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PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 1 Dec 2020, 10:01 AM

 

PublicInvest Research Headlines - 17 Feb 2020

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Economy

US: Consumer sentiment rises in Feb even amid the coronavirus outbreak . US consumer sentiment figures for Feb came in higher than expected despite the recent outbreak of the coronavirus. The University of Michigan’s consumer sentiment index came in at 100.9 for Feb. Economists polled by Dow Jones expected February consumer sentiment to come in at 99.5. Current personal finances as well as evaluations of the national economy each posted large gains,” said Richard Curtin, chief economist for the Surveys of Consumers, in a statement. “Net gains in household income and wealth were reported more frequently in early February than at any prior time since 1960.” He also noted the coronavirus outbreak, which capital markets have been grappling with in recent weeks, is still not a major concern for consumers as just 7% of survey respondents mentioned it “when asked to explain their economic expectations in early Feb.” (CNBC)

US: Business inventories inch up in line with estimates in Dec . Business inventories in the US edged higher in the month of Dec, according to a report released by the Commerce Department. The report said business inventories inched up by 0.1% in Dec after slipping by 0.2% in Nov. The uptick in inventories matched economist estimates. The modest increase in business inventories came as manufacturing inventories rose by 0.5%, more than offsetting a 0.2% dip in wholesale inventories. (RTT)

UK: Brexit trade deal or not, UK consumers face higher EU prices. UK consumers will face higher prices on goods coming from the EU after Brexit, whether Boris Johnson signs a free trade agreement with the bloc or not, according to a major business group. Products imported from the EU after Jan 1 2021 will require customs declarations, which cost between GBP16 and GBP56 per product line. They will also need documents like rules of origin paperwork, new red tape that is automatically triggered by Britain leaving the bloc’s single market and customs union. Looming higher costs for companies dealing with the EU, which is Britain’s largest trading partner and a source of half its imports, is a result of Prime Minister Johnson’s approach to trade talks with the bloc. (Bloomberg)

China: Taps blockchain technology to boost financing for businesses hit by virus. As Chinese authorities rush to support businesses struggling to survive the effects of the new coronavirus, blockchain technology is showing its potential in an archaic financing system. Since the Lunar New Year holiday, 87 China-based businesses have received more than USD200m in loans through a cross-border, pilot blockchain finance platform. The cross-border, financial blockchain services platform can play a bigger role, and help medium and small sized enterprises improve the efficiency and convenience of getting export trade financing and other financial credit support. (CNBC)

Hong Kong: Facing ‘tsunami-like’ shocks, finance chief says . Hong Kong is facing “tsunami-like” shocks, and may incur a record budget deficit in the next fiscal year as the city counts the costs of the coronavirus outbreak after months of social unrest, Financial Secretary Paul Chan said. The impact of the epidemic on the Hong Kong economy is being felt beyond retail, food and beverage and tourism related industries, Chan said in a blog post. The short-term economic outlook is “cautious,” and shocks can cause the unemployment rate to “deteriorate rapidly,” Chan said. “In addition to launching counter cyclical relief measures to support the economy, the government’s recurrent expenditure in the past 10 years has continued to increase significantly, and the weakening economy has significantly reduced government revenue from tax and land,” Chan wrote, elaborating on the deficit. The budget shortfall will likely continue for a period of time, he said. (Bloomberg)

Japan: Economy contracts most since 2014 on tax hike . Japan’s economy shrank by the most in more than five years last quarter, fueling recession concerns as the widening coronavirus outbreak hits activity at the start of 2020. Japan’s GDP shrank at an annualized pace of 6.3% from the previous quarter in the three months through December, according to a preliminary estimate by the Cabinet Office. Economists surveyed had predicted a fall of 3.8%, flagging the adverse impact of a sales tax increase, weak global demand and typhoon disruption. (Bloomberg)

Singapore: Could have biggest deficit in almost two decades . Singapore is set to deliver a strong budget this week to offset the damage to the economy from the coronavirus, with analysts predictingthe biggest deficit in almost two decades. The fiscal gap may widen to 1.5% of gross domestic product in the year beginning April 1, the highest since the 1.7% shortfall recorded in the 2001 financial year, according to the median estimate in a Bloomberg survey of economists. This year’s deficit will probably come in at 0.3%, compared to the government’s earlier projection of 0.7%. (Bloomberg)

Markets

FGV: Enters dairy business with Red Agri share acquisition. FGV Holdings entered into the dairy farming and fresh milk processing business following its RM10m acquisition of a 60% stake in RedAgri Farm SB. The equity acquisition marks the first step towards becoming an integrated agrifood company, enabling it to create more value from existing resources and tap into synergies within the palm-based circular economy. Currently, RedAgri currently processes 4,000 litres of fresh milk a day, which will be increased to 20,000 litres a day by 2022. (SunBiz)

Minda Global: Plans 10-to-1 share consolidation. Minda Global is planning to consolidate every 10 shares in the company into 1 new consolidated share, to shed the impression that its shares are just a "penny stock". The proposed exercise will see Minda Global’s share base be consolidated to 123.99 shares from 1.24bn shares presently. Minda Global's shares last traded at 5.5 sen apiece. At this price, the exercise will theoretically see its share price adjust to 55 sen per share. (The Edge)

Dolomite: Ordered to pay RM35m in summary judgment. Dolomite Corp has been instructed by the High Court here to pay RM35.46m to Fadzilah & Fikri SB, after having failed to set aside a summary judgement application filed by the latter. The amount due which has yet to take into account a 5% annual interest from June 2018 and costs of RM10,000 that Dolomite was also ordered to pay is bigger than the quarry operator turned property developer's current market capitalisation of RM31.34m. Fadzilah & Fikri filed the summary judgement application against its wholly-owned Dolomite Industries CB (DIO). However, it did not state the reason behind the summary judgement application. (The Edge)

Carlsberg: Customs cancels RM21m bill of demand. The brewery announced that Customs has cancelled its bill of demand claiming for sales tax and penalty totalling RM20.65m. The company said that it received a letter from the Selangor State Director of Royal Malaysian Customs. The letter confirms that the bill of demand for sales tax amounting to RM13.76m and the penalty amounting to RM6.88m for the period of July 1, 2011 to Jan 14, 2014 has been cancelled. The cancellation took effect on Jan 15, 2020, it added. (The Edge)

Gunung Capital: CEO exits loss-making group. Gunung Capital’s group managing director-cum-chief executive officer Datuk Syed Abu Hussin Hafiz Syed Abdul Fasal has ceased to be its substantial shareholder. Gunung Capital revealed that Syed Abu Hussin disposed of 7.45m shares representing a 3.117% direct stake in the company at 58.24sen per share, in a combination of open and off market disposals on Feb 12. This represents a discount to the company's closing price of 61 sen in the open market on that same day. (The Edge)

Scomi Group: In race with two lenders for Scomi Energy shares. It appears that Scomi Group is in a race with its two lenders, businessman Tan Sri Wan Azmi Wan Hamzah and and Gelombang Global SB (GGSB), a private vehicle of businessman Datuk Mohd Zakhir Siddiqy Sidek, for the block of 870.47m shares in Scomi Energy Services. While the two lenders want to transfer the block of Scomi Energy shares that have been pledged against the RM21m loan each of the duo had given to Scomi Group last year, the company is rushing to the court for an interim injunction to block the share transfer. (The Edge)

Market Update

US markets ended last Friday little changed as strong corporate earnings were tempered by weak consumer data. Despite Friday’s muted trading moves, stocks posted back-to-back weekly gains. The S&P 500 and Dow rose 1.6% and 1.0%, respectively last week. The Nasdaq gained 2.2%. Core retail sales, numbers which exclude autos, gas, food and services amongst others, were unchanged in January. Earnings from Nvidia and Expedia beat estimates meanwhile. Both the S&P 500 and Nasdaq Composite inched 0.2% higher though the Dow slipped 0.1%. European markets were mixed as investors monitored ongoing developments on the viral outbreak. Data on the day was less than encouraging, with Eurozone economic growth in the fourth quarter slowing as expected. Figures for Germany showed its economy had stagnated during the same period. On stocks, AstraZeneca shares were down 4% after it said its 2020 sales growth would take a hit from the coronavirus while RBS shares sank 7% after it scaled back its returns target and slashed its investment back. Market wise, UK’s FTSE 100 and France’s CAC fell 0.6% and 0.4%. Germany’s DAX was down 1.22pts. Key Asian markets were also mixed, though China and Hong Kong found some temporary relief from recent weaknesses. The Shanghai Composite and Hang Seng indices gained 0.4% and 0.3% on the day. Singapore has flagged the risk of a recession as a result of the coronavirus outbreak, though having little effect on the Straits Times Index which was largely unchanged. The Nikkei 225 fell 0.6% however.

FGV Holdings is spending RM10m to acquire 60% equity interest in the enlarged share capital of RedAgri Farm Sdn Bhd to diversify into the business of dairy farming and fresh milk processing. Carlsberg Brewery announced that the Customs Department has cancelled its bill of demand claiming for sales tax and penalty totalling RM20.7m.

Source: PublicInvest Research - 17 Feb 2020

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