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

 

PublicInvest Research Headlines - 27 Mar 2020

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Economy

US: GDP growth unrevised at 2.1% in 4Q. A report released by the Commerce Department showed the increase in US GDP in the 4Q was unrevised from the previous estimate. GDP increased by 2.1% in the 4Q, unchanged from the 3Q, as a downturn in imports and an acceleration in government spending were offset by a larger decrease in private inventory investment and a slowdown in consumer spending. (RTT)

US: Weekly jobless claims soar to record 3.28m. The number of Americans filing claims for unemployment benefits surged to a record of more than 3m last week as strict measures to contain the coronavirus pandemic brought the country to a sudden halt, unleashing a wave of layoffs that likely ended the longest employment boom in US history. Initial claims for unemployment benefits rose 3m to a seasonally adjusted 3.28m in the week ending March 21, eclipsing the previous record of 695,000 set in 1982. That also dwarfed the peak of 665,000 in applications during the 2007-2009 recession, during which 8.7m jobs were lost. (Reuters)

EU: M3 growth accelerates; credit to private sector rises. Eurozone money supply grew at a faster pace and credit to private sector logged a steady growth in Feb, the European Central Bank reported. Annual growth rate of broad monetary aggregate M3 increased to 5.5% in Feb from 5.2% in Jan. Likewise, the narrow measure M1 comprising currency in circulation and overnight deposits, grew at a faster pace of 8.1% after rising 7.9% a month ago. Credit to general government fell 2.0% in Feb, while the annual growth in credit to the private sector remained unchanged at 3.4% in Feb, data showed. (RTT)

EU: Employment barometer hits lowest since Jan 2010 - Ifo. The Ifo economic institute’s German employment barometer fell in March to its lowest level since Jan 2010, adding that the drop is the biggest since records began in 2002. “German companies are putting the brakes on personnel planning,” Ifo expert Klaus Wohlrabe said of the data, which the Munich institute calculates monthly for Handelsblatt based on the employment intentions of around 9,000 companies. A rise in unemployment will be unavoidable despite short-time work, referring to a governmentbacked scheme that allows firms to put workers on shorter hours. (Reuters)

UK: BOE retains rate, QE. The Bank of England retained its record low interest and asset purchase programme, after easing monetary policy at an unscheduled meeting last week. The Monetary Policy Committee voted unanimously to maintain the interest rate at 0.1% and the quantitative easing (QE) at GBP645bn. At a special meeting on March 19, the bank had reduced its bank rate by 15 basis points and expanded bond purchases by GBP200bn. The bank had reduced the rate twice this month. The MPC said it can expand asset purchases further if needed. (RTT)

UK: BOE ready to buy more bonds if needed to help limit coronavirus impact. The Bank of England held off from taking fresh action to stop the coronavirus crisis from plunging Britain’s economy into a long recession, but said it was ready to ramp up its bond-buying program further if needed. The BoE said that while it was not yet able to assess the likely scale of the hit, many firms were already describing it as worse than during the 2008 financial crisis. If needed, the MPC can expand asset purchases further, adding it would guard against an unwarranted tightening in financial conditions. (Reuters)

China: Imports of some products affected by coronavirus epidemic. China’s imports of products such as electric machinery, transport equipment and energy and chemical products have been affected by the global spread of the coronavirus epidemic, the commerce ministry said. Ministry officials also said during a weekly online briefing that China will encourage local governments to roll out measures to support the sales of cars and new energy vehicles. China will also further expand imports in areas including energy and agriculture. (Reuters)

Markets

Sunway Construction: SunCon JV bags RM508m highway job from India. Sunway Construction Group’s JV (SunCon) has secured a highway contract worth RM508m in Tamil Nadu. It said Sunway Construction SB-RNS Infrastructure Ltd accepted the letter of award from the National Highways Authority of India. The project consists of developing a new road and widening of the existing road to four lanes on a 36.75km highway stretch in Tamil Nadu. “The project will be operated under the hybrid annuity model (HAM), where NHAI will pay 40% of the project cost during the construction period while the remaining 60% will be paid over a period of 15 years as fixed annuity amount,” it said. The letter of award also includes a 15-year operations and maintenance contract which will bring about an additional RM4m per annum. (Starbiz)

Pestech: Bags RM32m Cambodian substation project . Pestech International has bagged a RM31.8m contract for a project in Cambodia, which entails works for the 230/11kV Okvau Transmission Substation for the Okvau Gold Mine. Pestech said the project is the first gold mine transmission substation asset to be undertaken by its subsidiary Pestech (Cambodia) Plc and had commenced on March 1 and will be completed within 12 months of commencement. (The Edge)

Tadmax: Worldwide seeks to up stake in Tadmax’s power plant to 75%. Worldwide Holdings plans to acquire an additional 40% stake in Tadmax Resources’s RM Pulau Indah power plant project, on top of the 35% stake it already owns. Tadmax said it received a letter dated March 16 from Worldwide expressing interest to acquire the additional 40% equity interest in the project company, Pulau Indah Power Plant SB (PIPP). Earlier this month, Tadmax announced that it has inked a share sale agreement (SSA) to transfer the 35% stake in PIPP to Worldwide for RM58.45m. However, it has not inked an SSA with Korean Electric Power Corp (Kepco) for the other 25% stake. (The Edge)

Uchi Tech: Warns of lower revenue due to Covid-19 . Uchi Technologies has issued a warning that it expects a “low double-digit revenue in US dollar” in FY20 as the Covid-19 fallout is wreaking havoc globally. It said the lower revenue would be when comparing with FY19 as its customers had reduced their demand due to the fallout from the Covid-19. “The group will continue to closely monitor the latest developments and take appropriate measures to mitigate any upcoming risks, as well as provide updates on any further developments. “On the other side of the world, the countries where our customers are located are also experiencing similar treatment as part of virus containment measures,” it said, adding the restrictions and lower demand would impact its FY20 revenue. (Starbiz)

Eco World International: 1Q net profit slumps by 95.61%. Eco World International’s (EWI) net profit for the 1Q ended Jan 31 slumped by 95.61% in the absence of higher sales registered a year prior. Net profit for the quarter amounted to RM5.19m against RM118.29m in the same quarter last year. EWI recorded revenue of RM492.69m from its JV projects in 1QFY20 versus RM852.28m in the corresponding quarter last year. Its effective share of revenue from the JV projects amounted to RM358.72m against RM629.95m in 1QFY19. (The Edge)

Market Update

The FBM KLCI might end the week with a positive note after US stocks roared higher Thursday, closing up for the third day in a row despite a report from the Labor Department that showed unemployment claims soared to a record 3.28 million last week, as the coronavirus pandemic shut down businesses across the nation. Investors took some comfort from the overnight passage of a historic USD2trn economic stimulus bill by the Senate, putting it one step closer to being signed into law to mitigate the economic fallout from the outbreak. The Dow Jones Industrial Average closed 1,351.62 points, or 6.38%, higher, at 22,552.17, while the S&P 500 gained 154.51 points, 6.24%, to touch 2,630.07. The Nasdaq Composite Index was 413.24 points or 5.6%, higher, closing at 7,797.54. In other economic news, US gross domestic product for the fourth quarter was confirmed at 2.1%, and the February goods trade gap narrowed to USD59.9bn, the government said. The Stoxx Europe 600 closed 2.6% higher.

Back home, the FBM KLCI managed to close higher for the third consecutive day with investors in trading mode ahead of the new COVID-19 stimulus package announcement by Putrajaya today. The benchmark index had dipped into the red in the morning session, followed by a swift rebound that tapered off at the final minutes of trading, to end the day 3.59 points or 0.27% higher at 1,328.09. In the region, shares ended mostly lower. Japan’s Nikkei 225 closed down 4.51%, South Korea’s Kospi erased earlier gains to end 1.09% lower, while Hong Kong’ HSI lost 0.74%.

Source: PublicInvest Research - 27 Mar 2020

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