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PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 25 Nov 2020, 10:24 AM

 

PublicInvest Research Headlines - 17 Mar 2020

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Economy

Global: IMF chief calls for more fiscal stimulus to limit coronavirus damage. IMF managing director Kristalina Georgieva called on governments to take coordinated fiscal and monetary stimulus measures to stop the coronavirus from causing long-term economic damage. The IMF stands ready to mobilise its USD1trn in lending capacity to aid its 189-member countries, she said. “As the virus spreads, the case for a coordinated and synchronized global fiscal stimulus is becoming stronger by the hour,” Georgieva said. The IMF chief suggested that coordinated fiscal action on the scale of the 2008-2009 financial crisis may be necessary. (Reuters)

US: New York manufacturing activity unexpectedly contracts in March. New York manufacturing activity unexpectedly contracted in the month of March, according to a report released by the Federal Reserve Bank of New York. The New York Fed said its general business conditions index plunged to a negative 21.5 in March from a positive 12.9 in Feb, with a negative reading indicating a contraction in regional manufacturing activity. The sharp decline by the headline index came as the new orders index plummeted to a negative 9.3 in March from a positive 22.1 in Feb and the shipments index tumbled to a negative 1.7 from a positive 18.9%. (RTT)

EU: Could muster EUR28bn-40bn immediately to support firms hit by epidemic — EIB . The EU could provide EUR28-40bn immediately to support small and medium-sized companies hit by the effects of the coronavirus pandemic, the European Investment Bank said to EU finance ministers. But such help would not be enough to calm financial markets, the letter said, calling for a "significant additional guarantee" from EU governments that the EIB could use to ensure open access to finance for small and medium sized companies. The re-prioritising and re-purposing of money already in the EIB pipeline and redirecting some funds now used as a guarantee for the EU-leveraged investment scheme EFSI would together generate EUR28bn, the EIB said. (Reuters)

UK: BOE new chief Bailey promises 'prompt action' on Covid- 19 shock. The UK central bank will act promptly again to support the economy amid the shock caused by the spread of the coronavirus, or Covid-19, BOE's new chief Andrew Bailey said. The central bank was "very keen" to ensure that the temporary damage to the UK economy did not permanently impair long-term growth, Bailey said. "That's why you saw prompt action last week, that's why you will see prompt action again when we need to take it, and the public can be assured of that," he said. The BOE said it will pump more USD funds to the financial system at cheaper rates. (RTT)

Japan: BOJ joins peers to fight coronavirus fallout, ramps up risky asset buying. The BOJ eased monetary policy on Monday by pledging to buy risky assets such as exchange-traded funds (ETF) at double the current pace, joining global central banks in combating the widening economic fallout form the coronavirus epidemic. The central bank also decided to create a new loan programme to extend one-year, zero-rate loans to financial institutions in an effort to boost lending to firms hit by the virus outbreak. "Japan's economic activity is likely to remain weak for the time being, mainly affected by the coronavirus outbreak," the BOJ said. At the meeting, the BOJ decided to buy ETFs at an annual pace of around USD112.55bn, double the previous amount, until markets stabilise from the recent rout. (Reuters)

Japan: Business mood plunges to decade lows on coronavirus woes. Japanese business confidence plunged to decade lows in March as the spreading coronavirus outbreak stoked fears of a global recession and sent stock markets tumbling, the Reuters Tankan survey showed on Tuesday. The monthly poll suggested that the BOJ’s tankan quarterly survey due April 1 will show a sharp deterioration in business sentiment both at manufacturers and non manufacturers. The souring business mood could derail capital spending, one of the few bright spots in the Japanese economy. That will heap pressure on the government and the central bank to deploy more stimulus measures. (Reuters)

Korea: Bank of Korea cuts key rate at emergency meeting . South Korea's central bank lowered its interest rate to a record low and unveiled measures to strengthen liquidity in the financial market, on Monday. At an unscheduled meeting, the Monetary Policy Board of the Bank of Korea decided to cut the base rate by 50 bps to 0.75%. The rates will take effect on March 17. The board assessed that further monetary policy accommodation is required to ease volatility in the financial markets and reduce the effects on future economic growth and inflation. This action is expected to strengthen the incentives for banks to lend to SMEs, alleviating the interest burden of SMEs and improving their financial conditions. Further, the board broadened the eligible collateral for open market operations to include bank financial debentures that are not credit risk-free. (RTT)

Markets

Daibochi: Sells off stake in property development associate. Daibochi is disposing of its entire 36.32% stake in property development and investment company Skyline Resources (M) SB for RM10m, to focus on its core business. The stake is being sold to Datuk Wira Wong Soon Lim and Jaymuda Resources SB (JRSB). The proposed disposal would enable the group to focus on its core competency of converting and further expansion of its business, adding proceeds from the disposal will be used as capital expenditure within the year. The total original cost of investment in Skyline is approximately RM22.5m. (The Edge)

Yinson: JV gets RM528m charter contract with PTSC. Yinson Holdings said its Vietnam JV PTSC Asia Pacific Pte Ltd has entered into a bareboat charter contract worth USD122.87m (RM528.34m) with Petrovietnam Technical Services Corp (PTSC) commencing from July 1, 2017 to June 30, 2021. The contract replaces the bareboat charter interim contract it had entered with PTSC on Jan 15. PTSC AP is a 49:51 JV between it and PTSC. Parties will have the right to terminate the contract subject to a 90-day notice period. Subject to the mutual agreement of the parties, the contract may be further extended thereafter. (The Edge)

Barakah: Files RM42.7m counter claim against Petronas’ unit. Barakah Offshore Petroleum has filed a statement of defence and counterclaim against the unit, PRPC Utilities and Facilities SB (PRPC). Barakah is seeking RM42.7m from PRPC, comprising what it alleged are progress claims or payments owed by PRPC over work done, together with an RM8.41m performance bond that it said PRPC has wrongfully demanded. There had been no alleged failure by the package contractor, namely Barakah's unit PBJV Group SB, as PRPC had alleged in the latter's statement of claim when it initiated the lawsuit against Barakah. (The Edge)

PetDag, PetChem: Businesses not affected by fire at Pengerang Refinery Complex. Petronas Dagangan and Petronas Chemicals Group say the fire incident that occurred within the Pengerang Refinery Complex last night has had no impact on their businesses. The fire and explosion occurred at one of the facilities owned by Pengerang Refining and Petrochemical (PRefChem). The incident occurred at the Diesel Hydro Treating Unit (DHT) within the Pengerang Refinery Complex at 10.39pm last night. (The Edge)

Brahim’s: Granted extension to submit regularisation plan by Aug 27. PN17 company Brahim’s Holding has been granted an extension of time by Bursa Malaysia until Aug 27 for the submission of its regularisation plan. However, if the company’s shares will be suspended and delisted if it fails to submit the regularisation plan by August 27 or fails to obtain approval for the plan; or fails to implement the plan within the time frame or extended time frame. Brahim’s lapsed into the PN17 status on Feb 28, 2019 after its shareholder equity fell below the 25% threshold. (SunBiz)

SYF: Sells Semenyih freehold plot for RM33.65m. SYF Resources is selling a parcel of freehold land it owns in Semenyih for RM33.65m, which will book it an estimated net gain of RM1.37m. The parcel, which measures 3.47ha and is held under Giat Armada SB, is being sold to Pacific Parkland SB (PPSB). In light of uncertain economic conditions, the proposed disposal provides an opportunity to dispose part of the group’s land bank in order to reduce gearing and realise profit. (The Edge)

Market Update

The FBM KLCI might see another selloff today as the Dow ended nearly 3,000 points lower on Monday, capping an ugly session for Wall Street that saw circuit breakers temporarily halt trading for 15 minutes, amid rising fears that fresh Federal Reserve stimulus won’t be enough to combat the threat of lost jobs and wages from the coronavirus outbreak. The Dow Jones Industrial Average plunged 2,997.10 points, or 12.9%, to settle at 20,188.52, while the S&P 500 index declined 324.89 points, or 12%, to end at 2,386.13, and the Nasdaq Composite Index shed 970.28 points, or 12.3%, to finish at 6,904.59. In economic data, the Empire State manufacturing index plunged 34.4 points to a reading of negative 21.5 in March, a record decline. European stocks were crushed Monday as economies shut down; the Stoxx Europe 600 index slumped 4.9%, but ended off session lows.

Back home, the KLCI closed down 64.12 points or 4.77% at 1,280.63 after plunging in afternoon trades with world equities as investors evaluated the effectiveness of global central banks’ monetary policies to mitigate the economic impact of the Covid-19 pandemic and after China reported its latest industrial output numbers, which fell below market forecast. The regional markets closed down substantially with US equity futures after the US emergency rate cut. Japan’s Nikkei 225 closed down 2.46%, South Korea’s Kospi fell 3.19%, Hong Kong’s Hang Seng dropped 4.03% while Australia’s S&P/ASX 200 was down 9.7%

Source: PublicInvest Research - 17 Mar 2020

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