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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 23 Oct 2020, 9:35 AM

 

PublicInvest Research Headlines - 24 Feb 2020

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Economy

Global: G20 finance heads eye impact of coronavirus outbreak on growth, see modest pickup. Finance chiefs of the world’s top 20 economies vowed to monitor the impact of the coronavirus outbreak on global growth and act if needed, as they said loose monetary policy and easing trade tensions would prompt a pick-up in 2020 and 2021. The Group of 20 (G20) finance ministers and central bank heads faced a sober presentation by the IMF, which predicted the epidemic would shave 0.1 percentage points off global growth. “We will enhance global risk monitoring, including of the recent outbreak of COVID-19. We stand ready to take further action to address these risks,” the financial leaders said. “Global growth is expected to pick up modestly in 2020 and 2021,” they predicted. “The recovery is supported by the continuation of accommodative financial conditions and some signs of easing trade tensions.” (Reuters)

US: Existing home sales fall in Jan. US home sales fell in Jan, but the constraint from tight supply could ease as building permits and the number of homes under construction at levels last seen nearly 13 years ago. The National Association of Realtors said on Friday existing home sales declined 1.3% to a seasonally adjusted annual rate of 5.46m units last month. Dec’s sales pace was revised down to 5.53m units from the previously reported 5.54m units. Economists polled by Reuters had forecast existing home sales falling 1.8% to a rate of 5.43m units in Jan. Last month, existing home sales were unchanged in the Northeast and rose in the Midwest and the populous South. But sales tumbled in the West, the country’s most expensive region. (Reuters)

US: Business gauge tumbles to lowest since 2013 on virus. US business activity shrank in Feb for the first time since 2013 as the coronavirus hit supply chains and made firms hesitant to place orders, a warning sign that the outbreak is starting to dent the world’s largest economy. The IHS Markit PMI measuring composite output at factories and service providers fell by 3.7 points to 49.6, the lowest level since Oct 2013, when the US government shut down, according to preliminary figures released Friday. Readings below 50 indicate contraction. It’s the first major piece of US economic data to show a sizable hit from the coronavirus. Economists see the virus as generally cutting more into Asian countries’ growth. (Bloomberg)

EU: Eurozone private sector growth at 6-month high. Euro area private sector grew for a third straight month and at the fastest pace in six months in Feb, mainly led by further expansion of the services sector, though there were signs of demand and production being hurt by the coronavirus outbreak in China. Elsewhere on Friday, final data from Eurostat confirmed that Eurozone inflation accelerated for the third straight month in Jan. The flash composite PMI, climbed to 51.6 from 51.3 in Jan, preliminary survey data from IHS Markit showed on Friday. Economists had forecast a score of 51. A PMI reading above 50 suggests growth in the sector. The latest reading was the best since Aug. The flash services PMI rose to a two-month high of 52.8 from 52.5 in Jan. The flash manufacturing PMI rose to a 12-month high of 49.1 from 47.9 in January. (RTT)

EU: Italy inflation steady in Jan. Italy's consumer price inflation remained stable in Jan, data from the statistical office Istat showed on Friday. The consumer price index rose 0.5% YoY in Jan, same as seen in Dec. In the initial estimate, inflation was 0.6%. The core inflation excluding prices of energy and unprocessed food increased to 0.8% in  Jan, as estimated. On a MoM basis, consumer prices edged up 0.1% in Jan. According to the initial estimate, the consumer prices rose 0.2%. The EU measure of harmonized index of consumer prices, or HICP, rose 0.4% annually in Jan, following a 0.5% climb in the previous month. Initially, the consumer prices were estimated to have remained unchanged. On a monthly basis, the HICP declined 1.8% in Jan, after a 0.2% rise in the prior month. In the initial estimate, the HICP fell 1.7%. (RTT)

UK: Manufacturing growth fastest in 10 months. UK manufacturing grew at the fastest pace in 10 months in Feb, while the services sector expanded at the slowest pace in two months, leading to stable growth of the private sector survey data showed Friday. The flash IHS Markit / CIPS Flash UK Composite PMI showed a reading of 53.3 in Feb, unchanged from Jan. A reading above 50 suggests expansion in the sector. The latest reading pointed to the joint-fastest expansion of private sector output since Sept 2018, IHS Markit said. The flash services PMI fell to a two-month low of 53.3 from Jan’s 53.9. In contrast, the flash manufacturing PMI hit a 10-month high of 51.9 versus 50.0 in Jan. Though receding political uncertainty boosted business as well as consumer confidence, the overall rate of new order growth eased from the 19-month peak seen in Jan amid the weakness in the services sector. (RTT)

China: Pushes factories to reopen, risking renewed virus spread. China is trying to get people back to work, risking a renewed spread of the coronavirus. Central and local governments are loosening the criteria for factories to resume operations as they walk a tightrope between containing a virus that has killed more than 2,400 people and preventing a slump in the world’s second-largest economy. The rush to restart has been propelled by China’s leader Xi Jinping and top leaders, who are urging companies to resume production so the country can continue to meet lofty goals for growth and economic development in 2020. Officials in China’s provinces have taken up Xi’s call, with one region after another relaxing rules that had kept more than half the nation’s industrial base idle following the Lunar New Year holiday. After weeks of empty streets and shuttered shops, signs of life are emerging along the manufacturing belt in the country’s coastal regions. (Bloomberg)

Japan: Private sector shrinks most in nearly 5 years . Japan's private sector declined in Feb at the strongest pace since April 2014, driven by the contraction in services output, survey results from IHS Markit showed on Friday. The au Jibun Bank flash composite output index fell to 47.0 in Feb from 50.1 in Jan. A score below 50 indicates contraction in the sector. The services PMI contracted to 46.7 in Feb from 51.0 in the previous month. The score was the lowest since April 2014. Total new sales fell for the first time since July 2016, mainly due to a slump in new business as the tourism sector was adversely hit by the coronavirus outbreak in China.. (RTT)

Japan: Kuroda says BOJ will be 'fully prepared' to act on virus risk. The BOJ will be fully prepared to take necessary action to mitigate the impact of the coronavirus on the world’s third-largest economy, its Governor Haruhiko Kuroda said. Kuroda said there was no major change to the BOJ’s projection that Japan’s economy would keep recovering moderately thanks to an expected rebound in global growth around mid-year. He also repeated the view that, while the central bank stands ready to ease monetary policy further “without hesitation”, it saw no immediate need to act. But Kuroda said the BOJ would scrutinize developments on the virus outbreak carefully, since the damage to Japan’s economy could be profound if the epidemic is prolonged and disrupts supply chains. (Reuters)

Markets

GDB: Gets shareholders nod for main market transfer . GDB received shareholders’ approval at the company's EGM to facilitate the transfer to the main market of Bursa Malaysia. This will be a landmark occasion in the group’s growth journey as it aims to continue its aggressive tender activities and larger scale of operations. Their orderbook as at 30 Sept 2019 stood at RM1.26bn and the Group aims to replenish its existing orderbook with an additional RM750m worth of new projects this year. (NST)

Duopharma: In talks for another contract extension. Duopharma Biotech which has obtained a 25-month extension on a government contract, said it is in discussion with the government for an extension of its insulin contract which will expire this year. The contract for the supply of insulin to government hospitals, which was previously extended, would expire on Dec 1,2020. Most analysts are confident that the insulin contract would also be extended. This involved the supply of pharmaceutical and non-pharmaceutical products to hospitals for 25 months from Dec 1,2019 until Dec 31,2021. (StarBiz)

Rhone Ma: Acquires interest in 3 livestock companies for RM7.84m. Rhone Ma is acquiring non-controlling interests in three companies for RM7.84m to expand its footprint in the ruminant segment and to participate in the dairy farming business. They are acquiring a 49% stake in One Lazuli SB (OLSB) for a consideration of RM5.39m, a 49% stake in Nor Lazuli Nutrition SB (NLN) for RM1.75m and another 49% stake in Nor Livestock Farm SB for RM700,000. To fund the acquisitions, Rhone Ma has proposed a private placement to raise up to RM8.18m via the issuance of up to 12.98m new shares representing 7.11% of its existing issued share capital. (The Edge)

Carlsberg Malaysia: Warns of big hit to sales if Covid-19 outbreak lasts till June . Carlsberg Brewery Malaysia is now focusing on how to address the effect of the Covid-19 outbreak on its beer sales, which will take a big hit if the outbreak lasts till June. The impact will be especially felt on the off-trade side like grocery and retail stores. They highlighted that traffics at entertainment outlets have been down by 10% to 20% which propels the question, “how much of beer sales have been hit ?”. (The Edge)

PLB Engineering: Inks deal with Penang to rehabilitate Jelutong dumpsite in exchange for 75% of the land. PLB Engineering has signed a conditional joint development agreement (JDA) with the Penang State Government and its development arm to undertake rehabilitation works for the Jelutong dumpsite along Lebuhraya Tun Dr Lim Chong Eu in Penang in exchange for three-fourths of the rehabilitated land. The firm said it will be undertaking rehabilitation works of the existing dumpsite — currently used for the disposal of various types of waste — on State land measuring approximately 84 acres, and additional area in excess of the existing area. (The Edge)

Kumpulan Powernet: Post third profitable quarter . Kumpulan Powernet posted a net profit of RM1.86m in its 2QFY20, compared with a net loss of RM1.13m the year before, lifted by its property development segment and its new construction business. The bulk or 82% of Powernet’s revenue in 2QFY20 came from its construction business, while property development contributed about 17%. (The Edge)

Market Update

The FBM KLCI might open in the red today as U.S. stocks slumped Friday, ending a two week win streak, as the spread of the COVID-19 epidemic from China to neighboring countries amplified worries about the impact on supply chains and global economic growth. Tech shares were the biggest loser in the S&P 500 index, with the sector closing down 2% as investors weighed potential fallout resulting from the corornavirus. The Dow Jones Industrial Average closed below 29,000, shedding 227.51 points, or 0.8%, at 28,992.40, its worst one-day percentage drop since Feb. 7. The S&P 500 lost 35.48 points, or 1.1%, to settle at 3,337.75, its biggest one-day percentage decline since Jan. 31. The Nasdaq Composite Index lost 174.37 points, or 1.8%, to finish at 9,576.59, its worst single-day percentage fall since Jan. 27, according to Dow Jones Market Data. In Europe, the Stoxx Europe 600 fell 0.5%, while the FTSE 100 lost 0.4%.

Back home, the FBM KLCI, which languished in negative territory throughout trading hours, closed 3.78 points or 0.25% lower amid renewed concerns about the fast-spreading Covid-19's global economic impact. In China, the Shanghai Stock Exchange Composite Index closed up 0.31%, marking its best week since last April as the Chinese Commerce Ministry said on Friday it will speed up studying new fiscal, tax financial, insurance measures to support companies to counter the impact of the epidemic. In contrast, the Hong Kong Hang Seng Index fell 1.09% at its close while Korea’s Kospi and Japan’s Nikkei lost 1.49% and 0.39%, respectively.

Source: PublicInvest Research - 24 Feb 2020

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