PublicInvest Research

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


PublicInvest Research Headlines - 18 Mar 2020

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Global: S&P predicts recession this year, warns of downside risks . The global economy is set to see a recession this year due to the severe economic shock caused by the coronavirus, or Covid-19, and the risks remain on the downside, S&P Global said. "As the coronavirus pandemic escalates and growth heads sharply lower against a backdrop of volatile markets and growing credit stress, we now forecast a global recession this year, with 2020 GDP rising just 1.0% -1.5%," S&P's global chief economist Paul Gruenwald said. "The risks remain firmly on the downside." The Chinese economy was hit much harder than projected, though a tentative stabilization has begun, S&P said citing initial data. Severe impact is seen in Europe and the US as containment measures such as social distancing and travel bans are set to lead to a demand collapse and hence, economic activity is expected to be sharply lower in the second quarter, the rating agency said. (RTT)

US: Trump pushes USD1.2trn stimulus, USD1,000 checks in two weeks . The Trump administration is discussing a plan that could amount to as much as USD1.2trn in spending -- including direct payments of USD1,000 or more to Americans within two weeks -- to blunt some of the economic impact of the widening coronavirus outbreak. Treasury Secretary Steven Mnuchin pitched USD250bn in checks to be sent at the end of April with a second set of checks totaling USD500bon four weeks later if there’s still a national emergency, according to a person familiar with the matter. “Americans need cash now, and the president wants to give cash now. And I mean now, in the next two weeks,” Mnuchin. “It is a big number,” Mnuchin said. “This is a very big situation in this economy, we put a proposal on the table that would inject USD1trn into the economy.” The administration had been discussing a total aid package of USD850bn, but discussions later included spending as much as USD1.2trn, according to people familiar with the matter. (Bloomberg)

US: Business inventories show modest decrease in Jan . A report released by the Commerce Department showed a modest decrease in business inventories in the US in the month of January. The Commerce Department said business inventories edged down by 0.1% in Jan after coming in unchanged in Dec. The slight drop in inventories matched economist estimates. The modest decrease in business inventories was partly due to a continued decline in wholesale inventories, which fell by 0.4% in January after slipping by 0.3% in December. Manufacturing inventories also dipped by 0.1% in Jan after climbing by 0.4% in Dec, while retail inventories were unchanged after edging down by 0.1% in the previous month. (RTT)

UK: Employment at record high . The UK employment increased to a record high and the unemployment rate also advanced even before the economy faced the impact of coronavirus epidemic, data published by the Office for National Statistics showed. The employment rate rose 0.3% points from the previous quarter to a joint record high of 76.5% in three months to Jan. The number of people in work grew to a record 32.99m as job creation rose by 184,000 from a quarter ago. However, the jobless rate gained 0.2% points from the preceding quarter to 3.9%. The rate was largely unchanged from a year earlier, the ONS said. This was above the forecast of 3.8%. (RTT)

Japan: Industrial production increases in Jan. Japan industrial production rose in Jan, data from the Ministry of Economy, Trade and Industry showed. Industrial production rose a seasonally adjusted 1.0% MoM in Jan. Economists had expected a growth of 0.8%. On a monthly basis, shipments rose 0.6% in Jan and inventories decreased 1.6%. The inventory ratio gained 1.6%. On a yearly basis, industrial production declined 2.3% in Jan. Further, data showed that capacity utilization rose 1.1% on month in Jan, and dropped 3.9% from a year ago. (RTT)

Hong Kong: Jobless rate highest in over 9 years. Hong Kong's jobless rate rose during the Dec to Feb period to its highest level in over nine years, the Census and Statistics Department said. The jobless rate increased to 3.7% in during Dec from Feb from 3.4% during the Nov to Jan. The latest unemployment rate was the highest in more than nine years. However, the number of unemployed persons increased to 134,100 during the three months ended in February from 122,300 in the previous three months. "The labour market deteriorated sharply, as the COVID-19 epidemic caused severe disruptions to a wide range of economic activities and dampened economic sentiment," the Secretary for Labour and Welfare Law Chi-kwong said. (RTT)


Kumpulan Jetson: Bags RM79m job to construct education institution. Kumpulan Jetson has been awarded a RM78.93m contract by Asia Pacific University SB for the construction of a private higher education institution. The company’s wholly owned subsidiary Jetson Construction SB has accepted the contract, which is expected to be completed by June 30, 2021. The contract is not expected to have a material effect on the net assets and gearing of Jetson for the financial year ending Dec 31, 2020. The contract is expected to contribute positively to the earnings and EPS of Jetson for the FYE Dec 31, 2020. (The Edge)

Kelington: Sues Singapore subcontractor for RM19.45m. Kelington Group’s wholly owned subsidiary Kelington Engineering (S) Pte Ltd (KES) had served a notice of arbitration against its subcontractor for alleged breach of contract. KES is claiming for total compensation of SGD6.37m (RM19.45m) from Mutiara (FE) Pte Ltd, as back charges and liquidated damages as well as scope deductions incurred to rectify defects and non-compliant works. Mutiara was engaged by KES under two separate sub-contracts for a project in Singapore. The company will make the necessary announcements on material development from time to time. (The Edge)

MTAG: Cancels proposed land buy in Johor to build plant. MTAG Group has called off its proposed acquisition of two plots of land in Plentong, Johor to build its new manufacturing plant. The land is no longer considered suitable to construct its plant, due to differing soil and earth conditions. It will seek the full refund of the RM491,191 deposit paid to the vendor. The company had proposed to buy the two pieces of freehold industrial land, spanning 4.9 hectares (12.1 acres) collectively, for RM24.56m in Jan. (The Edge)

Poh Kong: Shines with 57.6% jump in 2Q net profit. Poh Kong Holdings posted a 57.6% jump in net profit to RM10.64m for its 2Q ended Jan 31, 2020, as the uptrend in gold prices improved operating profits. Revenue for the quarter however, fell 8% to RM252.05m on a decrease in demand for gold jewellery products. For the cumulative six-month period, the group saw an 88.8% rise in net profit to RM18.73m while revenue dropped 14.1% to RM457.05m. (SunBiz)

Rubber Gloves (Overweight): Gloves players ramp up production amid control order - MARGMA. Malaysia’s rubber glove producers will further ramp up production to cater to the requirement for protective medical gloves despite the movement control order from March 18 to March 31, according to the Malaysian Rubber Glove Manufacturers Association (MARGMA). MARGMA and its members play a significant role in providing essential protective gear during this pandemic as Malaysia is the leading producer of medical gloves, supplying almost 65% of global demand. (SunBiz)

Retail: Impact of Covid-19 on retail sales worse than expected. Malaysian retail industry is expected to suffer a decline of 3.9% during the 1Q, compared with the same period in 2019, which is worse than the average estimate of a 0.4% growth. Retail Group Malaysia is unable to establish the likely retail industry growth rate for 2020 at the time of preparing the report. This is because of the ongoing and unpredictable changes relating to the Covid-19 outbreak and the new ruling government policies. The last time the retail industry recorded negative growth was during the first year of the Asian financial crisis. (SunBiz)

Market Update

The FBM KLCI might open higher today as US stocks rebounded Tuesday, helped by the White House backing an USD850bn federal stimulus plan and a Federal Reserve move to backstop the commercial paper market by providing short term funding to businesses hit by the coronavirus pandemic. The recovery came a day after the Dow Jones Industrial Average suffered its worst one day fall since the 1987 market crash as governments in the US and Europe shut down significant amounts of economic activity in an attempt to slow the pandemic that originated in China in January. The Dow closed 1,048.79 points, 5.2%, higher, at 21,237.31, after briefly dipping below the key 20,000 threshold mid-morning while the S&P 500 index added 143.06 points, 6%, to close at 2,529.19. The Nasdaq Composite Index closed up 430.19 points or 6.2%, at 7,334.78. The Stoxx Europe 600 index closed 2.3% higher after falling nearly 5% a day ago.

Back home, the FBM KLCI cut losses to close down 24.05 points or 1.88% at 1,256.58 on bargain hunting for beaten down Malaysian shares as investors weighed the economic impact of the Covid-19 pandemic. The regional markets finished mixed. The Hang Seng gained 0.87% and the Nikkei 225 rose 0.06%. The Shanghai Composite lost 0.34%.

Source: PublicInvest Research - 18 Mar 2020

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