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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 15 Jan 2021, 10:38 AM

 

PublicInvest Research Headlines - 15 Jul 2020

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Economy

US: Consumer prices rebound in June amid spike in gas prices. Partly reflecting a substantial rebound in gasoline prices, the Labor Department released a report showing US consumer prices increased by slightly more than expected in June following three straight monthly declines. The Labor Department said its consumer price index climbed by 0.6% in June after edging down by 0.1% in May. Economists had expected consumer prices to rise by 0.5%. The Labor Department said its consumer price index climbed by 0.6% in June after edging down by 0.1% in May. Economists had expected consumer prices to rise by 0.5%. The bigger than expected increase in consumer prices reflected the strongest price growth since August of 2012. Over half of the monthly increase in consumer prices was due to the rebound in gasoline prices, which soared by 12.3% in June after plunging by 3.5% in May. The jump in gas prices also contributed to a 5.1% spike in energy prices following four consecutive monthly decreases. (RTT)

EU: Industrial production rebounds in May. Eurozone industrial production rebounded in May as most of the factories reopened in member countries after the easing of coronavirus containment measures, data from Eurostat showed. Industrial production grew 12.4% MoM, in contrast to an 18.2% decrease in April. Nonetheless, this was slower than the expected growth of 15%. On a yearly basis, industrial production declined 20.9% versus a 28.7% fall in April. Output was expected to fall 20%. Among components, durable consumer goods production surged 54.2% and capital goods output advanced 25.4%. Intermediate goods production climbed 10%. Energy and non-durable consumer goods production increased only 2.3% and 2.8%, respectively. In EU27, industrial production grew 11.4% MoM but declined 20.5% YoY. (RTT)

EU: Banks to tighten lending conditions for enterprises in 3Q. Eurozone banks are set to tighten credit standards on loans to enterprises in the 3Q20 amid coronavirus pandemic, the Bank Lending Survey from the ECB showed. Credit standards for loans to firms remained favorable in 2Q20, supported by fiscal and monetary measures. Credit standards for loans to households tightened further in the 2Q20 reflecting deteriorated economic outlook, worsened creditworthiness of borrowers and a lower risk tolerance. The net tightening of credit standards on loans to households is expected to continue in the 3Q20. Further, the survey showed that demand from firms for loans or drawing of credit lines surged further in the 2Q20, reaching the highest net balance since the survey was launched in 2003. At the same time, demand for housing loans declined strongly and the net demand for consumer credit and other lending to households reached a record low in 2Q20. Banks expect that net demand for loans to enterprises will increase less in 3Q20. (RTT)

EU: Germany June inflation confirmed at 0.9%. German inflation rebounded from a 45-month low in June, latest data from Destatis confirmed. Consumer price inflation climbed to 0.9% in June from 0.6% in May, which was the lowest since September 2016. On a monthly basis, consumer prices gained 0.6% in June, after a 0.1% fall in May. Inflation accelerated to 0.8% from 0.5% in May. Compared to the previous month, the HICP gained 0.7% after remaining unchanged in May. On a YoY basis, energy prices fell 6.2%, which was slower than the 8.5% slump in the previous month, as oil prices recovered in the global market. Heating oil prices decreased 26.5% and prices of motor fuels fell 15.1%. Electricity prices rose 4.1%. Food prices increased 4.4%, led by higher prices for fruit and meat. (RTT)

UK: Economy recovers slowly in May. Despite easing of coronavirus containment measures, the UK economy recovered at a much slower than expected pace in May after contracting the most on record in April, data from the Office for National Statistics showed. GDP grew 1.8% in May from April, when the economy shrunk a record 20.3%. However, this was weaker than the expected growth of 5.5%. The national output was still 24.5% smaller than in February, before the coronavirus pandemic hit the economy. Jonathan Athow, Deputy National Statistician for Economic Statistics, said, "Manufacturing and house building showed signs of recovery as some businesses saw staff return to work." "Despite this, the economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck," Athow added. (RTT)

UK: Economy could shrink 14% this year, budget forecasters say. Britain’s economy could shrink by more than 14% this year if there is lasting damage from the coronavirus, budget forecasters said. The Office for Budget Responsibility said tax hikes or spending cuts would probably be needed to fix the huge hole in the public finances. “The UK is on track to record the largest decline in annual GDP for 300 years, with output falling by more than 10% in 2020 in all three scenarios,” the OBR said. “This delivers an unprecedented peacetime rise in borrowing this year to between 13% and 21% of GDP, lifting debt above 100% of GDP in all but the upside scenario.” The central scenario, with only moderate long-term damage, showed a 12.4% fall in output, with a 14.3% decline if the scarring is deeper. In the downside scenario borrowing in the current financial year could hit GBP391bn (USD490bn), and in the upside one GBP263bn, with output falling 10.6%. (Reuters)

China: Exports increase unexpectedly. China's exports grew unexpectedly in June as easing of the coronavirus containment measures in most of the developed economies boosted foreign demand, official data showed. In dollar terms, exports climbed 0.5% on a yearly basis in June, the General Administration of Customs reported. Economists had forecast an annual fall of 1.5% after falling 3.3% in May. Likewise, imports increased 2.7% YoY, confounding expectations for a decrease of 10% and reversing a 16.7% fall in May. Consequently, the trade surplus totalled USD46.42bn in June versus a USD62.9bn surplus posted in May. The expected level was USD58.6bn. (RTT)

Singapore: Slumps into recession with record 41.2% GDP plunge. Singapore’s economy plunged into recession last quarter as an extended lockdown shuttered businesses and decimated retail spending, a sign of the pain the pandemic is wreaking across export-reliant Asian nations. GDP declined an annualized 41.2% from the previous three months, the Ministry of Trade and Industry said, the biggest quarterly contraction on record and worse than the Bloomberg survey median of a 35.9% drop. Compared with a year earlier, GDP fell 12.6% in 2Q20, versus a survey median of -10.5%. The deep slump shows the blow Singapore’s economy is taking from all sides amid the pandemic. A plunge in global trade has hit the export-reliant manufacturing industry, while retailers saw a record decline in sales after partial lockdown measures were imposed last quarter. (Bloomberg)

Markets

Advancecon: Bags RM19.85m contract in Bukit Raja. Advancecon's subsidiary Advancecon Infra SB has secured a RM19.85m construction contract from Sime Darby Property to undertake earthworks and civil engineering services. Advancecon highlighted that it had accepted the letter of award for the proposed construction and completion of earthworks and other related works for development of Phase 2 at Bandar Bukit Raja 2 in Klang, Selangor. The contract period will be from July 27 this year until July 26, 2022. The scope of works include preliminaries, erosion and sediment control, site clearance and earthworks, soil improvement works and soil investigation works. (NST)

DBE Gurney: To beef up affordable housing arm . DBE Gurney Resources, soon to be known as Lagenda Properties, will be significantly scaling up its affordable housing development arm by acquiring the developer of two housing projects. The group said it would be buying Blossom Eastland SB, which is developing Bandar Baru Setia Awan Perdana (BBSAP) and Lagenda Teluk Intan (LTI). Currently, the group has a remaining aggregate gdv of approximately RM2.1bn, unbilled sales of RM514m together with a sizable landbank of around 1,200 acres to be developed. (The Edge)

Salcon: Inks smart water systems JV with HK firm. Salcon’s wholly-owned subsidiary Salcon Engineering has inked a joint venture agreement with Hong Kong’s The One Smart City Development Ltd (TOSC) via its subsidiary Wide Plus Smart City SB (WP) to market and deploy smart water systems in Malaysia. Salcon will be holding the majority share at a 60:40 ratio with WP in their joint venture company (JVCo), Digital Momentum SB. Salcon said TOSC also signed a Technology Licence Agreement with the JVCo. It said the JVCo would focus on providing end-to end water management solutions throughout a water utility’s entire water network system supported by Internet of Things (IOT) solutions for remote meter reading, water quality, pressure and level monitoring and leakage detection. (SunBiz)

Glomac: Dips into the red for 4Q on fair value losses, declares one sen dividend. Impacted by a recognition of fair value losses on its investment properties, Glomac reported a net loss of RM8.61m for the 4QFY20, from a net profit of RM11.21m a year ago. Revenue fell 27.88% to RM58.38m mainly due to the negative impact of the suspension of construction work for ongoing projects, as well as lower carpark rental and mall rental income during the MCO. Glomac has declared a final dividend of one sen per share for FY20.

IPO: ACE Market-bound TCS Group’s IPO oversubscribed by 33.39 times. TCS Group said its ipo has been oversubscribed by 33.39 times. Its IPO entails the public issuance of up to 90m new ordinary shares representing 25% of its enlarged total number of shares (public issue), and an offer for sale of up to 18m existing shares (offer shares) at an issue price of 23 sen per share. The company will raise approximately RM20.7m from the public issue. TCS Group will channel the proceeds raised to further strengthen their presence in the high rise, purpose-built and institutional buildings segments, backed by their established track record in building construction projects. (TheEdge)

Market Update

The FBM KLCI might open higher today as US stock indices closed near session highs Tuesday, after Federal Reserve Gov. Lael Brainard called for sustained large-scale asset purchases by the US central bank to help the economy rebound amid a “thick fog of uncertainty” brought on by COVID-19. Investors also monitored fresh corporate earnings, efforts by some US states to close down businesses again with coronavirus cases rising, and deteriorating US-China relations. The Dow Jones Industrial Average gained 556.79 points, or 2.1%, to end at 26,642.59, while the S&P 500 tacked on 42.30 points to finish at 3,197.52, a gain of 1.3%, as energy shares and materials shares rallied. The Nasdaq Composite Index advanced 97.73 points, or 0.9%, to settle at 10,488.58, after trading negative earlier in the session. In Europe, the pan-European Stoxx 600 Europe Index closed 0.8% lower, while London’s FTSE 100 gained 0.1%.

Back home, the FBM KLCI closed down 7.68 points or 0.48% at 1,598.75 after cutting losses following a sharp final-hour drop and as investors weighed a confluence of factors including fresh Covid- 19 restrictions in the US besides the US-China trade tension. In the region, the Shanghai Composite fell 0.8%, while the CSI 300 Index declined 1%. Japan’s Nikkei 225 Index retreated 0.9%, while the Hang Seng Index in Hong Kong closed 1.1% lower.

Source: PublicInvest Research - 15 Jul 2020

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