PublicInvest Research

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


PublicInvest Research Headlines - 3 Mar 2020

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Global: OECD cuts outlook on severe impact from covid-19 outbreak. The OECD downgraded its global growth outlook on Monday, saying the impact of the Covid-19 outbreak on economic prospects is set to be severe. The Paris-based think tank lowered the global growth projection for this year by 0.5% points, while prospects for China was revised down markedly, with growth seen slipping below 5% this year. In the Interim Economic Assessment, the OECD said global GDP growth is projected to drop to 2.4% in 2020 from an already weak 2.9% in 2019. The forecast for 2021 was trimmed to 3.3% from 3.6%. The OECD urged governments to act swiftly and forcefully to overcome the coronavirus and its economic impact. If downside risks materialise, and growth appears set to be much weaker for an extended period, then co-ordinated multilateral actions should be taken. (RTT)

Global: Manufacturing shrinks most since 2009 on virus pain. Global manufacturing contracted in Feb by the most since 2009 as the coronavirus severely disrupted demand, trade and supply chains. The JPMorgan Global Manufacturing PMI fell 3.2 points to 47.2, snapping a three-month streak of expansionary readings, according to a report released Monday. Factory employment declined for a third straight month, with the rate of job losses the fastest since 2009. Output contracted in 15 of 31 economies, including China, Japan, Germany, France, Italy, Taiwan, South Korea and Australia. The figures reflect record weakness in Chinese manufacturing data, amid factory shutdowns from China to South Korea and growing fears that the outbreak will turn into a global pandemic. (Bloomberg)

US: Manufacturing nearly stagnates with virus hitting suppliers. A key gauge of US manufacturing retreated to near stagnation in Feb amid mounting concern that the economy won’t be able to dodge a hit from the coronavirus. The ISM index slid to 50.1 from 50.9 a month earlier, according to data that showed a steeper drop than economists surveyed by Bloomberg projected. The ISM data showed that declines in the components tracking US production, new orders and inventories were somewhat offset by the employment measure hitting a four-month high. The gauge of supplier deliveries also rose to the highest level since 2018, indicating slower delivery times that may be due to supply disruptions from the coronavirus. (Bloomberg)

US: Construction outlays rise most since 2018 in broad advance. Spending on US construction projects jumped in Jan by the most in nearly two years, helped by favorable weather and lower borrowing costs. The value of construction put in place increased 1.8%, the most since Feb 2018, to a record USD1.37trn annualized rate, Commerce Department data showed on Monday. Private residential construction climbed 2.1%, the most in five months, while outlays for non-residential projects rose 0.8%. The pickup in home construction may indicate residential spending will add to 1Q GDP after boosting growth at the end of 2019. (Bloomberg)

EU: Eurozone manufacturing sector contracts at slowest pace in a year. Eurozone manufacturing activity contracted only marginally and at the slowest pace for the past year in Feb. The factory PMI rose to 49.2 in Feb from 47.9 in Jan. This was slightly above the flash score of 49.1. Although the PMI has recorded below the 50.0 no-change mark for 13 months in succession, Feb's reading marked not only a one-year high, but also a second successive monthly rise in the index. (RTT)

UK: Manufacturing sector expands most since April 2019. The UK manufacturing sector expanded at the fastest pace in ten months in Feb as domestic demand continued to recover on the back of reduced political uncertainty. A report by BOE showed that mortgage approvals for house purchase, which is an indicator for future lending, increased to the highest level in nearly 4 years in Jan. The IHS Markit/Chartered Institute of Procurement & Supply PMI rose to 51.7 in Feb from 50.0 in Jan. However, this was below the earlier flash estimate of 51.9. Manufacturing output expanded at the fastest pace since April 2019, as growth strengthened in both the consumer and intermediate goods sectors. At the same time, new orders grew at the fastest pace in eleven months. However, companies reported reduced new work intakes from Asia, especially China, due to the Covid-19 outbreak. (RTT)

China: Manufacturing contracts as factories shutdown due to coronavirus. China's manufacturing sector contracted at a record pace in Feb as efforts to contain the recent outbreak of the coronavirus weighed heavily on performance of factories. The Caixin manufacturing PMI fell sharply to 40.3 in Feb from 51.1 in Jan, thus marking this as the lowest reading since the survey began in April 2004. The survey showed that production, new work and staffing levels all fell at the quickest rates since the survey began nearly 16 years ago as companies extended their usual Lunar New Year shutdowns to help stem the spread of the virus. Sales declined for the first time since June 2019 with companies widely linking the fall to the coronavirus and subsequent factory closures. (RTT)

HK: Jan retail sales fall for 12th month due to coronavirus. HK’s retail sales fell for the 12th consecutive month in Jan, weighed down by a coronavirus outbreak following months of often violent anti government demonstrations. Since HK recorded its first coronavirus patient in Jan, tourist arrivals have slowed to a trickle and shopping malls and restaurants have been largely deserted as residents have stayed indoors. Retail sales in Jan fell 21.4% from a year earlier to HKD37.8bn (USD4.86bn), compared with a revised 19.4% drop in Dec. In volume terms, retail sales fell 23.0%, compared with a revised 21.1% drop in Dec. (New York Times)

Japan: BOJ Chief vows to ensure stability in financial markets. BOJ’s Governor Haruhiko Kuroda said the bank will ensure stability in the financial markets via asset purchases. He noted that global financial and capital markets have been unstable with rising uncertainties about the outlook for economic activity due to the spread of the novel coronavirus. (RTT)


Bumi Armada (Trading Buy, TP: RM0.53): Secures RM271m loan facility. Bumi Armada has secured a loan facility of USD64.3m (c.RM270.86m) to fund the repayment of its existing loan, transaction expenses and financing costs. “The repayment of the Facility will be via charter proceeds from the Bareboat Charter and the security for the Facility is the standard security package for this type of loan facility,” Bumi Armada said. The loan facility from ING Bank NV, Singapore, has a final maturity date of Dec 31, 2021, in accordance with the terms of a facility agreement dated Feb 29, 2020. (The Edge)

Pintaras Jaya: Bags RM116m worth of piling contracts. Pintaras Jaya has secured several piling contracts worth a combined RM116m, with contract periods spanning between three and eight months between January and April this year. “These contracts are expected to contribute positively to Pintaras Jaya group’s earnings,” it said. (The Edge)

Central Global: Secures construction job in Penang worth RM42m. Central Global said it has secured a contract from Simbol Era SB worth RM42.24m to build a 24-floor residential apartment in Penang. Central Global has accepted the letter of award for the job. The contract also involves a podium and eight floors of parking space. While the date of commencement for the job has yet to be decided, it is to be completed within 24 months. (The Edge)

GuocoLand, Tower REIT: Proposes purchase of Menara Guoco for RM242.1m. Tower REIT has entered into a conditional SPA with Guocoland for the proposed acquisition of Menara Guoco for RM242.1m cash. The 19-storey office building is located in Damansara City. The building has an occupancy rate of about 97.1% and is expected to increase Tower REIT's pro forma occupancy rate for its portfolio to 59.8% from 48.1%. Upon completion of the proposed acquisition, Tower REIT's consolidated asset base is expected to increase about 42.3% to RM814.3m and the average building age of its property portfolio is expected to decrease to 18 years from 23. (StarBiz)

WCE: Begins toll collection at Section 5 of West Coast Expressway. WCE Holdings says toll collection has started at Section 5 of the West Coast Expressway. “The company has commenced tolling with effect of 12.01am, March 1, 2020, for Section 5 (consisting of the New North Klang Straits Bypass Interchange – Kapar Interchange) of the West Coast Expressway,” it said. Previously, WCE announced it had begun collecting toll charges at three other sections of the 233km expressway covering six areas in Perak. Built at a cost of RM5.044bn, the West Coast Expressway has 21 interchanges — 11 in Perak and 10 in Selangor. It runs parallel to the PLUS-operated North-South Expressway. (The Edge)

CMMT: CapitaLand introduce support measures for retailers in Malaysia. Singapore-based CapitaLand Ltd and Malaysian-listed REIT, CapitaLand Malaysia Mall Trust (CMMT), announced a series of support measures for retail partners across all seven CapitaLand malls in Malaysia. “This is key to building resilience in our retail ecosystem and ensuring long-term sustainable growth for the company.” it said. The statement also said CapitaLand will pass on the full 15% discount on monthly electricity bills to its mall tenants, in response to the stimulus package announced by the Malaysian government on Feb 27. Besides that, CapitaLand will roll out initiatives to boost shopper spending over the next six months. (The Edge)

Market Update

The FBM KLCI might open higher today as the Dow Jones Industrial Average scored its biggest one-day percentage gain in nearly 11 years on Monday, as stocks bounced back sharply from the previous week’s selloff, with the rebound fueled by expectations that policy makers will move to cushion the impact of the COVID-19 outbreak on the global economy. The Dow Jones Industrial Average rose 1,293.96 points, or 5.1%, to end at 26,703.32 — its largest one-day percentage rise since March 23, 2009. The S&P 500 rebounded 136.01 points, or 4.6%, to end at 3,090.23., while the Nasdaq Composite advanced 384.80 points, or 4.5%, to finish at 8,952.16 — marking the biggest one-day percentage gain for both indexes since Dec. 26, 2018. Monday’s point gains were the largest on record for all three major indices. European Central Bank President Christine Lagarde, in a statement issued after U.S. market closed, said the bank was monitoring the outbreak and stood ready to take “appropriate” steps if needed. Earlier, Bank of Japan Gov. Haruhiko Kuroda said the central bank would take steps to steady markets, and bolster liquidity through short-term lending operations and asset purchases. On Friday, Fed Chairman Jerome Powell issued a rare, unscheduled statement, emphasizing the central bank’s intention to act appropriately to address the risks posed by the coronavirus. The Stoxx Europe 600 closed 0.1% higher to 375.97, with defensive utilities advancing.

Back home, the FBM KLCI closed down 15.7 points or 1.06% after cutting losses, while Asian stocks ended higher amid expectation world central banks will initiate monetary measures to mitigate Covid-19 outbreak's impact on their economies. Oil and gas (O&G)-related shares fell. At 5pm, the KLCI settled at 1,466.94, after falling to its intraday low at 1,456.08. Asian markets rose on the expectation for further stimulus, with Japan’s Nikkei logging a nearly 1% gain, while China’s CSI 300 index surged 3.3%.

Source: PublicInvest Research - 3 Mar 2020

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