PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 24 Jan 2020, 2:52 PM


PublicInvest Research Headlines - 10 Dec 2019

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US: Consumer inflation expectations rebound from five-year low - NY Fed. US consumers’ inflation expectations rose slightly in Nov, bringing the outlook for near and medium-term inflation up from a five year low in a New York Federal Reserve survey, potentially offering relief to policymakers worried about sagging inflation. The median outlook for what inflation will be over the next three years rose by 0.1 percentage point to 2.5%, the survey found. Expectations for inflation over the next 12 months rose slightly by 0.02 percentage point to 2.4%. In Oct, both inflation outlooks were at a series low for the survey, which began in 2013. (Reuters)

US: Manufacturers plan first pullback in investment since 2009. US manufacturers expect to reduce capital spending in 2020, a trend that could limit a rebound in the sector even as companies see profits improving. Factory executives forecast capital expenditures will decrease 2.1% in 2020, which if realized would be the first annual decline in 11 years, according to a semi-annual survey from the Institute for Supply Management released Monday. That compares to a reported increase of 6.4% in 2019. Managers at non-manufacturing firms expect a 1.3% rise next year, slower than 2019’s increase of 2%. (Bloomberg)

US, China: Trump agriculture chief sees China spared new Dec 15 duties. The US is unlikely to impose extra tariffs on a new USD160bn swath of Chinese goods including toys and smartphones come Sunday, Agriculture Secretary Sonny Perdue said. The looming Dec 15 deadline for new tariffs is just one of a number of events this week putting concerns over trade back at the forefront for investors and policy makers around the world. Besides the ongoing talks with China, the Trump administration is also trying to reach an agreement with Democrats for a new Nafta to pass through Congress. (Bloomberg)

EU: Eurozone investor confidence climbs for second month - Sentix. Eurozone's investor confidence improved for a second straight month to its highest level since May, and business expectations were the strongest in nearly two years, suggesting that recessions fears have receded, survey data from the behavioral research institute Sentix showed on Monday. The Sentix indicator of business confidence rose by 5.2 points to 0.7 in Dec. Economists had expected the reading to worsen to -5.3 from -4.5. The latest reading was the highest since May 2019. The expectations measure of the survey also rose for a second month, climbing to 2.5 from -3.5. (RTT)

Hong Kong: Set for ‘worst ever’ wave of layoffs, store closures. More than 5,600 retail jobs could be lost and thousands of stores shut down over the next six months, as pro-democracy protests in Hong Kong continue to disrupt sales during the crucial festive period. About 30% of respondents in a survey by the Hong Kong Retail Management Association said they’ll cut jobs while 43% said they can’t continue to operate beyond six months. “If cash flow doesn’t improve and landlords don’t help, there will be a wave of layoffs and business shutdowns,” Annie Tse, association’s chairwoman said Monday. “(Bloomberg)

Japan: 3Q GDP revised up to 1.8% annualised growth. Japan’s economy grew an annualised 1.8% in July-Sept, much more than the initial estimate of a 0.2% expansion, revised data from the Cabinet Office showed Monday. The revised figure for GDP beat economists’ median forecast for a 0.7% rise in a Reuters poll. On a QoQ basis GDP expanded 0.4%, compared with a 0.1% growth in the initial reading and a median forecast of 0.2% growth. (Reuters)


IHH (Outperform, TP: RM7.00): Shareholders approve Prince Court deal. IHH has secured the green light from its shareholders for the proposed acquisition of Prince Court Medical Centre (PCMC). IHH said 99.99% of non-interested IHH shareholders and proxies had voted in favour of the conditional share purchase agreement. The group expects the proposed acquisition to be completed in the 1Q20. (StarBiz)

Axis REIT (Neutral, TP: RM1.77): To raise RM63.84m from new units proposed placement. Axis REIT has approved the proposed placement of 37.12m new units to the EPF and KWAP. With this, Axis-REIT has placed out the entire second and final tranche of its placement at RM1.72 per unit, to raise RM63.84m. “The entire proceeds raised will be used to repay its borrowings, reducing Axis REIT’s gearing to 29%,” it said.

Perdana Petroleum: Gets Petronas orders. Perdana Petroleum has received two work order awards from Petronas Carigali SB worth RM18m each. The work involves providing two units of anchor handling tug and supply vessels. Both contracts are for the duration of a year, as per the vessels’ on-hire certificate. (StarBiz)

Protasco: Lands ten-year job in Sarawak. Protasco has secured a ten-year contract from the Public Works Department. Protasco said the performance-based contract for the long-term management and maintenance of state roads in Sarawak, Package 3 (Mukah Division) was effective from Jan 1, 2020. Protasco said the contract, worth approximately RM24.6m per annum, is subject to review every three years with a maximum increase of 7.2% per revision. (The Edge)

HSS: Bags first Johor BRT job. HSS Engineers has been awarded a contract by Iskandar Regional Development Authority to provide detailed design and construction supervision services for Johor’s first Bus Rapid Transit (BRT) project. The project is worth RM71.3m. HSS said the BRT transport system would consist of three high-capacity lanes and construction of a dedicated busway. (StarBiz)

MTAG: To buy 12-acre industrial land in Johor for RM24m. MTAG Group is buying two pieces of freehold industrial land that span 12.1 acres collectively in Plentong, Johor for RM24.56m. MTAG said its MD Chaw Kam Shiang was granted an option to purchase the two plots from Brilliant Propel SB. MTAG expects to execute the SPA for the proposed acquisition, before the expiry of option on March 31, 2020. (The Edge)

ARB: Terminates MoU for Cambodian market entry. ARB has terminated a MoU that was aimed at facilitating the group’s foray into Cambodia to implement the enterprise resource planning (ERP) system and solutions there. ARB and East Insurance PLC had mutually agreed to terminate the MoU with immediate effect. The reason for this was East Insurance’s internal restructuring exercise, it said. (The Edge)

Consumer (Neutral): More contribution from eCommerce sector this year – Communications and Multimedia Industry. The eCommerce sector is expected to increase its contribution to the economy this year from the RM115.5bn last year, given the strong momentum and greater participation by local businesses. "We believe that these numbers will continue to grow through the increasing number of business owners utilising the digital applications and platforms to drive their business growth,” said Ministry of Communications and Multimedia. (The Edge)

Market Update

The FBM KLCI might open weaker today after US stocks ended lower Monday as investors kept a close eye on trade negotiations ahead of Sunday’s tariff deadline and policy updates from global central banks. The Dow Jones Industrial Average retreated 105.46 points, or 0.4%, at 27,909.60, while the S&P 500 index lost 9.95 points, or 0.3%, at 3,135.96 and the Nasdaq Composite Index shed 34.70 points, or 0.4%, at 8,621.83. Investors awaited monetary-policy updates from the Federal Reserve, starting on Tuesday, and from new European Central Bank on Thursday, with investors hoping to gather clues on the state of the global economy and the longer-term outlook for interest rates. European stocks ended slightly lower, with the Stoxx 600 Europe index closing down 0.2% at 406.39.

Back home, the FBM KLCI closed 0.37% or 5.73 points lower at 1,562.71. Some 2.62bn shares worth RM1.62bn traded on the local bourse. A total of 406 counters saw gains, while 462 counters recorded declines, and 359 counters were unchanged. The Shanghai Composite closed 0.09% or 2.46 points higher at 2,914.48 points, while Hong Kong’s Hang Seng saw a 0.01% decline to 26,494.73 points. Meanwhile, South Korea's Kospi gained 0.33% or 6.8 points to end at 2,088.65 points, while Japan’s Nikkei 225 rose 0.33% or 76.3 points to 23,340.7 points.

Source: PublicInvest Research - 10 Dec 2019

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