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Author: PublicInvest   |   Latest post: Thu, 23 Jan 2020, 9:38 AM

 

PublicInvest Research Headlines - 5 Dec 2019

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Economy

US: Service sector slows more than expected in Nov. US services sector activity slowed more than expected in Nov amid lingering concerns about trade tensions and worker shortages, which could revive fears about the economy’s health. The ISM said on Wednesday its non-manufacturing activity index fell to a reading of 53.9 in last month from 54.7 in Oct. A reading above 50 indicates expansion in the  services sector, which accounts for more than two-thirds of US economic activity. Economists polled by Reuters had forecast the index dipping to a reading of 54.5 in Nov. (Reuters)

US: Private payrolls growth tumbles in Nov as jobs market is ‘losing its shine’. Job growth slowed to a crawl in Nov, with private payrolls increasing by just 67,000, according to an estimate Wednesday from ADP and Moody’s Analytics. The count was well below the 150,000 consensus from economists surveyed by Dow Jones and the lowest month since May. The big miss could call into question the relatively rosy estimates for Friday’s closely watched nonfarm payrolls report from the Labor Department, with the current forecast of 187,000 boosted by the return of striking GM workers. (CNBC)

US: Treasury Secretary Mnuchin warns of new global taxes, opposes digital services duty. Treasury Secretary Steven Mnuchin warned one of the globe’s largest economic organizations of the consequences new international taxes could have on American business and voiced opposition to the recent introduction of digital services taxes. In a letter to the Organization for Economic Cooperation and Development, Mnuchin said the US objects to digital services taxes because they “have a discriminatory impact on US-based businesses.” (CNBC)

EU: German vehicle industry to shed jobs at faster rate in 2020 - VDA. German vehicle manufacturers are likely to cut more jobs in 2020 after employment in the industry hit its highest in nearly three decades last year. The employment level remained stable at 835,300 during the first nine months of this year, but the increase in the figure recorded during the 1H of the year melted away in recent months, President of the German Association of the Automotive Industry (VDA) Bernhard Mattes said. (RTT)

EU: Italy services sector expands in Nov. Italy's services sector activity expanded at the slowest pace in six months in Nov, survey data from IHS Markit showed on Wednesday. The services PMI fell to 50.4 in Nov from 52.2 in Oct. Economists had forecast a score of 51.2. However, any score above 50 indicates expansion in the sector. The rate of increase in new business was the softest seen since Aug. The client demand was supported by the domestic market, as firms contracted further in new export orders. Firms hired more workers for the tenth month in a row in Nov, but the rate of job creation slowed. Backlogs of work declined for the fourth straight month. (RTT)

UK: Service sector contracts most in 8 months. The UK service sector contracted the most in eight months in Nov but the pace of decline was slower than initially estimated, survey results from IHS Markit and Chartered Institute of Procurement & Supply showed Wednesday. The final services PMI fell to 49.3 in Nov from 50.0 in Oct. Although the reading was above the flash reading of 48.6, the index signalled the steepest drop since March. The survey showed that domestic political uncertainty once again led to cautious business and consumer spending. Incoming new work declined at the sharpest rate for over three years. (RTT)

India: Services sector expands in Nov. India's services sector activity recovered in Nov amid a rise in new business intakes and job creation, survey results from IHS Markit showed on Wednesday. The services PMI rose to 52.7 in Nov from 49.2 in Oct. Any reading above 50 indicates expansion in the sector. Three out of five categories of the service sector achieved moderate expansion in Nov. Incoming new work increased to the greatest extent in four months in Nov and new business from abroad rose for the ninth month in a row. (RTT)

Markets

Genting (Outperform, RM8.70): S&P Global downgrades Genting's credit rating . S&P Global Ratings has today downgraded its long-term issuer credit rating on Genting to 'BBB+' from 'A-' in anticipation that the hotel and casino operator's leverage will increase, amid an expected weakening in cash flow adequacy over the next 12 to 18 months, given the company's aggressive expansion plans. (The Edge)

Prestariang: Putrajaya still wants to go to trial over SKIN dispute with Prestariang . The Malaysian Government still wants its dispute with Prestariang over the termination of the National Immigration Control System (SKIN) concession agreement to go on trial. Prestariang said Putrajaya has served its unit Prestariang Skin SB (PSKIN) a sealed notice of appeal dated Nov 21, 2019 to appeal against the entirety of the High Court Judge's dismissal of the Government's application to convert PSKIN's originating summons (OS) to a writ action. (The Edge)

Seacera: SME Bank files legal claim demanding Seacera auctions land to repay associate’s debt. Seacera Group (SGB) has been served with a legal claim demanding that it auctions land in Perak to pay off an RM31.25m debt owed by an associate company. SGB said its wholly-owned Seacera Porcelain SB (SPSB) was served with a legal claim dated Nov 20, 2019, by SME Bank for a dispute over RM31.25m owed through a credit facility granted to associate company SPAZ SB. (The Edge)

London Biscuits: Exits Khee San after 20% stake sale. London Biscuits is no longer a major shareholder of associate Khee San. London Biscuits announced to Bursa Malaysia that it has sold all its shares in Khee San, which will soon have a new controlling shareholder, Mamee-Double Decker (M) SB. A separate filing by Khee San shows that London Biscuits has disposed of its entire holding of 20.80m shares in the open market. (The Edge)

Microlink Solutions: Placement shares priced at 55 sen apiece . Microlink Solutions has fixed the issue price for its private placement shares at 55 sen apiece. In a bourse filing, the group said the issue price represents a discount of 4.47 sen or 7.52% from its five-day weighted average market price from Nov 27 to Dec 3 of 59.47 sen per share.

China Automobile: PN17-exit plan hits snag after MoU termination. China Automobile Parts Holdings Ltd's (CAP) proposed acquisition of Local Assembly SB (LA) hit a snag after the MoU between both companies was terminated. CAP said the MoU with LA was terminated after the sellers of LA's assets said they have not received a valid and executed term sheet from Bursa PN 17 (PN17) company CAP. (The Edge)

Rubber Gloves (Neutral): Industry set to improve next year. The rubber glove sector will see a better performance next year as the demand and supply situation in the market is starting to see a balance. Top Glove Corp executive chairman Tan Sri Lim Wee Chai said the oversupply situation has improved compared to the past two to three quarters. “Most factories have slowed down on their expansions and the supply is now more balanced to the demand. The demand growth is about 10% annually and Lim said this makes rubber glove a very good industry but this will inevitably attract strong competition in the sector, making it a game of the survival of the fittest. (Starbiz)

Market Update

The FBM KLCI might open higher today as US stocks closed higher for the first time in four sessions following a report that a phase-one trade US-China trade deal was still in the works, helping to offset fears of a delay sparked a day earlier by President Donald Trump’s remarks. The Dow Jones Industrial Average rose 146.97 points, or 0.5%, to 27,649.78. The S&P 500 index added 19.56 points, or 0.6%, to close at 3,112.76. The Nasdaq Composite Index advanced 46.03 points, or 0.5%, to end the session at 8,566.67. Meanwhile, stocks shrugged off a report on US private-sector hiring Wednesday morning. Employers added just 67,000 workers in November, payroll processor ADP said, a much weaker reading than analysts had forecast, made worse by downward revisions to earlier months. A reading on the service sector of the US economy was mixed: the Institute for Supply Management’s nonmanufacturing index was at 53.9%, lower than in October, but new orders were at 57.1%, up from 55.6% and signaling stronger demand ahead. A similar survey from IHS Markit for the service sector showed an improvement in November though with its index rising to 51.6 in November from 50.6 in October. European stocks closed higher, with the Stoxx Europe up 1.2%, to 403.19.

Back home, the FBM KLCI closed down 0.09% or 1.34 points to the 1,560.93. A total of 2.14bn shares worth RM1.7bn were traded across the bourse. In regional markets, the Shanghai Composite fell by 6.58 points or 0.23% to 2,878.12 points while Hong Kong's Hang Seng declined by 328.74 points or 1.25% to 26,062.56 points. South Korea's Kospi fell 0.73% or 15.18 points to 2,068.89 points, while Japan's Nikkei shrank 1.05% or 244.58 points to 23,135.23 points.

Source: PublicInvest Research - 5 Dec 2019

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