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Author: PublicInvest   |   Latest post: Mon, 23 Nov 2020, 11:55 AM

 

PublicInvest Research Headlines - 20 Dec 2019

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Economy

  • US: Leading economic index unexpectedly unchanged in Nov. With strength in residential construction, financial markets, and consumers' outlook offsetting weakness in manufacturing and labor markets, the Conference Board released a report showing its reading on leading US economic indicators came in unchanged in Nov. The Conference Board said its leading economic index was unchanged in Nov after dipping by 0.2% in both Sept and Oct. Economists had expected the index to inch up by 0.1%. The coincident economic index climbed by 0.4% in Nov after edging down by 0.1% in Oct. The lagging economic index also increased by 0.5% in Nov after rising by 0.2% in the previous month. (RTT)
  • US: Business borrowing for equipment falls 3% in Nov - ELFA. US companies’ borrowings for capital investments fell about 3% in Nov from a year earlier, the Equipment Leasing and Finance Association (ELFA) said. The companies signed up for USD7.8bn in new loans, leases and lines of credit last month, down from USD8bn a year earlier. Borrowings fell 23% from the previous month. Uncertainty brought on by the prolonged trade frictions with China was partly responsible for this slowdown. (Reuters)
  • US: Existing home sales fall more than expected in Nov. US home sales dropped more than expected in Nov due to an ongoing shortage of properties for sale, despite the sector receiving an overall boost from the Federal Reserve’s decision to cut interest rates this year. The National Association of Realtors said that existing home sales fell 1.7% to a seasonally adjusted annual rate of 5.35m units last month. Oct’s sales pace was downwardly revised to 5.44m units. The 30-year fixed mortgage rate has dropped more than 130bp since last Nov’s peak to an average of 3.73%, according to data from mortgage finance agency Freddie Mac. (Reuters)
  • US: Initial jobless claims pull back off two-year high. After reporting a significant increase in first-time claims for US unemployment benefits, the Labor Department released a report showing initial jobless claims pulled back in the week ended Dec 14th. The initial jobless claims fell to 234,000, a decrease of 18,000 from the previous week's unrevised level of 252,000. Economists had expected jobless claims to drop to 225,000. The smaller than expected pullback came after jobless claims reached their highest level since Sept of 2017 in the previous week. (RTT)
  • UK: Bank of England MPC split 7-2 on interest rate. The Bank of England left its interest rate unchanged in a split vote as two members sought a 25 bp rate cut. At the Monetary Policy Committee meeting, Governor Mark Carney and six other members voted to maintain the interest rate at 0.75%. Meanwhile, Jonathan Haskel and Michael Saunders repeated their call for a quarter point reduction. The committee unanimously decided to retain the stock of corporate bond purchases at GBP10bn and gov bond purchases at GBP435bn. (RTT)
  • UK: Retail sales fall unexpectedly. UK retail sales declined unexpectedly in Nov as consumers curbed spending ahead of general election. Retail sales volume, including auto fuel, decreased 0.6% on a monthly basis, after remaining unchanged in Oct, the Office for National Statistics reported. This was the biggest fall seen so far this year. Sales were expected to grow 0.2%. Food store and non-food store sales fell 0.6% and 0.2%, respectively. Excluding auto fuel, retail sales volume dropped 0.6% after a 0.1% decrease in Oct. (RTT)
  • Japan: BoJ keeps monetary policy unchanged. The Bank of Japan left its massive monetary stimulus unchanged and maintained its upbeat view on economy despite the sales tax hike hurting spending. The Policy Board of the BoJ governed by Haruhiko Kuroda voted 7-2 to retain the interest rate at -0.1% on current accounts that financial institutions maintain at the central bank. The bank maintained it yield target for 10-year Japanese government bonds at around 0%. (RTT)
  • Indonesia: Holds key rate as expected. Indonesia's central bank left its interest rates unchanged for the second straight meeting. The Board of Governors decided to retain the 7-day reverse repo rate at 5%. The bank had reduced the rate by a cumulative 100 bp this year. The monetary policy remains accommodative and consistent to maintain inflation within the target range. The central bank forecast economic growth to reach 5.1% this year. For next year, growth is seen in the range of 5.1-5.5%. (RTT)

Markets

  • Gamuda (Outperform, TP: RM4.26): MoF extends deadline to take over Gamuda's highways for the third time. The deadline to complete negotiations on the acquisition of four highway concessions by Minister of Finance (Incorporated) [MoF Inc] for a total enterprise value of RM6.2bn has been extended till Feb 29 next year from Dec 31. This marks the third postponement. Gamuda said MoF Inc and each of the concession holding companies have mutually agreed to the extension. "The long stop date to satisfy the conditions precedent and the date of completion will be extended to a date which shall be mutually agreed between MoF Inc and each of the concession holding companies," it added. (The Edge)
  • E&O (Neutral, TP: RM0.75): To raise up to RM1.5bn via sukuk programme. Eastern & Oriental Bhd (E&O) plans to set up a sukuk programme to raise up to RM1.5bn to finance the costs of land reclamation, infrastructure and development for its Seri Tanjung Pinang 2 (STP2A) development in Penang. The property developer said the proceeds from the issuance will also be used to repay borrowings, for working capital and to defray expenses incurred in relation to the sukuk issuance. (The Edge)
  • Guan Chong: Expands global footprint with European acquisition. Guan Chong is buying Europe-based chocolate maker Schokinag Holding GMBH (SHG) for RM137.84m as part of the group’s global expansion strategy. Guan Chong said the proposed acquisition will enable it to expand its presence to Europe and position the group to target new growth opportunities in the world’s largest chocolate consuming market. "Through the (exercise), the company expands its product range into the downstream industrial chocolate business-to-business market," it said. The proposed acquisition is expected to be completed within 1QCY20. (The Edge)
  • Puncak Niaga: Unit receives GST bills from Customs for RM5.27m. A unit of Puncak Niaga Holdings has received two bills of demand from the Royal Malaysian Customs Department for GST payments totalling RM5.27m. It said the bills of demand were issued to its wholly-owned unit Puncak Niaga Management Services SB (PNMSSB), for the period Feb 1, 2016 to Dec 31, 2017. (The Edge)
  • MyNews: 4Q profit halved as food processing centre in gestational stage. As its new food processing centre is still undergoing a gestational period, MyNews Holdings posted a profit of RM3.18m in 4QFY19— nearly half the RM6.06m posted in the corresponding period last year. The group said the food processing centre (FPC) incurred RM3.51m as it is in gestational period. However, revenue grew by 27.74% YoY to RM139.81m against RM109.45m (The Edge)
  • Property (Neutral): Sector improves on positive consumer sentiment. The overall performance of the property sector in Malaysia is deemed to have improved slightly in terms of transactions following the government’s initiatives to enable more Malaysians to buy their first house. Malaysian Institute of Estate Agents (MIEA) chief executive officer Soma Sundram Krishnasamy said based on a technical study, the sector, which has been declining since 2012, has been on a rebound since the end of 2018. "The signs are showing a stabilising market for the property sector where the first half (1H) of 2019 was better than 1H2018”. (Bernama)

MARKET UPDATE

  • The FBM KLCI might open higher today after all three benchmark U.S. stock indices scored record highs again Thursday, unfazed by President Donald Trump’s impeachment, while finding ongoing support from the US-China trade deal, the passage of the USMCA trade deal to replace NAFTA by the House, and improving economic data. The Dow Jones Industrial Average rose 137.68 points, or 0.5%, to a record 28,376.9 close, while the S&P 500 index gained 14.23 points, or 0.5%, at 3,205.37, its all-time high. The Nasdaq Composite index added 59.48 points, a gain of 0.7%, at 8,887.22, extending its seventh-day winning streak and setting another record. Meanwhile in US economic data, new applications for US jobless benefits fell during the week ended Dec. 14, dipping 18,000 to a seasonally adjusted 234,000 after surging to 252,000, a two-year high, the week before. The Conference Board’s index of leading economic indicators was unchanged in November, after three months of declines. In Europe, stocks ended slightly higher, as reflected by the Stoxx Europe 600 which added 0.17%.
     
  • Back home, the FBM KLCI drifted lower on profit taking, amid fears of a more uncertain outlook following the impeachment of US President Donald Trump. At the end of trading hours today – which ended abruptly at 4.45pm, with Bursa Securities announcing that the matter is being investigated, without elaborating – the KLCI was down 0.21% or 3.39 points at 1,595.72. Elsewhere in Asia, Japan's Nikkei 225 fell 0.29% and Hong Kong's Hang Seng was down 0.30%. Meanwhile, South Korea's Kospi edged up 0.08% and China CSI 300 lost 0.1%.

Source: PublicInvest Research - 20 Dec 2019

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Labels: GAMUDA, E&O, GCB, PUNCAK, MYNEWS

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