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Author: PublicInvest   |   Latest post: Fri, 23 Oct 2020, 9:35 AM

 

PublicInvest Research Headlines - 26 Nov 2019

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Economy

Global: Car sales expected to slide by 3.1m this year in steepest drop since Great Recession . Car sales around the world are expected to see their steepest YoY decline in 2019 since the financial crisis as consumer demand from the US to China softens. Global car sales are expected to fall by about 3.1m in 2019, a bigger drop than in 2008, Fitch Ratings economics team said, citing data collected by the International Organisation of Motor Vehicle Manufacturers. The slowdown in auto sales is contributing to a drag on global manufacturing, Fitch said. Global passenger car sales fell to 80.6m in 2018 from 81.8m new units sold in 2017, which was the first annual decline since 2009, Fitch said. Worldwide sales in 2019 look likely to fall by another 4% to around 77.5m new vehicle sales. Falling demand in China, the world’s largest auto market, is a major factor in the worldwide decline this year. (CNBC)

EU: German business confidence at 4-month high. German business confidence rose to a four-month high in Nov, suggesting that the economy is set to continue to expand moderately in the fourth quarter. The business confidence index rose to 95.0 in Nov from 94.7 in Oct, survey data from ifo institute showed. The institute said the German economy is showing resilience. The largest euro area economy is likely to grow 0.2% in 4Q, the think tank said. The latest Ifo index suggests that the economy, and above all, the manufacturing sector, could be in a phase of bottoming out, but a sharp rebound is not yet near, Carsten Brzeski, an ING economist, said. At the same time, companies' expectations were less pessimistic than in Oct. The corresponding index climbed to 92.1 from 91.6 in the previous month. (RTT)

UK: Retailers expect growth to return in December . UK retailers expect sales volume to grow in Dec as festive season begins, the Distributive Trades survey from the Confederation of British Industry showed. The retail sales balance rose to -3% in Nov, the highest in seven months and above the expected level of -11%. Within the retail sector, grocers made the greatest positive contribution to the headline figure in Nov, with negative contributions coming primarily from non specialized stores, but also clothing and non-store retail. "Retailers are entering the festive season with a bit of hope that sales will head up, with the strongest expectations in half a year," Anna Leach, CBI deputy chief economist said. (RTT)

China, US: Moving closer to trade deal, but no agreement on tariff rollbacks . China and the US are “moving closer to agreeing” on a “phase one” trade deal, the Global Times, a tabloid run by the ruling Communist Party’s official People’s Daily, reported. But the report noted that Washington and Beijing had not agreed on specifics or size of rollbacks of tariffs on Chinese goods. Beijing's insistence that Washington roll back the Trump administration's tariffs here has been a major sticking point. (Reuters)

Japan: IMF trims Japan's growth outlook . The IMF downgraded its growth projection for Japan and urged the government to take fiscal policy that supports near-term growth and stimulate price momentum. According to the concluding statement of the 2019 Article IV mission to Japan, the country's economy is set to expand 0.8% this year, which was slower than the previous forecast of 0.9%. For 2020, real GDP growth is projected to slow to 0.5%, as external demand remains soft and dampens export-related investment. At the same time, headline consumer price inflation is projected to continue its slow upward trend towards - but still below - the BOJ's 2% target. The lender sees downside risks to this outlook, namely, sharper-than-expected global slowdown and heightened uncertainty, durability of domestic demand and rising financial stability risks. (RTT)

Singapore: Inflation slows in October . Singapore's consumer price inflation eased in Oct, data from the Monetary Authority of Singapore and the Ministry of Trade and Industry showed. CPI rose 0.4% YoY in Oct, after a 0.5% increase in Sept. The slowdown was driven by a steeper decline in the cost of electricity and gas and lower services inflation, data showed. MAS core inflation, which excludes the costs of accommodation and private road transport, slowed to 0.6% in Oct from 0.7% in the previous month. This was the lowest in more than three years. (RTT)

Markets

Axiata (Trading Sell, TP: RM4.00), Maxis (Underperform, TP: RM4.80): Ink MoU to explore 5G collaboration. Celcom Axiata and Maxis have entered into a memorandum of understanding (MoU) to explore a potential partnership for the deployment of 5G infrastructure in Malaysia. (SunBiz) Comments: This potential collaboration focuses on the joint deployment of 5G infrastructure, which will cover selected areas while both telcos will still maintain their own networks and remain competitive in other areas. Note that this is not a definitive partnership yet but should this materializes, it would be positive as it enables both telcos to save resources and expedite the rollout of 5G network in Malaysia. One of the biggest challenges for 5G adoption is cost. Preliminary estimates suggest that the cost of 5G rollout would cost billions of ringgit, with infrastructure accounting for a big chunk of the set-up costs. At this juncture, no change to our earnings forecasts and ratings for both Maxis and Axiata.

YTL Corp: Submits plans for 'third biggest UK arena' in northern Bristol. YTL has reportedly submitted its planning application to local councils for a 17,000 capacity entertainment arena on the northern edge of Bristol, UK. The group, through YTL Corp's wholly-owned YTL Developments (UK) Ltd, plans to repurpose the iconic Brabazon hangars into a new entertainment complex built around the 17,080 seat venue located in the central hangar. (The Edge)

Favelle Favco: Bags eight contracts worth RM68.8m. Favelle Favco has bagged eight supply contracts worth a total of RM68.8m. The six out of the eight contracts are for the supply of offshore cranes, while the remainder two is for the provision of compressor system and replacement of flare pips. All of the contracts are to be delivered sometime next year (The Edge)

WZ Satu: Bags RM121m construction job for Kedah Rubber City. WZ Satu has bagged a RM121.5m contract related to earthworks and infrastructure works for Kedah Rubber City (KRC) Phase 1 (Package 1) in Padang Terap, Kedah for the Northern Corridor Implementation Authority. The project is slated to commence on Dec 2 and to be completed by Dec 2, 2021. (The Edge)

Scicom: Expects new projects to reflect a better FY20. Scicom’s chief executive officer Datuk Seri Leo Ariyanayakam is expecting the group to do better in its current FY20 due to new projects secured. The group secured between five and ten projects during FY19, which is expected to be reflected in the performance of FY20. (The Edge)

7-Eleven: Q3 net profit rises to RM17m. 7-Eleven Malaysia Holdings net profit for the 3Q ended Sept 30, 2019 rose 1.3% to RM16.98m thanks to the increase in revenue and higher marketing income. The group’s revenue of RM594.16m grew 4.5%, driven by the growth in new stores, higher customer counts and better consumer promotion activity. (SunBiz)

Scomi Energy: Registers RM3.54m net profit for Q1. Scomi Energy Services posted a net profit of RM3.54m and a revenue of RM107.88m for its 1Q ended Sept 30, 2019. Profit before tax for the period was RM100,000 lower compared to the three month period ended Sept 30, 2018 attributed to lower gross profit that was offset by lower operating expenses and finance cost. (SunBiz)

Market Update

The FBM KLCI might open higher today after major US stock market benchmarks ended Monday’s session at records as investors remained attuned to developments in the US-China trade relationship and cheered a wave of merger activity. The Dow Jones Industrial Average advanced 190.85 points, or 0.7%, to end at 28,066.47, while the Nasdaq Composite climbed 112.60 points, or 1.3%, to 8,632.49. The S&P 500 index ended 23.35 points higher at 3,133.64, a gain of 0.8%. On the economic front, the Chicago Fed’s national activity index for October fell to a reading of negative-0.71, from negative-0.45 in the previous month. The Dallas Fed manufacturing index rose to a negative-1.3 in November from negative-5.1 in October.

Meanwhile, the Stoxx Europe 600 closed up 1%.

Back home, the FBM KLCI finished 5.49 points or 0.34% lower to 1,591.35 points, while Bursa Malaysia indices for oil and gas shares and small market capitalization stocks fell by larger quantums, as global investors weighed US-China trade uncertainties. Across Bursa, there were more decliners than gainers at 549 versus 337 respectively. Total turnover stood at 2.52bn shares, worth RM1.54bn.

In the region, stocks traded higher; the China CSI 300 closed up 0.7%, Japan’s Nikkei 225 gained 0.8% and Hong Kong’s Hang Seng rose 1.5%.

Source: PublicInvest Research - 26 Nov 2019

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