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

 

PublicInvest Research Headlines - 4 Aug 2020

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Economy

  • US: Fed's Barkin says economy faces 'sinkhole' without more fiscal support. The US economy faces a much larger downturn than previously forecast if Congress is unable to provide longerterm fiscal support quickly to tens of millions of Americans who are currently jobless said Richmond Fed President Thomas Barkin. “Four months ago, when we did the first stimulus, we thought the economy faced a pothole and the stimulus puts a plate over it so we could navigate. Now escalation of the virus may be making that pothole into a sinkhole and creating a need for a longer plate” said Barkin. (Reuters)
  • US: Construction spending drops more than expected in June. Construction spending slid by 0.7% to an annual rate of USD1.35trn in June after tumbling by 1.7% to a revised rate of USD1.36trn in May. Economists had expected construction spending to decrease by 0.5% compared to the 2.1% slump originally reported for the previous month. The bigger than expected drop came as spending on private construction fell by 0.7% to an annual rate of USD1trn in June from the revised May estimate of USD1trn. Spending on residential construction dove by 1.5% to a rate of USD534.2bn, more than offsetting a 0.2% uptick in spending on residential construction to a rate of USD467.7bn. (RTT)
  • US: Manufacturing index indicates faster than expected growth in July. A report released by the Institute for Supply Management showed a bigger than expected acceleration in the pace of growth in US manufacturing activity in the month of July. The ISM said its purchasing managers index rose to 54.2 in July from 52.6 in June, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to inch up to 53.6. With the bigger than expected increase, the purchasing managers index reached its highest level of expansion since March of 2019. (RTT)
  • EU: Eurozone manufacturing sector returns to growth. The manufacturing PMI rose to 51.8 in July from 47.4 in June. This was also above the flash reading of 51.1. Both production and new orders returned to growth in July. The marked expansion in output was registered for the first time since the start of 2019 and the growth in new orders was the strongest since early 2018. Nonetheless, firms continued to operate below capacity and employment decreased for the fifteenth straight month. (RTT)
  • UK: BOE to keep backing stimulus even as splits emerge on economy. BOE’s policy makers are set to keep delivering ultraloose monetary policy even as they disagree over the pace of economic recovery from the coronavirus-triggered recession. While officials led by Governor Andrew Bailey have different takes on how the economy is emerging from the pandemic shock, the next policy decision on Thursday is expected to leave interest rates at a record low and the asset-purchase program unchanged. It’s a stance that economists reckon will last many months, which should provide certainty for households, companies and investors after the worst recession in living memory. (Bloomberg)
  • China: A private survey showed China’s manufacturing activity expanded at the fastest pace in nearly a decade. Results of a private survey showed China’s manufacturing activity expanded for the month of July, the fastest pace in nearly a decade, according to records. The Caixin/Markit manufacturing PMI came in at 52.8 for July, marking its third straight month of expansion. Companies registered the fast expansions in output and new orders since January 2011 amid reports of firmer customer demand. (CNBC)
  • Japan: Economy shrinks at same pace in 1Q as capex holds up. Japan’s economy shrank at the same pace as previously estimated in the 1Q, according to a further revision of data that continued to show the country was in a recession before the pandemic took its heaviest toll. GDP shrank an annualized 2.2% in the 1Q compared with the final three months of 2019, the Cabinet Office reported, with business investment showing more resilience than expected. (Bloomberg)

Markets

  • AirAsia (Neutral, TP: RM0.78): Plans to resume MalaysiaSingapore flights in mid-Aug. AirAsia Group is gearing up to resume flights between Malaysia and Singapore, including the Kuala Lumpur-Singapore route that is touted as the world's busiest, in the week of Aug 17, following both countries' decision to implement the Reciprocal Green Lane (RGL). This will be followed by other international destinations, subject to approvals from authorities, AirAsia said. (The Edge)
  • Boustead: Mindef mulls salvaging two of six vessels. The Ministry of Defence intends to salvage at least two of six littoral combat ships (LCS) construction that was awarded to a unit of Boustead Holdings in 2011, having paid RM6bn out of the contract value of RM9bn. The ministry is considering allocating the contract balance of up to RM3bn to either instruct Boustead Naval Shipyard SB (BNSSB), a unit of Boustead Holdings, to complete two of six vessels, or to have two vessels completed by vessel designer France’s Naval Group, via a deed of assignment with BNSSB. (The Edge)
  • TDM: Sale of two loss-making units to Indonesian firm falls through. TDM announced that the deal to sell two loss-making subsidiaries for USD50m (about RM210.3m) to an Indonesian company has fallen through, despite multiple extensions given to the buyer to effect the deal, with the last until July 31. The board has decided to withdraw the said acceptance of the offer, which expired on July 31, 2020, TDM said. (The Edge)
  • Tasek Corp: Hong Leong Asia garners 97% stake via VGO. Tasek Corp's controlling shareholder Hong Leong Asia has garnered 97.2% shareholding in the cement manufacturer as at the close of the unconditional voluntary takeover offer (VGO). The VGO at RM5.80 per share, which was launched by Hong Leong Asia's investment vehicles HL Cement (Malaysia) SB and Ridge Star Ltd, was to pave way for a privatisation exercise. Tasek Corp shares will be suspended on Aug 11, it said. (The Edge)
  • Unisem: Net profit more than doubles in 2Q. Unisem (M)’s net profit for the 2QFY20 more than doubled to RM33.9m from RM14.4m a year ago, mainly attributable to the higher sales volume achieved and the appreciation of USD/ringgit exchange rates compared with prevailing rates a year ago. For the sixmonth period, its net profit increased 51.7% to RM31.1m from RM20.5m. The directors recommended an interim dividend of 2 sen per share for the FPE June 30, 2020. The dividend will be paid on Sept 3, 2020. (SunBiz)
  • IPO: Aneka Jaringan obtains Bursa Malaysia’s approval for ACE Market listing. Aneka Jaringan Holdings has clinched Bursa Malaysia’s approval for its IPO on the ACE Market. MD Pang Tse Fui pointed out that the group has won numerous projects based on its technical skills, knowledge, and experience in undertaking technically complex projects. The MD revealed that the bulk of the proceeds will be utilised for the expansion of its fleet of construction machinery and equipment in Malaysia. (SunBiz)

MARKET UPDATE

  • The FBM KLCI might open higher today as U.S. stocks closed higher Monday to start to kick off August on a positive note as investors took heart in upbeat manufacturing data, even as talks over another round of coronavirus stimulus appeared stalled. The Dow Jones Industrial Average climbed 236.08 points, or 0.9%, to close at 26,664.40. The S&P 500 rose 23.49 points, or 0.7%, touching 3,294.61 at the close. The Nasdaq Composite gained 157.52 points, or 1.5%, to close at 10,902.80. The tech-heavy benchmark earlier set a new intraday record at 10,905.40, putting it in sight of another 1,000-point milestone. The Stoxx Europe 600 index closed at 363.64, up 2.1%, and the FTSE 100 closed up 2.3%.
     
  • Back home, the FBM KLCI shed 1.94% or 31.14 points to 1,572.61 points— the biggest one-day decline since June 15, when the benchmark index dived 3.05%. However, there was strong buying interest in the lower liners, as reflected by the 7.52% surge in the FBMACE index to close at 9,176.82 points. In Asia, China’s CSI 300 index gained 1.6%, the Shanghai Composite Index climbed 1.8% and Japan’s benchmark Nikkei index climbed 2.2%.

Source: PublicInvest Research - 4 Aug 2020

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