2% sequentially, the same rate as seen in the 2Q, preliminary flash estimate from Eurostat showed Thursday. On a YoY basis, GDP advanced 1.1%, in line with expectations, but slightly slower than the 1.2% growth posted a quarter ago. (RTT)

China: Manufacturing activity shrank for the sixth straight month in Oct. China on Thursday reported that factory activity shrank for the sixth straight month in Oct, with the official Purchasing Managers’ Index for manufacturing coming in at 49.3 in Oct. In Sept, the official manufacturing PMI was 49.8, according to the country’s statistics bureau. Policymakers have limited options to boost growth, particularly in the area of monetary policy such as cutting interest rates. (CNBC)

Hong Kong: Falls into first recession in 10 years as protests, trade war weigh . Hong Kong slid into recession for the first time in a decade in the 3Q, weighed down by increasingly violent anti-government protests and the protracted US-China trade war. The city's economy shrank 3.2% in July-Sept from the preceding period, contracting for a second straight quarter and meeting the technical definition of a recession, according to preliminary government data on Thursday. From a year earlier, GDP contracted 2.9%. The readings were the weakest for the Asian financial hub since the global financial crisis in 2008/2009. (Reuters)

Japan: BOJ sends clearer signal of rate cut chance; keeps policy steady . The BOJ kept monetary policy steady on Thursday as expected but offered a stronger signal it may cut interest rates in future, underscoring its concern that overseas risks could derail the country's fragile economic recovery. The BOJ kept its short-term rate target at - 0.1% and that for the 10-year government bond yield at around 0%. It also maintained a pledge to buy government bonds so its holdings increase at an annual pace of roughly USD736bn. But the BOJ modified its forward guidance — a signal central banks give to markets on future policy moves — to indicate more clearly its readiness to cut rates if needed. (Reuters)


Gamuda (Outperform, TP: RM4.26): Cut-off date for highway deals extended again. The cut-off date for the takeover of four toll con-cessionaires has been extended again for another two months. MOF Inc and concession holding companies Kesas Holdings, Litrak Holdings, Sprint Holdings and Smart Holdings have mutually agreed to extend the cut-off date to negotiate and finalise the terms of the definitive agreement from Oct 31, 2019 to Dec 31, 2019 in relation to the government’s acquisition of high-ways. This is the second time the negotiations have been extended. (SunBiz)

Sunway: Acquires three student accommodations in the UK for RM203m. Sunway is buying three purpose-built student accommodations in the UK, collectively worth some RM202.8m via its recently established private trust, the Sunway Residence (Guernsey) Ltd (SRG). The proposed acquisition will provide Sunway with geographical and sectorial diversification, as well as a stable and sustainable income stream. The three accommodations are The Colston for GBP9.12m (RM49.2m), Centregate Property for GBP9.53m (RM51.3m), and Redvers House for GBP18.98m (RM102.3m). (The Edge)

Scomi Energy: Auditor flags going concern uncertainty. Scomi Energy Services external auditor Messrs KPMG PLT has expressed material uncertainty over the group's ability to continue as a going concern based on its financial statements for the FY19. It also triggered the Practice Note 17 (PN17) criteria as its shareholders’ equity on a consolidated basis has fallen below 50% of its issued share capital as at June 30, 2019. It will seek a waiver from being classified as a PN17 company to Bursa Securities. (The Edge)

Chin Teck: Net profit for FY19 declines to RM32.1m. Chin Teck Plantations net profit for the financial year ended Aug 31, 2019 declined to RM32.10m compared with RM71.4m recorded in the previous financial year. Revenue fell to RM122.12m from RM149.92m previously. The average selling price of fresh fruit bunch (FFB), crude palm oil (CPO) and palm kernel were lower. However the sales volume of FFB, CPO and palm kernel was higher. Production and purchase of FFB were higher. The production of CPO and palm kernel was higher. (The Edge)

Banking (Neutral): Sept loan disbursements down 1.9% on month. Total loans disbursed by the banking system declined 1.9% to RM99.5bn in Sept compared with RM101.4bn in the previous month, according to Bank Negara Malaysia (BNM). However, the central bank said the figure remained higher than the historical monthly average of RM93bn. The moderation from August was mainly in disbursements to households, particularly for the purchase of securities and residential properties. Net financing growth remained unchanged at 5.2% in Sept. (The Edge)

Construction (Neutral): Malaysia-Singapore rail link back on at lower cost – Mahathir. A train line linking Malaysia’s southern state of Johor with neighbouring Singapore will go ahead after the projected cost was cut by 36%, Malaysia’s Prime Minister Mahathir Mohamad said, ending months of uncertainty over the delayed project. The Rapid Transit System Link, which will bridge one of the world’s busiest border crossings, can carry up to 10,000 passengers an hour each way, more than 30 times the capacity of the existing train service. The project will cost RM3.16bn (USD757m), down from RM4.93bn under the original proposal. (SunBiz)

Market Update

The FBM KLCI might open weaker today after US stocks closed lower Thursday after renewed worries about a US - China trade deal, more evidence of a slowdown in manufacturing, and mixed corporate earnings. The weaker tone followed a record close for the S&P 500 after the Fed cut rates for the third time this year, while also signaling that it would pause before making any further moves on monetary policy. The Dow Jones Industrial Average closed 140.46 points, or 0.5%, lower, at 27,046.23, while the S&P 500 index declined 9.21 points, or 0.3%, to finish at 3,037.56. The Nasdaq Composite Index fell 11.62 points, or 0.1%, to end at 8,292.36. All three indexes ended well off session lows. The major indices scored monthly gains, with Dow hanging on to a 0.5% October rise, while the S&P 500 rose 2% and the Nasdaq advanced 3.7%. Chinese officials are expressing doubts about their ability to reach a comprehensive, long-term trade deal with the US despite progress toward signing a “phase one” agreement. In US economic data, there was more evidence of a slowdown in manufacturing with the Chicago purchasing-managers index falling to 43.2 in October from 47.1 in September, below the 48.3 consensus expectation. European markets finished broadly lower with the FTSE 100 down 1.12% while France's CAC 40 was off 0.62% and Germany's DAX was lower by 0.34%.

Back home, the FBM KLCI index gained 17.98 points or 1.14% to 1,597.98 points on Thursday. Trading volume increased to 2.95bn worth RM2.70bn. Market breadth was positive with 539 gainers as compared to 308 losers. The regional markets finished mixed with the Hang Seng gained 0.90% and the Nikkei 225 rose 0.37%. The Shanghai Composite lost 0.35%.

Source: PublicInvest Research - 1 Nov 2019

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