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

 

PublicInvest Research Headlines - 26 Dec 2019

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Economy

China: Widens economic policy blitz with cash injection move. The Chinese government is trying to set the economy up for a stronger start to 2020, with a multi-pronged policy push ranging from easier monetary settings to freer trade. The latest pledge came when Premier Li Keqiang signaled that further cuts in the amount of cash that banks have to park as reserves will be forthcoming. In theory, that will free up funds to lend to private-sector companies that have struggled to access loans this year. The funding promise follows a wide-ranging set of initiatives to boost the non-state sector announced at the weekend, and a fresh round of tariff cuts designed to spur domestic demand. (Bloomberg)

China: To lower import tariffs on frozen pork, avocados from Jan 1. China will lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year as Beijing looks to boost imports amid a slowing economy and a trade war with the US. Next year, China will implement temporary import tariffs, which are  lower than the most-favored-nation tariffs, on more than 850 products. By comparison, 706 products were taxed at temporary rates in 2019. The tariff changes were made to increase imports of products facing a relative domestic shortage, or foreign speciality goods for everyday consumption. (Reuters)

Taiwan: M2 money supply growth climbs in Nov. Taiwan's M2 money supply grew at the fastest pace in over three years in November, data from the central bank showed. The M2 money supply grew 4.14% year-on-year following a 3.79% increase in October. The latest increase was the biggest since August 2016, when M2 money supply grew 4.51%. The M1B monetary aggregate grew 7.46% annually in November. The central bank attributed the increase in both M1B and M2 money supply to a growth in capital inflows. On a month-on-month basis, M2 increase 0.62% in November. (RTT)

Japan: Some members called for monetary, fiscal policies for next downturn - BoJ Minutes. A few board members of the Bank of Japan shared the view that the central bank should not only conduct monetary policy but also enhance its cooperation with the government in terms of economic policies and prepare for the next economic downturn, the minutes of the policy board meeting held on Oct 30 and 31 showed. A different member pointed out that the BoJ should continue to examine whether additional monetary easing would be necessary. At the October meeting, the Policy Board voted 7-2 to maintain interest rate at -0.1% on current accounts that financial institutions maintain at the bank. The bank retained it yield target for 10-year Japanese government bonds at around 0%. The bank strongly signaled further monetary easing going forward at the meeting. (RTT)

Japan: Supermarket sales decline in Nov. Japan supermarket sales declined at a slower pace in November, data from the Chain Store Association showed. Supermarket sales fell 1.4% on a yearly basis in November, following a 4.1% drop in October. The annual fall was largely driven by a 7.9% drop in clothing and a 3.2% decrease in household goods sales. Before adjustment, supermarket sales declined 6.2% in November after easing 8.4% a month ago. On a monthly basis, retail sales increased 2.2% in November. (RTT)

India: IMF says India has limited room for fiscal stimulus, urges debt reduction. The International Monetary Fund said India has limited room for fiscal stimulus and stressed the need for fiscal consolidation as it has one of the highest debt among the emerging markets. The IMF estimated that India's public sector needs to borrow the amount equivalent to around 8.5% of GDP in order to pay for the services it provides. Economic development projects and enhanced social initiatives in India will be vital in the coming year. But to generate the funds to get them off the ground, public debt must be reduced. The general government debt has risen to a three-year high of 68.1% of GDP in the fiscal 2019. Measures are now required to reduce the same to 60% of GDP. India's growth projections are likely to be revised down in the Jan update of the World Economic Outlook. (RTT)

Thailand: Narrows CPI target as price pressures stay subdued. Thailand will narrow its inflation target from next year as consumer-price growth remains subdued in the Southeast Asian nation. The central bank’s new goal is to keep annual headline inflation within a 1%-3% range, compared with 1%-4% previously. Speaking to reporters after the government’s announcement, Bank of Thailand Deputy Governor Mathee Supapongse said there’s no longer a midpoint target, allowing for more policy flexibility. Previously, the goal was to reach the band’s midpoint at 2.5%. (Bloomberg)

Markets

Cypark: Confirms solar power project win in Marang. Cypark Resources together with its consortium partner Impian Bumiria SB, has won a competitive bid to develop a large scale solar photovoltaic (LSSPV) plant of 100 megawatts of alternating current (MWac) in Marang, Terengganu. However, it did not disclose the contract value. Cypark has received a letter of acceptance of offer from the Energy Commission Malaysia (EC) for the development of the solar plant. (The Edge)

Advancecon: Bags RM21.27m construction contract. Advancecon Holdings has won a RM21.27m contract from Sime Darby USJ Development SB to undertake earthworks and related works in Bandar Bukit Raja 2 in Klang. The works, to be carried out by its wholly-owned subsidiary Advancecon Infra SB are expected to be completed by April 5, 2021. Barring any unforeseen circumstances, the contract is expected to contribute positively towards the future earnings of the Advancecon group for the duration of the contract. (The Edge)

EG Industries: Gets offer to buy 17.5% stake in major shareholder. EG Industries has received an offer from Accrelist Ltd proposing to sell a 17.50% stake in subsidiary Jubilee Industries Holdings Limited to EG for SGD6.95m (RM21m). Accrelist’s principal business segments consist of medical aesthetics, retail and sale of pharmaceutical and medical goods, systems integration for artificial intelligence and facial recognition technology for the operation of an unmanned shop. (SunBiz)

Gunung Capital: Awarded RM44.23m school bus service contract. Gunung Capital has been awarded a service contract worth up to RM44.23m by the Ministry of Defence. The service contract is for the provision of a school transportation (bus) service for the children of the armed forces personnale throughout Malaysia. The tenure of the service contract awarded is from Jan 1, 2020 to Dec 31, 2022 (3 years), comprising of 33 months of school sessions. The scope of services is to provide transportation to, and from the nominated schools, for the children of the armed forces personnel nationwide. (SunBiz)

MUI: To sell Scotland land for RM38.8m. Malayan United Industries (MUI) is to sell a 4.1ha plot of land in Scotland for GBP7.2m (RM38.8m), for a gain of GBP2.9m (RM15.6m) or 0.5sen per share. MUI said its indirect wholly-owned subsidiary, Corus Hotels Ltd, has entered into a deal with Scottish property developer AR Land Investments Ltd to sell the freehold land located in Edinburgh. Approximately 50% of the proceeds will be used to repay the vendor’s bank borrowing while the balance will be utilised as working capital. (The Edge)

ARB: Calls off 2 MOUs to deploy IT solutions. ARB terminated two memoranda of understanding (MOU) for potential collaboration in deploying IT solutions. The parties have been unable to agree and finalise the terms of the potential collaboration. The termination would enable the company to focus on its existing operations as well as to pursue other opportunities. Notwithstanding the termination, the group continues to explore other business opportunities in the Southeast Asia region. The group would still look forward collaborate with HKYT in the future. (SunBiz)

Market Update

US markets were little changed in a holiday-shortened trading session on Tuesday just before the Christmas break yesterday, though sentiment was lifted somewhat by news of China reportedly looking to stimulate its economy. The Dow Jones Industrial Average slipped 0.1% while the S&P 500 fell less than a point. The Nasdaq Composite inched 0.1% higher however. European markets saw similar trading patterns on Tuesday, with activity also curtailed ahead of the holiday season. Investors are also continuing to focus on US-China relations which appear to be on the mend. UK’s FTSE 100 inched 0.1% higher as France’s CAC 40 gained less than a point. Germany’s DAX slipped 0.1%. With the bulk of Asian markets also closed yesterday for the Christmas holiday, focus was on Japan and China. The Nikkei 225 fell 0.2% as shares of Nissan dropped after a top executive tasked with leading a recovery at the troubled automaker decided to resign just weeks into his new job. Over in China, the Shanghai Composite Index slipped marginally on the day, even amid reports of the Chinese government saying it would study additional cuts in bank reserve-ratio requirements.

Gunung Capital has won a service contract with a value of up to RM44.2m from the Ministry of Defence to provide school bus transportation for the children of armed force personnel throughout Malaysia. Advancecon Holdings has secured an RM21.3m contract from Sime Darby USJ Development Sdn Bhd to undertake earthworks and related works in Bandar Bukit Raja 2, Klang.

Source: PublicInvest Research - 26 Dec 2019

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