PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 27 Nov 2020, 11:04 AM


PublicInvest Research Headlines - 22 May 2020

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US: Fed’s Williams says US can afford more support for economy. The US can afford plenty of additional government support for the economy even after authorizing almost USD3trn in fiscal relief measures to counter the impact of the coronavirus pandemic. The central bank has slashed interest rates to nearly zero, flooded financial markets with liquidity and rolled out several emergency lending programs. (Bloomberg)

US: Labour markets struggles as layoffs spread despite business reopening. Initial claims for state unemployment benefits totalled a seasonally adjusted 2.44m in the week ended May 16, down from 2.69m in the prior week. Last week’s claims reading was in line with economists’ expectations, and marked the seventh straight weekly decline. First-time claims have been gradually decreasing since hitting a record 6.87m in the week ended March 28. Still they remained more than triple their peak during the 2007/09 Great Recession. The elevated claims have also been blamed on backlogs after the unprecedented amount of applications overwhelmed state unemployment offices. (Reuters)

US: Leading Economic Index shows another steep drop in April. The leading economic index tumbled by 4.4% in April after plunging by a revised 7.4% in March. Economists had expected the index to plummet by 5.9% compared to the 6.7% slump originally reported for the previous month. The coincident economic index cratered by 8.9% in April after falling by 1.5% in the previous month. On the other hand, the lagging economic index jumped by 4.1% in April after climbing by 1.7% in March. (RTT)

US: Existing home sales plunge to nearly 10-year low in April. Existing home sales plunged by 17.8% to an annual rate of 4.33m in April after tumbling by 8.5% to 5.27m in March. Economists had expected existing home sales to plummet to a rate of 4.30m. The continued nosedive pulled existing home sales down to their lowest level since hitting 3.45m in July 2010. Median existing-home price for all housing types in April was USD286,800, up 2.2% from USD280,700 in March and up 7.4% from USD267,000 in April 2019. There were 1.47m homes for sale at the end of April, down 1.3% from 1.49m at the end of March and down 19.7% from 1.83m a year ago. (RTT)

EU: Eurozone private sector remains in deep contraction. The euro area private sector remained stuck in its deepest downturn ever in May due to the containment measures taken amid coronavirus. The composite output index rose to 30.5 in May from a record low 13.6 in April. A score below 50 indicates contraction. The prior low of 36.2 was seen during the peak of the global financial crisis in February 2009. Nonetheless, the latest reading was above economists' forecast of 25.0. The flash services PMI advanced to 28.7 from 12.0 in the previous month. This was the highest score since February and above forecast of 25.0. The flash factory PMI climbed to 39.5 from 33.4 in April. The expected score was 38.0. (RTT)

EU: German private sector continues to shrink in May. Germany's private sector continued to shrink in May, albeit the rate of decline eased from the record fall seen in April. The headline flash composite output index rose to 31.4 in May from April's record low of 17.4. But the score was below economists' forecast of 34.1. Data showed steep falls in manufacturing production and services business activity, though in both cases the rates of contraction were discernibly slower than in April amid the reopening of parts of the economy after the coronavirus outbreak. The services PMI climbed to 31.4 from 16.2 in the previous month. The expected level was 26.6. At the same time, the manufacturing PMI came in at 36.8 versus 34.5 in the previous month and below forecast of 39.2. (RTT)

UK: Manufacturing output declines most on record – CBI. UK manufacturing output declined at the fastest pace on record in May as factories are grappling with the impact of the coronavirus pandemic. The output volume balance fell to -54% in May from - 21% in April. The decline was largely driven by motor vehicles and transport and food, drink and tobacco sub-sectors. (RTT)

Japan: Manufacturing PMI falls to 31.7 in May - Jibun Bank. The manufacturing sector in Japan continued to contract in May, and at a faster pace with a manufacturing PMI score of 31.7. That's down from 34.7 in April and it moves further beneath the boom or bust line of 50 that separates expansion from contraction. However, the services PMI improved to 25.3 in May, up from the record low 21.5 in April but still well below the line for expansion. The composite Index came in with a score of 27.4 in May, up from 25.8 a month earlier. The individual components for all three indexes - output, new orders, new export orders, employment, backlogs, output prices, input prices and future output - were all firmly in contraction territory because of the global economic shutdown resulting from the Covid-19 pandemic. (RTT)

Japan: Trade deficit balloons to JPY930.40bn in April. Japan posted a merchandise trade deficit of JPY930.40bn in April. That missed expectations for a shortfall of JPY560bn following the JPY4.9bn surplus in March. Exports plummeted 21.9%, which actually beat expectations for a fall of 22.7% following the 11.7% decline in the previous month. Imports were down an annual 7.2% versus expectations for a drop of 12.9% after slipping 5.0% a month earlier. (RTT)

Hong Kong: Inflation eases to 3-month low. The consumer price index rose 1.9% YoY in April, after a 2.3% increase in March. The inflation rate was the lowest since January, when it was 1.4%. Excluding the effects of all government's one-off relief measures, core inflation was 2.3% in April, after a 2.6% rise in the previous month. The slowing was mainly due to the smaller increases in private housing rentals and the decreases in the fuel cost variation charge for town gas. (RTT)


Heitech Padu: Bags RM126m contract . HeiTech Padu has accepted the Letter of Award for the maintenance and technical support services for hardware and software of mainframe systems for the Road Transport Department (JPJ) worth RM126m. In a filing with Bursa Malaysia, it said the contract was for a period of 29 months commencing from May 1, 2020 to Sept 30, 2022. “The contract is expected to have positive effects on future earnings and earnings per share of HeiTech,“ the company said. (Bernama)

Tadmax: Expands landbank via 70% stake buy in property outfit . As part of its landbank expansion, Tadmax Resources is buying a 70% stake in a firm which is in the process of acquiring a strategically located piece of land in Cheras. This comes as Tadmax refocuses on property development, following its recently announced plan to exit from the RM3.3bn Pulau Indah power plant project.In an exchange filing, Tadmax said it is buying the 70% stake in property outfit Bendera Juara SB (BJSB) from Maxim Holdings SB for RM233,334. BJSB is in the midst of acquiring a 5.73-acre land in Alam Damai, Cheras for RM64.8m or RM260 per sq ft from Syarikat Perumahan Pegawai Kerajaan SB (SPPK). (The Edge)

Sunway Construction: Bags RM120m contract. Sunway Construction SB (SCSB) has accepted a Letter of Award (LOA) from Sunway Education Group SB for the proposed development of a Sunway International School worth RM120m in Selangor. In a filing with Bursa Malaysia, Sunway Construction Group said the project commences on June 15,2020 and is expected to be completed on June 30,2022. The total new projects secured by SunCon Group this year, including the school building project amounts to RM688m. (Bernama)

Poly Glass Fibre: Ventures into making melt-blown non woven fabric for surgical face masks . Yet another company is venturing into the production of personal protective gear (PPE) which has seen demand skyrocket due to Covid-19. Poly Glass Fibre (M), via its wholly-owned unit Concrete Energy SB, is venturing into the manufacturing of melt-blown non-woven fabric, a vital component of surgical face masks. Poly Glass, which principally manufactures fiber glass wool and its related products, is seeking to address increasing demand for face mask material due to the ongoing pandemic. Poly Glass said that the production line will be installed at its existing facility in Penang and is expected to commence production by the end of June. (The Edge)

Auto (Neutral): April vehicle sales down more than 99% YoY . A total of 141 vehicles were sold in April, a 99.7% fall from total sales of 49,935 units in April 2019 as all automotive sectors stopped operations following the extension of the movement control order (MCO) until May 12. In a note, the Malaysian Automotive Association (MAA) said 131 vehicles were sold in the passenger segment, while the commercial segment saw sales of just 10 units. However, it expects the sales volume in May to be much higher than April’s figures, albeit still below traditional monthly registrations seen pre-MCO. (Sunbiz)

Market Update

The FBM KLCI might end the week lower as U.S. stocks finished lower Thursday, with investors pointing to elevated tensions between Washington and Beijing and a stream of poor economic data, including another 2.4 million job losses last week, as contributors to a lackluster buying mood on Wall Street. The Dow Jones Industrial Average fell 101.78 points, or 0.4%, at 24,474.12, while the S&P 500 index ended off 23.10 points, or 0.8%, at 2,948.51. The Nasdaq Composite Index fell 90 points or 1% to end at 9,284.88. In Europe, the Stoxx Europe 600 closed 0.8% lower, while the FTSE ended off 0.9%.

Back home, the FBM KLCI closed up 16.99 points or 1.18% at 1,452.11, helped by share price gains in index-link rubber glove manufacturers on resurgent concerns about the Covid-19 pandemic, amid doubts about the development of a vaccine.

In the region, the markets finished mostly lower with shares in China leading the region. The Shanghai Composite lost 0.55% while Hong Kong's Hang Seng was off 0.49% and Japan's Nikkei 225 gave away 0.21%.

Source: PublicInvest Research - 22 May 2020

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