PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 28 Oct 2020, 11:02 AM


PublicInvest Research Headlines - 20 Nov 2019

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US: Services data suggests upward revision to 3Q GDP. US economic growth for the 3Q is likely to be revised higher after data showed stronger consumer spending than initially estimated. The Commerce Department’s quarterly services survey, or QSS, implied spending on legal services increased at a faster pace than the government had assumed in its advance estimate of gross domestic product published last month. Data from this survey signaled stronger consumption growth during the quarter than what was first reported by the BEA (Bureau of Economic Analysis). The government estimated last month that consumer spending, which accounts for more than two thirds of the economy, increased at a 2.9% rate in the 3Q. (Reuters)

US: Lower mortgage rates boost housing starts, building permits. US homebuilding rebounded in Oct and permits for future home construction jumped to a more than 12-year high, pointing to strength in the housing market amid lower mortgage rates. The report from the Commerce Department also showed an increase in home completions and the stock of homes under construction, which could help to ease a supply squeeze that has plagued the housing market. Though housing accounts for a fraction of gross domestic product, it has a bigger economic footprint. The surge in housing activity at the start of the 4Q suggested some support for the economy, which is slowing amid cooling consumer spending and persistent weakness in business investment and manufacturing. (Reuters)

EU: OECD growth slows In Q3. Economic growth in the OECD that comprises of 36 member countries slowed further in the 3Q. GDP in the OECD area grew 0.3% from the 2Q, when the economy expanded 0.4%, provisional data from the Paris-based Organization for Economic Co-operation and Development showed. The pace of growth slowed for  a second consecutive quarter and was the weakest since the 3Q of last year, when the economy expanded at the same pace. Among the major seven economies of the OECD, GDP growth slowed sharply in Japan, down to 0.1% from 0.4%. (RTT)

EU: Current account surplus falls in Sept. The euro area current account surplus declined in Sept largely due to the fall in primary income, data from the European Central Bank showed. The current account surplus totaled EUR28bn in Sept versus EUR29bn in Aug. In the same period last year, the surplus came in at EUR21bn. The surplus on trade in goods decreased to EUR27bn from EUR28bn a month ago. Likewise, primary income declined to EUR4bn from EUR7bn. Meanwhile, the surplus on services rose to EUR10bn from EUR7bn in the previous month and the shortfall in secondary income narrowed to EUR13bn from EUR14bn. In the 12-month period to Sept, the current account surplus fell to EUR321bn, or 2.7% of euro area GDP, from EUR378bn, or 3.3% of GDP, in the 12-month period to Sept 2018. (RTT)

EU: Construction output rises in Sept. Eurozone's construction output rose for the first time in three months, data from Eurostat showed. Construction output grew 0.7% in Sep, reversing a 0.8% fall in Aug. Building and civil engineering works increased 0.6% and 1.2%, respectively. On an annual basis, construction output fell 0.7% in Sept, after a 0.8% increase in the preceding month. In the EU28, construction output rose 0.3% monthly in Sept and 0.3% from a year ago. Among the member states, Slovakia, Hungary and France logged the biggest monthly increases, while the worst declines were seen in Sweden, Romania and Spain. (RTT)

EU: German manufacturing output to shrink 4% this year, BDI says. Germany’s manufacturing production is expected to decline 4% this year, with exports edging up just half a percentage point, because of to weaker foreign demand, the BDI industry association said. Germany’s export-reliant manufacturers are being hit by international trade disputes and China’s cooling economy, as well as uncertainty linked to Britain’s decision to leave the European Union. After six consecutive years of growth, Germany’s industrial sector is stuck in recession since the third quarter of 2018. The BDI expects global industrial output to rise only 1% this year after two years with annual growth rates of 3%. The projected export growth of 0.5% for 2019 follows a 2.1% expansion the year before, marking the weakest rise in foreign sales since the world financial crisis in 2009. (Reuters)

UK: Manufacturing orders fall at slower pace - CBI . UK manufacturers continued to log a decline in orders in Nov but the pace of decrease slowed from Oct, survey data from the Confederation of British Industry, or CBI, showed. The order book balance fell to -26% in Nov from -37% in Oct, the Industrial Trends Survey showed. This was well below the long-run average of -13%. A balance of -22% said their export order books were below normal compared to the long-run average of -17%. Further, a net -9% reported decrease in output volume over the last three months. Manufacturers expect output to be broadly flat in the coming quarter, with 24% predicting growth, and 25% a decline, giving a balance of -1%. (RTT)

Japan: BOJ has room to cut rates further, says Kuroda. Bank of Japan Governor Haruhiko Kuroda said on Tuesday that the central bank still has room to lower interest rates further. However, there were limits to how long rates could go down, he said at the parliament. At the last monetary policy meeting in October, the BOJ maintained its policy rates but tweaked its forward guidance signaling further easing. (RTT)


DNeX: Bags RM43m contract to re-engineer IRB's self assessment system. Dagang NeXChange (DNeX)'s 60%-owned Innovation Associates Consulting SB (IAC) has secured a three-year contract worth RM42.8m to re-engineer the Inland Revenue Board's tax self-assessment system. The job will start from Dec 1, 2019, and be completed by Nov 30, 2022. The balance 40% stake in IAC are held by Datuk Dr Md Hamzah Md Kassim (30%) and Halim Din (10%). (The Edge)

Omesti: 51%-owned unit bags RM71m contract from LHDNM for computer equipment rental. Omesti’s 51%-owned unit has bagged a contract worth RM71.5m to rent computer equipment to the Inland Revenue Board of Malaysia (LHDNM). The contract is subject to a formal contract agreement to be entered between the two parties in not more than four months from the LoA acceptance date. The three year contract, scheduled to commence on Nov 15, 2019 and be completed on Nov 14, 2022, is expected to contribute positively to Omesti's earnings throughout the contract's duration. (The Edge)

Malaysia Smelting Corp: Gets new mining leases in Perak. Malaysia Smelting Corp (MSC)'s wholly-owned unit was granted new mining leases for several parcels of lands spanning more than 700 hectares located at Klian Intan, Perak. MSC said its unit Rahman Hydraulic Tin SB (RHT) has received approval from the Perak state government, in which the new leases will be running up until Nov 2034. (The Edge)

PUC: Proposes 5-to-1 share consolidation. PUC is planning to consolidate every five existing shares held by its shareholders on an entitlement date to be determined, into one share. PUC said the proposed share consolidation is expected to enhance the company’s share capital structure, as the shares are currently traded at a relatively low trading price range. The proposed exercise, expected to be completed by the 1Q of 2020, will not have any effect on the group’s earnings for the FYE will increase its EPS. (The Edge)

Petronas Gas: 3Q earnings down 13.6% on lower revenue, higher costs. Petronas Gas (PetGas)’s net profit fell 13.6% to RM431.6m in the 3QFY19, attributed to lower revenue from the gas transportation and utilities segments as well as higher finance, repair and maintenance costs. Revenue for the period stood at RM1.34 billion, a 4.5% decline from RM1.4bn reported previously. PetGas has declared an interim dividend of 18 sen per share for the quarter under review. (SunBiz)

Magnum: Back in the black in 3Q. Magnum returned to the black registering a net profit of RM48m for the 3QFY19 against a net loss of RM70.5m previously, mainly due to the absence of the tax penalty amounting to RM44.2m incurred in the previous corresponding period. The group has proposed to declare an interim dividend of 4 sen per share. (SunBiz)

SunCon: 3Q net profit at RM33.5m. Sunway Construction Group (Suncon) posted an 8% decline in net profit to RM33.5m for its 3QFY19. Its revenue stood at RM402.6m for the period, down 27.8% from RM557.3m reported previously. Its construction business’ profit before tax dropped 27.3% to RM35.4m in 3Q, as a majority of its projects are at its initial stages coupled with the delay in LRT3 package due to cost optimisation by the client. The group’s outstanding order book as at Sept 30, 2019 amounted to RM5.6bn, which will sustain for the next three to four years. (SunBiz)

Market Update

The FBM KLCI might open weaker today as U.S. stocks closed mostly lower Tuesday, with the Dow and S&P 500 retreating from records, on disappointing earnings results and doubts about a U.S. - China trade deal. The Nasdaq, however, notched a record finish on the strength of technology shares. Nasdaq Composite gained 20.72 points, or 0.2%, to a record 8,570.66, it’s third consecutive record close. The Dow Jones Industrial Average fell 102.20 points, or 0.4%, to close at 27,934.02 while the S&P 500 index shed 1.85 point or 0.1% to end the session at 3,120.18. In Europe, stocks ended mixed; the Stoxx Europe 600 lost 0.1%.

Back home, the FBM KLCI index gained 0.95 point or 0.06% to 1,605.31 points on Tuesday. Trading volume increased to 2.68bn worth RM1.63bn. In the region, stocks traded mixed, with the China CSI 300 gaining 1%, Japan’s Nikkei 225 fell 0.5% and Hong Kong’s Hang Seng climbed 1.6%, to add to its sharp gain from the previous session.

Source: PublicInvest Research - 20 Nov 2019

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Chart Stock Name Last Change Volume 
DNEX 0.18 -0.01 (5.26%) 8,149,300 
OMESTI 0.49 -0.01 (2.00%) 732,600 
MSC 0.70 0.00 (0.00%) 23,000 
PUC 0.245 +0.005 (2.08%) 15,089,600 
PETGAS 15.98 -0.04 (0.25%) 391,600 
MAGNUM 2.01 0.00 (0.00%) 135,800 
SUNCON 1.81 -0.01 (0.55%) 96,000 

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