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Author: PublicInvest   |   Latest post: Fri, 27 Nov 2020, 10:57 AM

 

PublicInvest Research Headlines - 31 Dec 2019

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Economy

  • US: Pending home sales rise in Nov. Contracts to buy previously owned US homes rose in Nov, driven by a surge in new contracts being signed in the country’s West, the National Association of Realtors said on Monday. The NAR’s pending home sales index, based on contracts signed last month, increased 1.2% to a reading of 108.5. The previous month’s reading was revised upward. Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later. Compared with one year ago, pending sales were up 7.4%. Compared to the prior month, contracts increased 5.5% in Nov in the West. They also increased in the Midwest but were lower in the South and Northeast. (Reuters)
  • US: Goods trade deficit declines to smallest in three years. The US merchandise-trade deficit unexpectedly narrowed for a third month in Nov to the smallest shortfall in three years as exports increased and imports declined, the latest sign that economic growth is holding up at the end of the year. The gap decreased to USD63.2bn from USD66.8bn the prior month, according to Commerce Department data released Monday that compared with forecasts for a widening to USD68.7bn. Exports rose 0.7% while imports dropped 1.3%. The further narrowing of the trade deficit will help give a boost to growth in the 4Q. Imports were a slight drag on GDP growth in the two prior periods, while exports of goods provided a slight tailwind in the 3Q after weighing in the prior three-month period. (Bloomberg)
  • US, China: White House adviser says China trade deal signing expected soon . The White House’s trade adviser on Monday said the US-China Phase 1 trade deal would likely be signed in the next week,  but said confirmation would come from President Donald Trump or the US Trade Representative. White House trade adviser Peter Navarro cited a report that Chinese Vice Premier Liu He would visit this week to sign the deal, but did not confirm it. “Washington has sent an invitation and Beijing has accepted it,” the South China Morning Post on Monday quoted a source as saying. Representatives for the Office of the US Trade Representative and the White House did not immediately respond to a request for comment on the report, which said the Chinese delegation was likely to stay in the US until the middle of next week. (Reuters)
  • EU: Seeks reset in trade talks with US - trade Chief Hogan. The European Union’s new trade commissioner, Irishman Phil Hogan, was quoted on Monday as saying he would seek a reset of EU/US trade relations on a number of contentious issues when he meets his US counterpart for the first time next month. The Trump administration imposed tariffs on European steel and aluminum in mid-2018. “We agreed to meet in Washington in mid-Jan to discuss the long list of issues causing strain in the relationship between the EU and the US. There is no point in getting into the details of resolving trade irritants unless we agree a line on a common trade agenda,” he said. “I will be seeking a reset of the EU/US trade relationship on issues like tariffs on steel and aluminum and the threat of US tariffs in response to a digital tax in Europe.” (Reuters)
  • UK: BOE's Carney says finance must act faster on climate change. Financial services have been too slow to cut investment in fossil fuels, a delay that could lead to a sharp increase in global temperatures, BOE Governor Mark Carney said. Carney said that global warming could render the assets of many financial companies worthless. Carney cited pension fund analysis that showed the policies of companies pointed to global warming of 3.7 to 3.8 degrees Celsius, compared with the 1.5- degree target outlined in the Paris Agreement on climate change. “The concern is whether we will spend another decade doing worthy things but not enough, and we will blow through the 1.5C mark very quickly,” Carney said. (Reuters)
  • China: Dec factory activity set to expand for a second month - Reuters poll. China’s factory activity likely expanded again in Dec on stronger external demand and an infrastructure push at home, but the pace of growth is set to ease as markets await more certainty on a US China trade truce, a Reuters poll showed. The official PMI for Dec is expected to come in at 50.1, slightly above the 50-point mark that separates expansion from contraction on a monthly basis, according to the median forecasts of 27 economists. This would be notch below Nov’s 50.2, which unexpectedly ended six straight months of contraction as Beijing’s accelerated stimulus measures buoyed domestic demand. The recovery has been supported by a rebound in external demand, a pick-up in infrastructure investment, a still-resilient property market, and a moderate inventory restocking cycle propelled by improved growth expectations. (Reuters)
  • China: To scrap benchmark as rates shift toward market-led system. China’s central bank ordered lenders to adopt a new loan pricing regime for all credit from next year, marking an end to the previous benchmark and another step toward liberalizing the financial system. Financial institutions should stop using the old lending rate as the pricing reference for all credit from January, while gradually converting existing loans to a new base, the loan prime rate, from March to August, the PBOC said Saturday. The one-year lending rate had provided the previous anchor for loans across the economy. (Bloomberg)

Markets

  • TNB (Neutral, TP: RM14.12): Second large scale solar project now 84% complete. Tenaga Nasional;s (TNB) second Large Scale Solar (LSS) project, located in Bukit Selambau, Kedah, is on track for completion before the end of 2020, as over 84% of the project has been completed to-date. Situated on a 50-hectare land, the RM180m project involves the installation of 134,880 solar photovoltaic (PV) panels, capable of generating up to 30 megawatts (MW). (The Edge)
  • Cypark: 4Q earnings jump 23%, helped by MFRS 15 adoption. Cypark Resources' net profit for the 4Q ended Oct 31, 2019 rose 23% to RM38.9m, from RM31.5m a year earlier, partly due to the adoption of Malaysian Financial Reporting Standards 15 (MFRS 15). Revenue for the quarter increased 5% to RM99.7m from RM94.6m in the previous year. "These were mainly due to the effect of adoption of MFRS 15 and the higher margin yielded from environmental engineering and green tech and renewable energy divisions in the current quarter," it said. (The Edge)
  • Carimin: Accepts contract from Petronas Carigali. Carimin Petroleum has accepted a letter of award for the provision of hook-up and commissioning services for Petronas Carigali SB. The contract will be for a duration of four years, effective from Jan 1, 2020. The Contract is expected to contribute positively to the earnings of Carimin over the duration of the Contract. (StarBiz)
  • Hiap Huat: Buys land in Pulau Indah for new waste treatment plant. Hiap Huat is buying 4.10 acres of leasehold land in Pulau Indah Industrial Park for RM11.97m to build a new waste treatment plant. The Group said it has signed an agreement with Central Spectrum (M) SB to buy the plot. Hiap Huat said the plant will enable the group to tap into new markets for schedule waste and participate in renewal energy generation. (The Edge)
  • Barakah: In talks with parties to utilize debt-laden pipe laying barge. Barakah Offshore Petroleum is in talks with two potential investors interested in the group's prized asset Kota Laksamana 101 (KL101) pipe-laying barge, as it seeks to formulate its way forward after pulling the plug on its debt restructuring scheme last Aug. Barakah was quick to clarify that nothing has been firmed with the parties to be part of Barakah's new regularisation plan. The focus is on getting KL101 utilised. (The Edge)
  • Xing He: Sells stake in China’s peanut oil processing unit for RM91.5m. Xinghe Holdings is selling a 41.15% stake in a peanut oil trading and blending firm in China for CNY155m (RM91.5m). Xinghe said it is selling the 41.15% stake because the peanut oil blending unit has been unable to produce enough to sustain its sales orders, since the local authorities in China have been issuing directives to industrial plants to improve air quality. (The Edge)
  • Poh Kong: Upbeat on FY20 prospects with higher gold price projection. Poh Kong is upbeat on its prospects in FY20 in light of the uptrend in gold prices. Executive chairman and group MD tor Datuk Choon Yee Seiong said the group foresees gold prices to be on an upward trend going forward. "Gold prices were affected by many factors, such as geopolitical tension and economic conditions. The current uncertain environment has spurred a lot of investors' interest to go for gold products. (The Edge)

Market Update

  • The FBM KLCI might open lower today as US stock indices on Monday logged their worst declines in about four weeks, as markets retreated in the penultimate session of 2019, following a powerful stretch of returns, supported in the final few weeks by optimism over an initial trade pact with China. The Dow Jones Industrial Average fell 183.12 points, or 0.6%, to 28,462.14, while the S&P 500 index slipped 18.73 points, or 0.6%, to 3,221.29. The Nasdaq Composite Index retreated 60.62 points, or 0.7%, to close at 8,945.99. In economic news, the November trade deficit fell to a more than 27-month low, down 5.4%, though 2019 is on track for the largest annual deficit in 11 years. A reading of the Chicago area purchasing manager’s index for December showed a climb to 48.9 from 46.3. A reading of above 50 indicates improving conditions. Contracts to buy previously-owned U.S. homes rose in November, according to the National Association of Realtors. Its pending home sales index was up 12% to 108.5. In Europe, stocks closed mixed. The Stoxx Europe 600 lost 0.9%, while the FTSE 100 lost 1.0%.
  • Back home, the FBM KLCI closed 5.06 points or 0.31% higher to 1,615.67 points, led by Tenaga Nasional Bhd and as Bursa Malaysia plantation shares rose with crude palm oil (CPO) prices.In the region, shares traded mixed, with the China CSI 300 gained 1.5%, Hong Kong’s Hang Seng Index advanced 0.3%, while Japan’s Nikkei 225 closed 0.8% lower.

Source: PublicInvest Research - 31 Dec 2019

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