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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 27 Nov 2020, 11:04 AM

 

PublicInvest Research Headlines - 16 Mar 2020

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Economy

Global: Central banks coordinate to ensure Dollar liquidity around world . The Fed and five counterparts united to ensure dollars keep flowing around the world after the coronavirus emergency sparked a rush for greenbacks. In coordinated statements, the Fed, BOJ, ECB, Swiss National Bank, Bank of Canada and BOE said they would use swap lines to support international supply of the world’s reserve currency. (Bloomberg)

US: Fed cuts rates to zero and launches massive USD700bn quantitative easing program . The Fed, saying “the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the US,” cut interest rates to essentially zero and launched a massive USD700bn quantitative easing program to shelter the economy from the effects of the virus. The new fed funds rate, used as a benchmark both for short-term lending for financial institutions and as a peg to many consumer rates, will now be targeted at 0% to 0.25% down from a previous target range of 1% to 1.25%. (CNBC)

US: Covid-19 weighs on consumer sentiment in early Feb. US consumer sentiment fell less than expected in early March, as households responded to the 2019 novel coronavirus (Covid-19) pandemic and a sharp stock market sell-off, but also hoped that any disruptions to economic activity would be temporary. (Reuters)

China: Cuts reserve requirement ratio . China's central bank lowered the reserve requirement ratio for qualified banks in order to shore up the economy hit by the outbreak of coronavirus epidemic. To improve liquidity and pushdown borrowing costs, the PBOC reduced the reserve requirement ratio, or RRR, by 50-100 bps for qualifying banks. This was the second cut in RRR this year. (RTT)

Japan: BoJ strengthens steps to ensure financial market stability . The BoJ said it will provide ample liquidity and ensure stability in the financial markets amid high volatility triggered by coronavirus outbreak fears. Taking into account the rapid fall in liquidity in the bond market, the BoJ conducted unscheduled outright purchase of Japanese government bonds (JGBs). The bank said it will conduct additional outright purchases as needed. BoJ is set to buy JPY200bn of five to ten year JGBs. (RTT)

Hong Kong: Cuts benchmark interest rate, following fed’s move . The Hong Kong Monetary Authority (HKMA) reduced its benchmark interest rate, following the Fed’s move. The HKMA lowered its base rate by 64 bps to 0.86%, hours after the Fed’s 100 bps cut. (Bloomberg)

Markets

DRB-Hicom (Outperform, TP: RM2.80): China State Construction Engineering seeks RM129.7m claims. China State Construction Engineering (M) SB (CSCE) has filed a RM129.7m statement of claim against DRB-Hicom at the Asian International Arbitration Centre relating to a development and infrastructure contract in Kuala Lumpur. The arbitration was initiated by CSCE, a subcontractor of the project pertaining to a dispute related to contracts awarded by its 51%-owned subsidiary Media City Ventures SB. DRB-Hicom stated that its legal advisors are reviewing the claims and will take all the necessary steps to defend against the claim and ensure all its rights are protected. (SunBiz)

Tan Chong Motor: To jointly undertake construction projects in Indochina. Tan Chong Motor Holdings has teamed up with An Tam Construction and Trading Co Ltd (Antaco Vietnam) to jointly carry out construction project activities in Indochina. With Tan Chong Motor expansion into Indochina and Myanmar, particularly Vietnam, there are series of projects, that is, extension of assembly plant, body shop, trim and chassis and new warehouses that need to be constructed to cater for the business expansion. (The Edge)

Tadmax: Sells 35% stake in Pulau Indah power plant for RM58.45m. Tadmax Resources is disposing of its 35% stake in a power plant on Pulau Indah, Selangor for RM58.45m cash. The group had inked an agreement to sell the stake in Pulau Indah Power Plant SB (PIPP) to Worldwide Holdings. PIPP is the special purpose vehicle undertaking the development of the combined-cycle gas turbine power plant with capacity of 1,200MW. The disposal is in line with the heads of agreement executed on Sept 14, 2018 with Worldwide and Korea Electric Power Corp (Kepco) which has also been endorsed by the Energy Commission. (SunBiz)

TH Heavy: Proposes acquisition of O&G engineering unit to revive financial health. TH Heavy Engineering (THHE) has signed a non-binding memorandum of understanding (MOU) with ICE Petroleum Ventures SB in relation to the acquisition of its engineering unit ICE Petroleum Engineering SB (ICE). The proposed acquisition is part of its regularisation The MOU allows the parties to negotiate exclusively and outline the salient terms in relation to the share sale agreement. (The Edge)

Notion VTec: Takes legal action against insurers to demand for additional RM12m compensation. Notion VTec has filed for a Writ of Summons and Statement of Claim for due service on AXA Affin General Insurance (AXA) and two other co-insurers, QBE Insurance (M) (QBE) and MSIG Insurance (M) (MSIG), in relation to an additional claim of RM12.2m, a sum that the insurers have refused to pay. The amount is in addition to the final sum of RM22.22m that AXA offered to Notion VTec on Jan 16 for the business interruption loss settlement in relation to a fire incident that occurred in the hard disk drive maker’s facility in Oct 2017. (The Edge)

Multi Sports: To be delisted on Wednesday. Multi Sports Holdings will be delisted from the Main Market of Bursa Malaysia on Wednesday (March 18) after Bursa Securities dismissed its appeal for an extension of time to submit its regularisation plan. The regulator has decided to de-list the company pursuant to paragraph 8.04 of Bursa's Main Market listing requirements. Upon the delisting of the company, the company will continue to exist but as an unlisted entity. (The Edge)

Market Update

In another wild trading session, US markets clawed back most of the previous day’s losses to close sharply higher last Friday as investors took heart from a series of moves by the Trump administration. 500,000 new coronavirus tests will be available next week, the Energy Department was asked to purchase oil for the US strategic petroleum reserve, the Federal Reserve said it will start buying bonds across all durations as the White House and Congress agreed to a deal on economic relief for the coronavirus outbreak. The Dow and S&P 500 surged 9.4% and 9.2% higher as the Nasdaq Composite gained 9.3%. Over the weekend, the Federal Reserve cut its benchmark rate to near zero and said it would also start buying USD700bn worth of Treasury bonds and mortgage-backed securities. European markets were also higher last Friday though still logging significant losses for the week. European Union banking regulators are delaying stress tests and easing capital rules to encourage financial institutions to continue lending. Italy is facing total shutdown meanwhile as the numbers of new infections continue to rise while UK Prime Minister Boris Johnson has said up to 10,000 in the country may be infected with the virus. Italy’s FTSE MIB and U.K’s FTSE 100 jumped 7.1% and 2.5% higher. France’s CAC 40 and Germany’s DAX gained 1.8% and 0.8%. Asian markets attempted dramatic comebacks though some key benchmarks still ended lower on the day. Australia’s ASX 200 recovered from a near-8% drop to end 4.4% higher. The Nikkei 225 fell 6.1%, though coming back from a 10% loss earlier on. The Shanghai Composite and Hand Seng indices were 1.2% and 1.1% lower.

WCT Holdings has been ordered to pay a total of 132.54million riyals (RM152.7m) following an unfavourable final award ruling in an arbitration case ordered by the Court of Arbitration of the International Chamber of Commerce. Supermax Corporation is buying a five-acre piece of industrial land in Klang for RM20m for future expansion of its manufacturing capacity.

Source: PublicInvest Research - 16 Mar 2020

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