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

 

PublicInvest Research Headlines - 20 Feb 2020

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Economy

Global: IMF says Coronavirus poses new threat to fragile global economic recovery. Global economy is set for a fragile and shallow recovery and the coronavirus outbreak in China is posing a new threat to the outlook, the IMF said. "Global growth appears to be bottoming out, but the projected recovery is fragile," the lender said in a surveillance note for the G20 finance ministers and central bank governors meeting to be held in the Saudi Arabian capital of Riyadh on February 22-23. "The projected recovery is expected to be shallow and subject to downside risks," the note said. (RTT)

US: Fed minutes signal interest rates to remain unchanged for some time . Leaving interest rates at their current levels is likely to remain appropriate for some time, according to the assessments offered by Fed officials in the minutes of the central bank's latest monetary policy meeting. The minutes of the January meeting made several references to the coronavirus outbreak but are likely to reinforce expectations that the Fed will remain on hold at upcoming meetings. (RTT)

US: Housing starts pull back after reaching 13-year high. A report released by the Commerce Department showed a pullback in new residential construction in the US in the month of Jan. The Commerce Department said housing starts slumped by 3.6% to an annual rate of 1.57m in Jan after soaring by 17.7% to a revised rate of 1.63m in Dec. With the decrease, housing starts pulled back after reaching their highest level since hitting 1.649m in Dec of 2006. Meanwhile, the report said building permits spiked by 9.2% to an annual rate of 1.55m in Jan after sliding by 3.7% to a revised rate of 1.42m in Dec. (RTT)

EU: Germany faces sluggish growth in 2020 - DIHK . Germany’s DIHK Chambers of Industry and Commerce said it expected Europe’s largest economy to grow by 0.7% this year, up slightly from 0.6% in 2019, with export growth stagnant in the face of trade conflicts and Brexit. A large part of the expected growth is due to four additional working days this year, with strong state consumption supporting the otherwise lackluster economy. (Reuters)

EU: Construction output falls in Dec . Eurozone construction output declined in Dec after rising in the previous month, Eurostat reported. The construction output dropped 3.1% MoM in Dec, after a 0.7% rise in Nov. In Oct, output fell 0.7%. The decline was driven by a 3.6% decrease in building construction and a 1.4% fall in civil engineering. On a YoY basis, the construction output dropped 3.7% in Dec, after a 1.4% rise in the prior month. (RTT)

Japan: Exports, machinery orders fall as virus risks grow . Japan’s machinery orders tumbled at their fastest pace since 2018 while exports posted a 14th straight month of decline as the world’s third-largest economy grappled with the widening impact of the coronavirus outbreak and a recent sales tax hike. Government data showed exports fell 2.6% YoY in Jan, smaller than a 6.9% decrease expected by economists and dragged by US-bound shipments of cars and construction and mining machinery. (Reuters)

Markets

GHL, Axiata (Neutral, TP: RM4.00): To leverage on Axiata Digital's platform to power new financing business. GHL Systems has partnered with Aspirasi to provide local SMEs and micro-entrepreneurs digital access to GHL's new financing business. Axiata Digital is the digital services arm of Axiata. The collaboration, which is focused on Malaysia for now but is planned to expand to other countries in the near future, will enable GHL to tap into Aspirasi's platform, which offers a fully digital and complete financing application journey that covers on-boarding and merchant scoring. (The Edge)

Destini: Expands port operations to Indonesia. Destini has entered into a conditional share sale agreement with Indonesia based PT Berkah Sadaya Adikarya to acquire 99.9% of its holdings in port services provider PT Muara Badak Perkasa for SGD4m (RM12m). The acquisition will allow the group to diversify its revenue stream into the provision of port related services to mining companies. PT Muara Badak is well positioned to grow with the growth of mining activities in Indonesia. (Sunbiz)

Widad: Buys into company with RM861m concession for UiTM campus. Widad Group is buying Serendah Heights SB whose unit YBK Usahasama SB has a concession with the government and Universiti Teknoloji MARA (ÜiTM) to develop the facilities and maintain the UiTM campus in Jasin, Melaka. Serendah Heights owns 100% of YBK which has a remaining concession of 14 years ending 2034, totalling RM861.60m. The purchase consideration of RM95.89m would be satisfied via cash of RM86.30m and issuance of new shares in Widad with value of RM9.59m. (StarBiz)

Kim Loong Resources: Buys oil palm plantations in Sabah for RM93m. Kim Loong Resources is buying four plots of oil palm plantation land in Sabah for RM92.53m to increase its land bank and long-term profitability growth. The parcels, with a combined size of 2,722.3ha, are located near its estates in Sandakan, so the acquisitions are expected to bring about synergistic effects and benefits in terms of cost efficiency of managing the plots. The purchase should increase Kim Loong's fresh fruit bunch supply and contribute towards optimising the utilisation of its mill processing capacity. (The Edge)

MyEG: Chinese partner helps to develop coronavirus profiling system. My E.G. Services (MyEG) has developed an Artificial Intelligence-powered coronavirus risk profiling system, a tracking system for foreign visitors. MyEG noted the company’s innovation has leveraged on its partnership with Phoenix Travel Worldwide Co. Phoenix Travel is a leading China outbound travel company whose shareholders include China State Owned Enterprise (SOE) Citic Capital, Haier and Legend Holdings/Lenovo. MyEG is now making the innovation available in Malaysia and the Philippines. (The Edge)

Damansara Realty: 4Q net profit falls amid higher costs and expenses. Damansara Realty 4Q net profit shrank 15.4% YoY to RM14.67m from RM17.34m, as cost of sales climbed more than revenue, while other income dropped. While revenue for the 4QFY19 came in 7.2% or RM5.9m more at RM88.21m, compared with RM82.31m a year ago, cost of sales expanded 17% or RM8.99m to RM63.46m. Employee benefits expense also climbed 33% or RM2.24m to RM8.96m, while other income dropped 94% or RM4.51m to RM301,000. (The Edge)

Market Update

The FBM KLCI might open higher today after the S&P 500 and Nasdaq finished at all-time highs Wednesday as investors were encouraged by comments from the Federal Reserve and measures China says it has taken to help coronavirus-stricken businesses. The Dow Jones Industrial Average advanced 115.84 points, or 0.4%, to 29,348.03. The S&P 500 rose 15.86 points, or 0.5%, to end at 3,386.15 while the Nasdaq Composite added 84.44 points, or 0.9%, to end the session at a record at 9,817.18, its second all-time closing high in a row. U.S. stocks have remained in an uptrend for February, helped by corporate earnings reports, despite the potential for slowing global economic growth due to disruptions to trade and travel caused by COVID-19, the infectious disease that originated in Wuhan, China late last year. In Europe, the Stoxx Europe 600 closed 0.8% higher at 433.90, while the FTSE 100 climbed 1% to end at 7,457.02.

Back home, the FBM KLCI slid 0.19% on Wednesday, weighed down by glove counters following a declining trend in new cases of Covid-19 infections. The benchmark index erased early gains to close 2.92 points lower at 1,534.16, dragged by profit-taking in Top Glove Corp and Hartalega Holdings. In the region, the China CSI 300 ended 0.2% lower to close at 4.051.31, the Shanghai Composite edged down 0.3% at 2,975.40, and the Hang Seng Index gained 0.5% to 27,655.81. The Nikkei 225 rose 0.9% to 23,400.70.

Source: PublicInvest Research - 20 Feb 2020

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