PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 26 Jan 2021, 12:09 PM


PublicInvest Research Headlines - 14 Apr 2020

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Global: World Bank sees 'huge willingness' to suspend debt payments for poorest countries. World Bank MD Axel van Trotsenburg said the Group of 20 major economies and the Group of Seven (G7) had been largely supportive of a call by the World Bank and IMF for a temporary halt in debt payments. “Everybody understands that we need to help the poorest countries. There is a huge willingness - as in nobody is questioning that, absolutely nobody,” he said. “I think we are in a good place to move forward.” Finance officials from the G7 and G20 countries are due to discuss the debt relief issue this week. Two sources familiar with the process said details were still being finalized, but they expected the G20 countries to back a temporary suspension of debt payments. (Reuters)

US: Deficit to soar to record USD3.8trn in 2020, budget watchdog group says . A steep economic downturn and massive coronavirus rescue spending will nearly quadruple the fiscal 2020 US budget deficit to a record USD3.8trn, a staggering 18.7% of US economic output, a Washington-based watchdog group said on Monday. Releasing new budget estimates based on spending mandated by law, the Committee for a Responsible Federal Budget (CRFB) also projected that the fiscal 2021 deficit would reach USD2.1trn in 2021, and average USD1.3trn through 2025 as the economy recovers from damage caused by coronavirus-related shutdowns. The estimates follow the US Treasury’s report on Friday of a USD744bn budget deficit in the six months through March 30, which included minimal impact from the outbreak of the new coronavirus. Officials said significant budget impacts from spending and reduced revenues would appear in April’s budget results. (Reuters)

US: Three areas economists are watching to gauge recovery’s strength. When it comes to predicting or limiting the near-term wreckage that Covid-19 will visit upon the US, economists and policy makers can do little to help. What happens after the virus passes is a different story. The strength or weakness of the country’s rebound, whenever that comes, will be heavily influenced by actions taken today and over the coming months. Economists pointed to three crucial areas they say will matter most. For one, the speed with which small and mid-sized business aid finds its mark. A second, the level of support for states and cities later this year. And third, something -- anything -- to restore public confidence in getting back to life, and business, as usual. A clean, so-called V-shaped recovery may be unrealistic, but effective steps on each of those fronts could help make the difference between an energetic bounce back and a recession that is long-lasting, or even catastrophic. (Bloomberg)

US: It's my decision when to reopen economy, says Trump. President Donald Trump said on Monday it was his decision when to reopen the US economy, not that of state governors, but legal experts disagree and governors are going their own way. Trump last month extended federal “stay at home” guidelines through April and has made clear he wanted the economy to reopen as soon as possible after the coronavirus outbreak that has killed nearly 22,000 Americans and cost millions of jobs. However, he also has said he would listen to US health experts and others in making any recommendations. “It is the decision of the President, and for many good reasons. With that being said, the Administration and I are working closely with the Governors, and this will continue. A decision by me, in conjunction with the Governors and input from others, will be made shortly!” Trump wrote on Twitter. (Reuters)

China: Recovery in trade far from sight as global outlook dims. The contraction in China’s foreign trade is set to continue through the 2Q, as global demand remains depressed by measures to curb the ongoing coronavirus outbreak. Both exports and imports are forecast to have slumped 10% or more in March, with data due Tuesday expected to show a continuation of the declines seen in the first two months of the year. The outlook is grim too, with the World Trade Organization now saying that 2020 could see the worst collapse in international trade since the Great Depression. China’s shipments plateaued in 2019 due to the trade war with the US and slowing global growth, and the virus outbreak then caused the weakest start for any year since 2012 with exports dropping 17.2% from a year earlier in the first two months. Trading partners like the US potentially face many more months of shutdowns before consumption and manufacturing can return to normal. (Bloomberg)

India: Inflation slows in March. India's consumer price inflation slowed in March, data from the National Statistical Office showed Monday. Consumer price inflation eased to 5.9% from 6.6% in Feb. However, in the same period last year, consumer prices rose only 2.8%. Likewise, food price inflation slowed to 8.7% from 10.8% a month ago. Food prices advanced 0.3% in March 2019. On a monthly basis, consumer prices fell 0.3% and food prices were down 1.3% in March. The Reserve Bank of India forecast inflation to ease to 4.8% in the June quarter. (RTT)

India: RBI ready to adopt any tools to mitigate Covid-19 impact, says governor . The Reserve Bank of India will not hesitate to use conventional and unconventional tools to mitigate the impact of Covid-19, and revive growth and preserve financial stability, Governor Shaktikanta Das said. According to the minutes of the monetary policy committee meeting held on March 24, 26 and 27, the governor said it is comforting that the macroeconomic fundamentals of the Indian economy continue to be sound compared with the conditions that prevailed in the aftermath of the global financial crisis. At the meeting, the committee had reduced the repo rate by 75 basis points and adjusted the marginal standing facility and the bank rate. The cash reserve ratio was lowered by 100 basis points. The Covid-19 pandemic is an invisible assassin which needs to be contained quickly and the situation currently facing the country is unprecedented, the governor noted. (RTT)


TM (Neutral, TP: RM4.00): Deploys 5G base stations at two Covid-19 quarantine centres. Telekom Malaysia (TM) has deployed its 5G base stations at two Covid-19 quarantine centres, namely, Malaysia Agro Exposition Park (MAEPS) in Serdang and Institut Latihan Kementerian Kesihatan Malaysia in Sungai Buloh, for frontliners, medical teams and patients to enjoy mobile broadband services over 5G connectivity. This corporate responsibility initiative is an extension of its recent 5G demonstration project in Langkawi and Subang Jaya which utilises a similar 5G core network setup. (SunBiz)

CCK (Outpeform, TP: RM0.79): Proposes 1.25sen dividend. CCK Consolidated has proposed a first and final dividend of 1.25sen a share for the financial FY19. The entitlement dates and payment dates for the dividend would be announced at a later date. The poultry firm recorded a net profit of RM33.62m for FY19, up 20.52%. EPS rose to 5.34sen from 4.23sen. Revenue rose 5.87% to RM659.74m from RM623.17m in FY18. (The Edge)

K-One: Ventures into ventilator production amid Covid-19 pandemic. K-One Technology has joined the growing number of companies venturing into making products that are essential in the fight against the Covid-19 pandemic. The group noted that in the last few years, it had been focusing increasingly on the medical and healthcare industry. It has recently obtained open source design files of a ventilator model released to interested parties by a multinational in the industry. (The Edge)

Ikhmas Jaya: EPF sues over payment arrears. The Employees Provident Fund (EPF) is suing a subsidiary of Ikhmas Jaya Group to recover RM2.08m in unpaid contributions. Ikhmas Jaya said the suit was in respect of arrears from January to March 2019 and from May to July 2019. On top of that, EPF is claiming dividend and late payment charges. Ikhmas Jaya said its board is negotiating with EPF for settlement via instalments. However, it said the claim is not anticipated to have any significant financial and operational impact on its results for the FYE20, as the amount has been accrued for in the financial statements. (The Edge)

TA Global: To temporarily close some hotels worldwide. TA Global will be temporarily closing a number of its hotels worldwide, as a combined result of the Covid-19 pandemic and various restricted movement initiatives instated by governments in its respective operating markets. The temporary closure of the hotels is one of the measures to protect the health of guests and employees, support social distancing and control costs. TA Global said that it would not be possible to quantify or determine the extent of the impact on the group’s hospitality business and financial position. (SunBiz)

Oil and Gas (Neutral): Petronas says risks of project delays rising, aims to maintain local capex. Malaysian state energy giant Petroliam Nasional (Petronas) said the risks of delays to some of its projects were rising due to prolonged coronavirus-related lockdowns around the world. Petronas said in an email that it would try to maintain its domestic spending for this year. The company forecast 2020 domestic capital expenditure of RM26bn to RM28bn, higher than last year. (SunBiz)

Market Update

The FBM KLCI might open flat today as the Nasdaq eked out a 0.5% gain Monday, while other major U.S. indices trimmed losses as investors prepared for a bleak first-quarter earnings season that will see results and outlooks hammered as a result of the COVID- 19 pandemic. The Dow Jones Industrial Average slumped 328.60 points, or 1.4%, to finish at 23,390.77, while the S&P 500 dropped 28.19 points, or 1%, to close at 2,761.63. The Nasdaq Composite turned positive in late trade, gaining 38.85 points, or 0.5%, to end at 8,192.42, its third straight session of gains. European markets remained closed Monday for the Easter holiday. Stocks were not helped much by crude prices, which put in a mixed performance late Sunday and Monday. On Sunday, the Organization of the Petroleum Exporting Countries, Russia and the U.S. completed a deal that would see global output cut by 9.7 million barrels a day beginning in May. After an initial surge, West Texas Intermediate crude for May delivery lost 35 cents on Monday, or 1.5%, to settle at $22.41 a barrel.

Back home, the FBM KLCI closed down 1.47 points or 0.1% at 1,356.03, while rubber glove manufacturers’ share price gained, following global updates on the rising number of Covid-19 pandemic cases and higher death toll from the outbreak. The regional stocks traded lower, with Japan’s Nikkei 225 index down 2.3% to end at 19,058.15. The Shanghai Composite Index gave up 0.5% to close at 2,782.08, while the Kospi in South Korea shed 1.9% to finish at 1,883.69.

Source: PublicInvest Research - 14 Apr 2020

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