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PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 25 Nov 2020, 10:24 AM

 

PublicInvest Research Headlines - 6 Jan 2020

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Economy

US: Factory sector in deepest slump in more than 10 years. The US manufacturing sector fell into its deepest slump in more than a decade in Dec as the US-China trade war kept a lid on factory output, orders and employment, although the long-awaited Phase 1 deal between Washington and Beijing could limit further downside. The ISM said its index of national factory activity fell to 47.2 last month from 48.1 in Nov. It was the lowest reading since June 2009 and, coupled with readings for both new orders and factory employment at multi-year lows, thwarted expectations for a leveling off in the pace of decline in a sector buffeted by trade tensions. (Reuters)

US: Construction spending climbs more than expected in Nov. Construction spending in the US increased by more than expected in the month of Nov, according to a report released by the Commerce Department on Friday. The report said construction spending climbed by 0.6% to an annual rate of USD1.32trn in Nov after inching up by 0.1% to an upwardly revised USD1.31trn in Oct. Economists had expected construction spending to rise by 0.3% compared to the 0.8% slump originally reported for the previous month. (RTT)

US: Fed minutes show some concern low rates could lead to excessive risk-taking. Members of the Federal Reserve generally agree that interest rates should remain unchanged for the foreseeable future unless there is a material shift in the economic outlook. However, the minutes of the Fed's Dec meeting showed a few participants raised concerns that keeping interest rates low over a long period might encourage excessive risk-taking. The participants suggested that policies that keep interest rates persistently low could exacerbate imbalances in the financial sector. (RTT)

US, China: Chinese delegation plans to travel to Washington to sign trade deal - SCMP . A Chinese trade delegation is planning to travel to Washington on Jan 13 for the signing of the US-China Phase 1 trade deal, the South China Morning Post reported on Sunday citing a source briefed on the matter. The Chinese delegation will return on Jan 16, SCMP said. The trade delegation, led by Vice Premier Liu He, had originally planned to set off earlier in the month but had to change plans after US President Donald Trump sent a tweet claiming that he would sign the Phase 1 trade deal with China on Jan 15. (Reuters)

EU: Eurozone M3 money supply growth eases in Nov. The annual growth in a broad measure of Eurozone money supply slowed in Nov, figures from the ECB showed on Friday. M3, a broad monetary aggregate, grew 5.6% YoY after a 5.7% increase in Oct, which was revised from 5.6%. The annual growth in the narrower monetary aggregate M1, which includes currency in circulation and overnight deposits, slowed to 8.3% from 8.4%. Growth in lending to households was steady at 3.5%, while the pace of increase in loans to businesses slowed to 3.4% from 3.8%. (RTT)

EU: German unemployment increases more than forecast. German unemployment increased far more-than-expected in Dec as trade disputes weighed heavily on the manufacturing sector, in turn hurting hiring and the labor market. Data from the Federal Employment Agency showed on Friday that the number of people out of work rose by a seasonally adjusted 8,000 persons. This was double the increase of 4,000 persons that economists had predicted. The agency attributed the latest increase in unemployment mainly to the development in the unemployment insurance sector due to the economic downturn. (RTT)

UK: Construction logs longest downturn in almost a decade. The UK construction sector logged its longest downturn in activity in almost a decade in Dec due to political uncertainty and subdued client demand ahead of the general election, a closely watched survey showed on Friday. The IHS Markit/Chartered Institute of Procurement & Supply construction PMI fell unexpectedly to 44.4 in Dec from 45.3 in Nov. (RTT)

China: Central bank says will keep monetary policy prudent, flexible and appropriate. China will keep monetary policy prudent, flexible and appropriate, and continue to deepen financial reforms, the central bank said on Sunday, reiterating previous policy statements. After a work meeting chaired by PBOC Governor Yi Gang, the central bank also vowed to prevent any financial crisis, and said it would continue to help small companies seeking financing. It also said it will continue to let market play a decisive role in the currency exchange rate, but would keep the yuan exchange rate stable within a reasonable range. (Reuters)

Markets

VS (Trading Buy, TP: RM1.49): Positive on outlook despite challenges. VS Industry is remaining upbeat on its long-term prospects moving forward despite the challenging operating environment, said MD Datuk SY Gan. “In the face of difficult business operating environment and uncertainties in the global economy, we are very pleased to have registered our best-ever net profit in FY19.” he said. Gan added the group has recently commenced mass production on a model for US-based Bissell International Trading Co BV at its dedicated facility. “Moving ahead, there are a few more models in the pipeline and shall come on-stream soon. At the same time, we are also looking forward to further strengthening the robust relationships with our other key customers and grow our business together,” he said. (The Sun Daily)

FGV: Team up with Johor Port to buy 25% stake in Pakistan dry bulk terminal. FGV Holdings has entered into a MoU with Johor Port (JPB) to explore the potential acquisition of a 25% stake in Fauji Akbar Portia Marine Terminals (FAP), an operating dry bulk terminal in Port Qasim, Pakistan. FGV said FAP had extended an invitation to select a potential investor of up to 25% equity for its future expansion plan, with works comprising land reclamation for additional storage, installation of new unloaders, warehouse extension, installation of new silos and jetty extension. “JPB and FGV intend to join hands to form an unincorporated JV for the sole purpose of preparation and submission of an expression of interest (EOI) as required to be submitted to FAP and/or Fauji Foundation,” FGV said. (The Edge)

Guocoland: Unit sells Malacca land for RM119.26m. Guocoland’s unit is selling a parcel of land in Jasin, Malacca for RM119.26m. The plot was valued at RM99.4m, according to a recent valuation certificate. The disposal is expected to generate an estimated net gain of approximately RM35.35m for Guocoland. “The proposed disposal will enable Guocoland group to realise its investment in the property and to focus on its core business of property development,” it said. (The Edge)

Tadmax: Gets nod to develop power plant. Tadmax Resources has received a letter of notification from the Ministry of Energy, Science, Technology, Environment and Climate Change to proceed with the development of a 1,200MW combined-cycle gas turbine power plant (CCGT) at Pulau Indah, Selangor. The construction period will be approximately three years with scheduled commercial envisaged in 2024. “The project will not contribute to the near term profitability of the group as it takes approximately four years before commercial operation commences. (StarBiz)

KAB: Announces solar business foray. Kejuruteraan Asastera (KAB) is expanding into the solar energy industry via the proposed acquistion of a 30% stake in LeveragEdge SB (LSB) for RM2.1m. KAB had entered into a heads of agreement with LSB and Loo Chun Keat. KAB said LSB provides solar photovoltaic and energy efficiency solutions while Loo is an existing director in LSB. The proposed investment is part of the group’s expansion strategy into the solar energy industry. (The Edge)

London Biscuits: Auditor resigns. London Biscuits’ external auditor has resigned, as the firm does not have enough resources to provide reasonable professional due care to the company and its subsidiaries. Messrs Nexia SSY PLT (Nexia) had tendered its resignation via a written notice. The auditor was re-appointed as London Biscuits’ auditor at its last AGM. (The Edge)

Market Update

The FBM KLCI might open lower today after US stocks last Friday ended a holiday-shortened week solidly lower, with the Dow shedding more than 230 points, following escalating tensions in the Middle East and US manufacturing activity that fell to its lowest reading in about a decade. The Dow Jones Industrial Average shed 233.92 points, or 0.8%, at 28,634.8. The S&P 500 fell 23 points, or 0.7%, to 3,234.85. The Nasdaq Composite slipped 71.42 points, or 0.8%, to 9,020.77. All three benchmarks finished off their lows for the session, however. The Pentagon confirmed late Thursday that the US military had killed Qassem Soleimani, the head of Iran’s Islamic Revolutionary Guard’s Quds Force, and said the strike was aimed at deterring future Iranian attacks. Friday also saw worse-than-expected US manufacturing data underlined risks to economic growth. The Institute for Supply Management’s closely watched December US manufacturing purchasing managers index fell to 47.2%, its lowest since June 2009, from a reading of 48.1% in November, leaving the gauge in contraction. Separately, US November construction activity rose by 0.6%, a sharp increase from the 0.1% rise registered in October. European markets finished mixed with the FTSE 100 gained 0.24% and the CAC 40 rose 0.04%. The DAX lost 1.25%.

Back home, the FBM KLCI closed 8.88 points or 0.55% higher to 1,611.38, amid higher crude oil prices and after US shares ended at record highs in overnight trades. Top gainers included Carlsberg Brewery Malaysia Bhd, Hong Leong Financial Group Bhd and Petronas Gas Bhd. The regional markets finished mostly lower on Friday with shares in Japan leading the region. The Nikkei 225 was down 0.76% while Hong Kong's Hang Seng lost 0.32% and China's Shanghai Composite gave away 0.05%

Source: PublicInvest Research - 6 Jan 2020

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Labels: VS, FGV, GUOCO, TADMAX, KAB, LONBISC

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