PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 2 Dec 2020, 9:34 AM


PublicInvest Research Headlines - 7 Feb 2020

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US: Weekly jobless claims hit nine-month low. The number of Americans filing for unemployment benefits dropped to a nine-month low last week, suggesting a tightening labor market would continue to keep the longest economic expansion in history on track despite weak business investment. Initial claims for state unemployment benefits decreased 15,000 to a seasonally adjusted 202,000 for the week ended Feb 1, the lowest reading since last April, the Labor Department said. (Reuters)

US: Productivity rebounds in 4Q, labor costs growth slows. US worker productivity rebounded in the 4Q, keeping labor costs in check. The Labor Department said on Thursday nonfarm productivity, which measures hourly output per worker, increased at a 1.4% annualized rate last quarter. Productivity decreased at an unrevised 0.2% pace in the July-Sept period, the biggest drop since the 4Q of 2015. (Reuters)

US, China: China to halve tariffs on some US imports as coronavirus risks grow. China on Thursday said it would halve additional tariffs levied against 1,717 US goods last year, following the signing of a Phase 1 deal that defused a bruising trade war between the world’s two largest economies. China’s finance ministry said that starting Feb 14, additional tariffs levied on some goods will be cut to 5% from 10% and others lowered to 2.5% from 5%. The ministry did not state the value of the goods affected by the decision, but the products affected by the new rule are among USD75bn of goods hit by Chinese tariffs of 5% to 10% tariffs that came into effect on Sept 1. (Reuters)

EU: ECB's Lagarde says eurozone showing tentative signs of stabilization. ECB President Christine Lagarde said on Thursday that there are tentative signs of stabilization in the euro area economy, while the novel coronavirus outbreak in China is a source of concern. "While uncertainties surrounding the global economic environment remain elevated, those related to trade tensions between the US and China are receding," Lagarde said. "Other risks, however, are still lingering or - as for the uncertainty surrounding the impact of the coronavirus - are a renewed source of concern." (RTT)

EU: German factory orders fall unexpectedly on foreign demand. Germany's factory orders decreased unexpectedly at the end of 2019, reflecting the weakness in foreign demand, data from Destatis revealed Thursday. Factory orders fell 2.1% MoM in Dec, following a revised 0.8% drop in Nov. This was the biggest decrease since Feb and confounded the expected growth of 0.7%. Domestic orders grew 1.4%, while foreign demand decreased 4.5% in Dec. Orders from the euro area plunged 13.9%. On the other hand, demand from other countries grew 2.1%. On a yearly basis, new orders slid 8.7% versus a 6% fall in Nov. Economists had forecast a decrease of 6.6%. In the 4Q manufacturing orders were down 0.5% from the preceding three months. The economy ministry said the outlook for industrial activity remains subdued. (RTT)

UK: Seeks big tariff reductions in US trade deal. Britain is seeking far-reaching reductions in tariffs from a trade deal with the US, trade minister Liz Truss said on Thursday, setting out the broad aims of a post-Brexit push to secure new free-trade agreements. Britain plans to begin negotiating deals with the US, Japan, Australia and New Zealand in the coming months, alongside talks on an agreement over its future relationship with the European Union. “We will drive a hard bargain and, as with all negotiations, we will be prepared to walk away if that is in the national interest,” Truss said. (Reuters)

India: Keeps rates unchanged for second straight time. India's central bank left its key interest rate unchanged for the second straight meeting on Thursday, and decided to continue its accommodative stance as long as necessary to revive growth and to bring inflation to the target. At the sixth bi-monthly monetary policy meeting, the monetary policy committee of the Reserve Bank of India headed by Shaktikanta Das unanimously decided to hold the policy repo rate unchanged at 5.15%. The bank has kept the reverse repo rate at 4.90%. The central bank lowered its key interest rate five times by a cumulative 135 basis points in 2019. The MPC recognizes that there is policy space available for future action, the bank said. (RTT)

Japan: Drop in household spending deepens unexpectedly . Declines in Japan’s household spending worsened in Dec, signaling that government measures to ease the shock of Oct’s sales tax hike may not be working as well as economists expected. Spending fell 4.8% from a year earlier, deepening from Nov’s 2% drop, data from the internal affairs ministry showed Friday. Economists had forecast the slide would moderate to 1.7%. Domestic demand has been the main driver of Japan’s growth amid slumping exports, so analysts are closely watching to see how consumers react to Oct’s 2 percentage-point hike in the sales tax. (Bloomberg)

Australia: Service sector falls deeper into contraction. The service sector in Australia slid deeper into contraction in Jan, the latest survey from the Australian Industry Group showed on Friday with a Performance of Service Index score of 46.6. That's down from 48.7 in Dec, and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction. Individually, production, employment and new orders were all well into contraction territory. (RTT)


FGV: May be winner from potential rise in palm oil supply to Pakistan. FGV Holdings could be the winner if palm oil supply to Pakistan rises following the Pakistan government's expression of interest to import more palm oil from Malaysia, said Palm Oil Analytics owner and co-founder Dr Sathia Varqa. He said the plantation company has a large presence in Pakistan and recently announced to Bursa Malaysia that it is exploring a new investment there. FGV, via its 65%-owned subsidiary FWQ Enterprises (Private) Ltd, signed MoU with Johor Port to jointly acquire up to a 25% stake in Fauji Akbar Portia Marine Terminals, an operating dry bulk terminal in Port Qasim, Pakistan. (The Edge)

Progressive Impact: Bags RM20.76m job in Jeddah. Progressive Impact Corp (Picorp) accepted a SAR18.90m (RM20.76m) contract award from Jeddah Municipality (JM) for the provision of mosquito control monitoring services to JM within Jeddah, Saudi Arabia. Picorp’s obligations under the contract will involve the recruitment of manpower, procurement of equipment and the provision of mosquito monitoring services within Jeddah. The award is a continuity of the existing business that Picorp has with JM, and as part of the latter’s Public Health Enhancement Programme undertaken to maintain the quality of life of the general public in Jeddah City. (The Sun Daily)

Ekovest: Sued by Samling over dispute involving Pan Borneo Highway. Ekovest is being sued by their former JV partner Samling Resources SB over a dispute involving work on the Sarawak portion of the Pan Borneo Highway project. Samling was awarded a work package from Lebuhraya Borneo Utara SB (LBU) worth RM2.11bn under the Sarawak portion of the highway project in July 2016. Ekovest had announced in June 2018 that its JV agreement with Samling had been voided, as LBU did not consent to the project to be subcontracted to Samling-Ekovest JV SB. Then in July 2019, Ekovest had initiated arbitration proceedings against Samling for wrongful termination of the JV. Ekovest said Samling is currently seeking general damages with interests, costs, and further relief deemed fit by the court, from Ekovest. (The Edge)

Berjaya Food: 2Q net profit at RM8m, says earnings still impacted by new accounting standards. Berjaya Food (BFood), reported a net profit of RM8.01m in 2QFY20, on a revenue of RM184.12m. There was no comparison numbers for the previous year's corresponding period, due to a change in its financial yearend. Nevertheless, BFood has been “adversely impacted by the adoption of the MFRS16”, as the depreciation charge of right-of-use assets and the lease liability interest expense [is] higher than the total lease rental expenses, resulting in lower PBT. Its board of directors has recommended a second interim dividend of 1 sen per share. (The Edge)

Atrium REIT: 4Q rental income jumps 69%, declares 2.23 sen dividend. Atrium REIT net rental income in 4QFY19 jumped 69.8% YoY to RM8.13m. The better results came on the back of higher gross revenue of RM7.61m, as well as lower property operating expenses for 4QFY19. Atrium REIT also booked unbilled lease income receivable of RM605.96m as part of adjustment under the MFRS16 accounting requirement. It is noted that the REIT recorded higher trust expenses on higher manager fees, administrative expenses and finance costs in 4QFY19.

Market Update

The FBM KLCI might open stronger today as U.S. stocks closed higher Thursday, seizing a fresh round of records, after the market got another shot of confidence from promised trade tariff reductions. The Dow Jones Industrial Average closed up 88.92 points, or 0.3%, to settle at 29,379.77, after carving out a intraday record at 29,408.05. The S&P 500 index rose 11.09 points or 0.3% to settle at 3,345.78. The Nasdaq Composite Index advanced 63.47 points, or 0.7% to settle at 9,572.15. The number of Americans newly applying for jobless benefits fell 15,000 to 202,000 during the week ended Feb. 1, near a 50-year low. Productivity growth accelerated in the fourth quarter, the Labor Department said, to 1.4%, below consensus expectations of 1.6% growth. In Europe, stocks rose, with the Stoxx Europe 600 closing 0.4% higher for a record close at 425.49.

Back home, the FBM KLCI closed up 15.98 points or 1.04% to 1,552.77 points as general market sentiment was boosted following China's announcement that it will cut tariffs on US imports. The regional stocks also advanced, with the China CSI 300 adding 1.9%, Japan’s Nikkei 225 rising 2.4% and Hong Kong’s Hang Seng index gaining 2.6%.

Source: PublicInvest Research - 7 Feb 2020

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