PublicInvest Research

Author: PublicInvest   |   Latest post: Mon, 18 Jan 2021, 11:45 AM


PublicInvest Research Headlines - 2 Apr 2020

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US: Manufacturing activity shows modest contraction in March. With the coronavirus outbreak weighing on demand, the Institute for Supply Management released a report showing a contraction in US manufacturing activity in March. The ISM said its PMI dipped to 49.1 in March after edging down to 50.1 in Feb. While a reading below 50 indicates a contraction in manufacturing activity, economists had expected the index to show a steeper drop to 45.0. The modest decrease by the headline index came as the new orders index tumbled to 42.2 in March from 49.8 in Feb, hitting its lowest level since March of 2009. The production index also fell to 47.7 in March from 50.3 in Feb, while the employment index slid to 43.8 from 46.9 in the previous month. The report also said the prices index plunged to 37.4 in March from 45.9 in Feb, indicating the fastest decrease in prices since Jan of 2016. (RTT)

US: Private sector employment edges lower ahead of full impact of coronavirus. Reflecting a significant loss of jobs at small businesses, payroll processor ADP released a report showing a modest decrease in private sector employment in the US in March. ADP said private sector employment fell by 27,000 jobs in March after jumping by a downwardly revised 179,000 jobs in Feb. Economists had expected private sector employment to plunge by 150,000 jobs compared to the addition of 183,000 jobs originally reported for the previous month. The drop was much smaller than expected but still reflects the first decrease in private sector employment since Sept of 2017. ADP also noted its national employment report, or NER, only utilizes data through the 12th of the month, which is the same period the Labor Department uses for its more closely watched monthly jobs report. (RTT)

EU: Factory activity crashed in March as coronavirus spread — PMI. EU manufacturing activity collapsed last month as breaks in global supply chains caused by measures to curb the coronavirus pandemic crushed output, and the nosedive could worsen in coming months, a survey showed. Factories, shops and schools have closed across the region amid government-imposed lockdowns, whacking demand for goods as consumers worried about job prospects rein in their spending and stay indoors. IHS Markit's final March manufacturing PMI sank to 44.5, below a flash reading of 44.8 and Feb's 49.2. The reading was the lowest since mid-2012, when the euro zone debt crisis was raging, and well below the 50- mark separating growth from contraction. An index measuring output which feeds into a composite PMI plummeted to 38.5 from 48.7, below its flash reading of 39.5 and the lowest since April 2009, in the midst of the Great Recession that followed the global financial crisis. (Reuters)

EU: Unemployment rate lowest since March 2008. EU jobless rate unexpectedly eased to its lowest level since in over a decade in Feb, just ahead of the announcement of coronavirus pandemic containment measures in several countries in the region. The jobless rate fell to 7.3%, data from Eurostat showed, while economists had expected it to remain unchanged at Jan's 7.4%. That was the lowest rate since March 2008, the agency added. In Feb 2019, the unemployment rate was 7.8%. The EU unemployment rate was 6.5%, unchanged from Feb. A year ago, it was 6.9%. The latest rate is the lowest recorded in the EU since the start of the monthly unemployment series in February 2000, Eurostat said. In Feb, a total 13.984m people were unemployed in the EU, of whom 12.047m were in the euro area. The number of persons unemployed decreased by 62,000 from the previous month in the EU and by 88,000 in the euro area. (RTT)

UK: Manufacturing contracts on Covid-19 disruption. UK manufacturing activity contracted in March due to the outbreak of the coronavirus, or Covid-19, and the subsequent mitigation efforts, the final survey data from IHS Markit showed. The IHS Markit/Chartered Institute of Procurement & Supply factory PMI fell to 47.8 in March from 51.7 in Feb. The flash estimate was 48.0. Output fell to the greatest extent since July 2012 following a similarly severe reduction in intakes of new business. The impact was also felt in the labor market and through supply chains. Manufacturers said declines in output and orders resulted from the disruption caused by the covid-19 outbreak, lower market confidence and company shutdowns. (RTT)

Asia: World Bank warns of severe economic pain in Asia Pacific due to Covid-19. Developing economies in East Asia and the Pacific are facing the prospect of a global financial shock and recession and more people are set to remain poor, thanks to the coronavirus outbreak, the World Bank said in a report. The lender urged countries to take action now including urgent investments in healthcare capacity and targeted fiscal measures such as subsidies for sick pay and healthcare to mitigate some of the immediate impacts. The report also stressed that government should ensure temporary deprivation does not translate into long-term losses of human capital. In a baseline scenario, growth in the EAP region is projected to slow to 2.1% this year from an estimated 5.8% in 2019. In a lower case scenario, the growth is forecast to plummet to a0.5%. In China, growth is projected to slow to 2.3% in the baseline and to 0.1% in the lower case scenario this year from 6.1% in 2019. (RTT)

China: Factory activity shows minimal growth in March after plunge, still in virus grip. China's factory activity improved in March after plunging a month earlier, a private survey showed, but the bare minimal growth highlighted the intense pressure facing businesses as the global coronavirus pandemic shuts down many countries. The Caixin/Markit Manufacturing PMI rose to 50.1 last month, from February's record low of 40.3, and just a notch above the 50-mark that separates growth from contraction. Analysts had expected it to rise to 45.5. The findings, which focus mostly on small and export-oriented businesses, lagged an official survey released, which showed factory activity expanded at a faster pace on a MoM basis. After widespread factory closures and travel restrictions imposed by Beijing, businesses in the country have reopened and life for millions of people has started to slowly return to normal. (Reuters)


Genting (Outperform, TP: RM5.10): Genting’s associate Landmarks suspends resort ops due to COVID-19 disruptions. Genting’s associate Landmarks has announced that it will be temporarily closing its resorts and leisure operations in Malaysia and Indonesia. This drastic decision is a direct result of the COVID-19 pandemic, which has caused serious and significant disruption to both domestic and international travels. Genting has a 27.55% stake in Landmarks. (The Edge)

Sapura Energy (Neutral, TP: RM0.18): Discussing with banks to refinance borrowings. Sapura Energy says it is in discussions with banks to refinance the oil and gas support services provider’s borrowings and that these lenders are supportive of the company’s refinancing plans. The company expects to complete the refinancing exercise this year. (The Edge)

Yinson: Terminates Ghana FPSO contract. Yinson Holding, via its Ghanaian JV, has terminated its letter of intent with Aker Energy Ghana Limited, as Aker Energy has postponed the activities under the Deepwater Tano/Cape Three Points (DWT/CTP) Petroleum Agreement and the development of the project until further notice amid the Covid-19 pandemic. The group said it will preserve its right for compensation due arising from the termination. The aforesaid termination will not have any effect on the share capital and shareholding structure of the company. (Sun Biz)

FGV: Urges palm oil ops in Sabah to continue. FGV Holdings stressed that all operations related to the palm oil industry need to be continued to avoid worse financial and social implications. This was in line with the announcement by Prime Minister recognising the industry as an essential service. FGV said it supported the concerns raised by the Malaysian Palm Oil Association (MPOA) and the Malaysian Estate Owners Association (MEOA) over the decision of Sabah state government to close oil palm operations in three additional districts in the state until 14 April. It added that the districts constituted 65% of the total 1.2m ha of cropland and 75% of production in Sabah. (NST)

Kenanga Investment Bank: Sells stripped-down Libra Invest for RM10.75m. Kenanga Investment Bank (KIBB) is selling off Libra Invest, whose assets it had stripped down for consolidation with its asset management arm towards the end of last year, for RM10.75m. The proposed disposal is expected to book KIBB a pro forma gain of RM4.21m, and is expected to be completed by the early 3QFY2020. Proceeds from the disposal will be used for the group's working capital requirement. (The Edge)

Keck Seng: US, Canada hotels close temporarily due to COVID- 19 lockdowns. Keck Seng (Malaysia), (KSM) highlighted its hotel operations located in the US and Canada have temporarily closed, following the enforcement of citywide lockdowns. The operations of DoubleTree by Hilton Hotel Alana – Waikiki Beach (Hawaii), SpringHill Suites New York Midtown Manhattan (New York) and Delta Hotels by Marriott Toronto Airport and Conference Centre (Toronto) are temporarily suspended until further notice. KSM’s Tanjong Puteri Golf Resort in Johor was also affected, but it will continue to service guests who were staying at the resort prior to the Movement Control Order (MCO) imposed by the Government. (The Edge)

Market Update

The FBM KLCI might start lower today as the US stock market on Wednesday started the second quarter nearly the same way it ended March, with bruising losses. The Dow closed 974 points, or 4.44%, lower to 20,944, the S&P 500 tumbled 114 points, or 4.41%, to 2,470.50, while the Nasdaq Composite closed 340 points, or 4.41%, lower to 7,360. European markets also finished sharply lower with shares in France leading the region. The CAC 40 was down 4.30% while Germany's DAX was off 3.94% and London's FTSE 100 was lower by 3.83%. The banking sector dragged the European market down on Wednesday, as several banks canceled dividends and suspended buybacks at the request of the Bank of England while the country tries to come to grips with its coronavirus outbreak.

Back home, the FBM KLCI closed down 28.23 points or 2.09% at 1,322.66, as the Covid-19 pandemic, which has killed more than 40,000 globally, gave no respite to world share markets. Regionally, markets ended mostly in the red with the Nikkei 225 gave away 4.50% while Hong Kong's Hang Seng lost 2.19% and China's Shanghai Composite eased by 0.57%.

Source: PublicInvest Research - 2 Apr 2020

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