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PublicInvest Research

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

 

PublicInvest Research Headlines - 4 May 2020

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Economy

US: Weekly jobless claims remain elevated as 3.84m more seek benefits. Millions more Americans filed claims for unemployment benefits last week, suggesting that layoffs were spreading to industries that were not initially directly impacted by business closures and disruptions related to the coronavirus. The Labor Department's weekly jobless claims report followed news that the economy in the first quarter suffered its sharpest contraction since the Great Recession. This ended the longest expansion in the United States' history. (Reuters)

US: Manufacturing index slumps to 11 year low in April. Manufacturing activity in the US continued to contract in the month of April, according to a report released by the Institute for Supply Management. The ISM said its PMI slumped to 41.5 in April from 49.1 in March, with a reading below 50 indicating a contraction in manufacturing activity. The manufacturing index showed a notable decrease compared to the previous month but still came in above economist estimates for a reading of 36.9. With the decline, the PMI dropped to its lowest level since hitting 39.9 in April of 2009. (RTT)

US: Consumer spending plunges 7.5% in March, reflecting virus . US consumer spending plunged 7.5% in March, reflecting the growing impact of the coronavirus pandemic as Americans complied with stay-at-home orders. The Commerce Department said that the spending decline was the sharpest monthly drop on records that go back to 1959, exceeding the previous record, a decline of 2.1% in January 1987. Personal incomes also fell sharply last month, declining by 2% with wages and salaries, the largest part of incomes, falling by 3.1% as millions of Americans started getting lay-off notices. (CNBC)

EU: Eurozone GDP could remain below 2019 level until 2022, says ECB . The euro area real GDP could remain well below the level seen at the end of 2019 until the end of 2022 under severe situation, the ECB reported. The ECB said the high uncertainty surrounding the economic impact of the COVID-19 pandemic warrants an analysis based on alternative scenarios. According to the estimate, the economy could shrink as much as 12% in severe scenario. The annual figure under the severe scenario reflects a quarterly real GDP growth reaching a trough of around -15% in the 2Q20, followed by a protracted and incomplete recovery, entailing quarterly growth rates of around 6% in the 3Q and 3% in the 4Q20. (RTT)

UK: Factory activity contracts at fastest pace on record . UK manufacturing activity contracted the most on record as the outbreak of coronavirus pandemic caused substantial disruptions in the sector, final survey data from IHS Markit and Chartered Institute of Procurement & Supply showed. The manufacturing Purchasing Managers' Index fell to 32.6 in April from 47.8 in March. The flash reading was 32.9. Data showed that manufacturing production, new orders and employment all contracted at the fastest rates in the 28- year survey history, while vendor lead times lengthened to the greatest extent so far. (RTT)

China: Total services trade plunges 10.8% in 1Q. China’s 1Q total services trade fell 10.8% from a year earlier to CNY1.15trn (USD162.82bn), according to the Ministry of Commerce. Services exports in the Jan.-to-March period declined 4.1% to CNY444.28bn while imports dropped 14.5% to CNY708.02bn, the ministry said. The narrowing of the trade deficit that started last year continues, it said. Knowledge-intensive services accounted for more than 40% of the total. (Bloomberg)

Japan: Manufacturing downturn intensifies in April. Japan's manufacturing downturn intensified in April as the coronavirus, pandemic caused severe fall in domestic and foreign demand, final survey results from IHS Markit showed. The headline au Jibun Bank Japan Manufacturing Purchasing Managers' Index dropped to an eleven-year low of 41.9 in April from 44.8 in March. The flash reading was 43.7. Production declined at the strongest pace since March 2009 due to a collapse in demand and factory shutdowns. Amid reports of order cancellation, sales declined the most in over 11 years. (RTT)

Markets

DiGi (Neutral, TP: RM4.75): Explores new opportunities through 5G, AI and IoT. Digi.com (Digi) will invest in the leading network solutions to enable future technologies such as 5G, AI and IoT, said its chair of the board Haakon Bruaset Kjoel. He said the company would do that while maintaining standards of excellence of the core network and IT services to provide customers with the best connectivity experience. (Bernama)

G3 Global: To expand further into AI, data analytics. The business plans to expand further in artificial intelligence (AI) and data analytics segment amid a surge in demand for such services following the Covid-19 outbreak. It said the global AI market size is expected to grow to USD390bn by 2025 with a compounded annual growth rate of 46%, while in Malaysia, data and analytics software market is forecast to reach RM595m by 2021. (Bernama)

CMMT: Commits to RM35m in rental relief for non-essential service tenants. CapitaLand Malaysia Mall Trust (CMMT) has committed to RM35m in rental relief for shopping mall tenants in non-essential services during the MCO period. The mandated closure of non-essential businesses during the MCO had dealt a blow to shopping mall tenants involved in non-essential services. The rental relief will be on top of the 15% electricity discount announced by the government, which will be fully passed on to eligible tenants. (The Edge)

FGV: CPO output down 30% in 1Q, Chairman speaks of urgency to speed up business plans. FGV whose CPO production fell 30% YoY in the 1Q of this year, is expecting its crude palm oil production to chart "a significant improvement" in the 2Q of this year, as the impact of historically poor weather abates. The group's CPO production stood at 514,000mt in 1Q this year compared with the 1Q of last year’s 762,000mt, as fresh fruit production declined to 712,000mt from 1,055,000mt previously. (The Edge)

K-One: Ramps up operations to full capacity. K-One Technology has ramped up its operations, consisting research, design & development and manufacturing activities, to full capacity following the approval by the MITI to operate during the movement control order (MCO) period. The group said this is in line with Miti senior minister Datuk Seri Mohamed Azmin Ali’s call for businesses that have been allowed to operate to ramp up their operations to full capacity effective April 29. (SunBiz)

George Kent: 4Q profit falls 66% amid slower pace of LRT3 work. George Kent (M) closed its 4QFY20 with a net profit of RM6.7m, down 65.6% from RM19.6m the year before, on lower contribution from its engineering division. No dividend was declared in the quarter, leaving its FY2020 dividend payout at 2.5 sen compared with 7 sen in FY19. The lower engineering segment contribution was mainly due to lower revenue and gross profit margin. (The Edge)

Bursa Malaysia: Net profit up 38.2% in 1Q20. Bursa Malaysia’s net profit rose 38.2% to RM68.7m in the 1Q20 compared with RM46.8m in the corresponding period of the previous year, attributed to a higher revenue thanks to the growth in the securities market. Revenue for the period stood at RM150.7m, a 19.1% improvement from RM126.5m reported previously. (SunBiz)

Market Update

The FBM KLCI might open lower today after US equities dropped for a second straight week last Friday, as investors took stock of the damage being done to business by the coronavirus crisis following a slew of corporate earnings. The S&P 500 closed lower by 2.8% on Friday, erasing its gains for the week. The Nasdaq Composite came under pressure as well, dropping 3.2% following red flags in overnight results from Amazon and Apple, two pivotal companies in a tech sector that has led the US market’s rebound in recent weeks. Amazon warned that the cost of hiring new workers and protecting them from the virus could leave it with an operating loss in the second quarter — a disclosure that sent its shares lower by more than 7% on Friday. Apple also nodded to the uncertainty of the economic outlook, withholding guidance for the current quarter. Its shares fell over 1%. London’s FTSE 100 closed down 2.3% while most bourses on continental Europe were shut for a public holiday. Japan’s Topix fell 2.2% and the S&P/ASX 200 benchmark in Australia, a country heavily exposed to trade with China, dropped 5%.

Source: PublicInvest Research - 4 May 2020

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Labels: BURSA, GKENT, K1, FGV, CMMT, G3, DIGI

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