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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 27 Nov 2020, 10:57 AM

 

PublicInvest Research Headlines - 6 Aug 2020

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Economy

  • US: Job market recovery appears to be slowing, services sector powering ahead. US private employers hired far fewer workers than expected in July, as companies exhausted loans to help with wages and new Covid-19 infections flared up across the country, supporting the view that the nascent economic recovery was faltering. While other data showed activity in the vast services sector gained momentum in July as new orders raced to a record high, hiring declined. The reports, together with a recent rise in applications for unemployment benefits, suggest job growth pulled back sharply in July. "The economy will remain at risk of a renewed downturn so long as a vaccine or therapeutic for the virus remains out of reach," said Oren Klachkin, lead US economist at Oxford Economics in New York. (Reuters)
  • US: Trade gap narrows as autos spur record exports increase. The deficit in US trade of goods and services narrowed in June for the first time since February as exports jumped, though shipments remained well below pre-pandemic levels. Exports increased from the prior month by 9.4%, the most in records back to 1992 to USD158.3bn, according to Commerce Department data released. Imports climbed 4.7%, the most since March 2015 to USD208.9bn. Both increases reflected a pick-up in shipments of autos and parts, after factories restarted production. The overall gap in goods and services trade narrowed to USD50.7bn, compared to the median estimate of USD50.2bn by a Bloomberg survey of economists, from a revised USD54.8bn in May. (Bloomberg)
  • EU: Euro zone business activity resumes growth in July. Euro zone business activity returned to modest growth in July as some curbs imposed to stop the spread of the coronavirus were lifted, but the recovery in the dominant service industry was not as sharp as expected, a survey showed. More than 18.5m people have been diagnosed with the coronavirus globally but, amid signs the pandemic was being contained in much of Europe, governments have allowed more businesses to reopen. Composite Purchasing Managers' Index (PMI) from IHS Markit, seen as a good indicator of economic health, climbed to 54.9 in July from June's 48.5, better than a 54.8 flash estimate. It had been below the 50 level separating growth from contraction for four months. (Reuters)
  • UK: Businesses grow at fastest pace in five years in July after Covid slump. British businesses in the services and manufacturing sectors grew at the fastest rate in more than five years last month as they began to recover from the effect of the Covid-19 lockdown, a survey showed. The IHS Markit/CIPS final composite Purchasing Managers' Index (PMI) rose to 57.0 from 47.7 in June, its highest since June 2015 and close to the provisional flash reading of 57.1. The services PMI also rose, to a five-year high of 56.5 from June's 47.1, again a fraction below the flash reading. "UK service providers are starting to see light at the end of the tunnel after a record slump in business activity during the second quarter of 2020," IHS Markit's economics director, Tim Moore, said. (Reuters)
  • South Korea: Has USD6.88bn current account surplus in June. South Korea had a current account surplus of USD6.88bn in June, the Bank of Korea said - up from USD2.29bn in May. The goods account surplus narrowed to USD5.87bn, compared to USD6.27bn in June 2019. The services account deficit decreased to USD1.26bn, from USD2.14bn in June last year, the bank said, owing to an improvement in the travel account. (RTT)
  • Thailand: Central bank holds rate at record low. Thailand's central bank retained its record low interest rates as the economy is expected to recover gradually in line with the relaxation of the coronavirus containment measures. The Monetary Policy Committee of Bank of Thailand unanimously voted to retain the interest rate at 0.50%. The bank had reduced the rate by 25 bps in May. Although the economy is forecast to recover gradually, overall economic activities would take at least two years before returning to the pre-pandemic level, the bank said. The bank expressed its willingness to ease policy further. The MPC said it would stand ready to use additional appropriate monetary policy tools if necessary. (RTT)
  • Indonesia: Bets on USD100bn state spending to rekindle growth. Indonesia’s government will spend aggressively in the coming months to support a nascent economic recovery after measures to contain the coronavirus pandemic sent Southeast Asia’s largest economy into its first contraction in more than two decades. State spending will total about IDR1,476trn (USD101bn) in the six months through December, Finance Minister Sri Mulyani Indrawati said during a briefing in Jakarta. A ramp up in government spending will sustain the recovery momentum seen with the easing of mobility restrictions, she said. (Bloomberg)

Markets

  • UMW: UMW Toyota sells 7,509 vehicles in July, highest YTD. UMW Toyota Motor SB, a subsidiary of UMW Holdings, sold 7,509 vehicles in July, its highest number for the year. UMW said the improved sales in the month was mainly due to the sales tax exemption announced by the government on June 5, effective from June 15 to Dec 31 this year. Meanwhile, July marked Perodua's highest monthly sales for the year with 23,203 vehicles, a 9.2% increased. "Perodua is also increasing production at both its assembly plants to meet the strong demand," UMW said. (Business Times)
  • Datasonic: Proposes 1-for-1 bonus issue. Datasonic Group announced its proposal for a 1-for-1 bonus issue to reward shareholders. It said that the proposed bonus issue entails the issuance of up to 2.18bn bonus shares on the basis of one bonus share for every share held by shareholders as at the close of entitlement date, and expected to be completed by the 4Q of this year. (The Edge)
  • Green Ocean: Initial placement shares' issue price lapses. Green Ocean Corp said the issue price of 18.5 sen a share for the initial tranche of the planned private placement had lapsed after the payment condition was not met. It said that on July 28, 2020, the company's board fixed the issue price of the initial tranch at 18.5 sen a share. (The Edge)
  • MSCM, MMAG: MSCM sees emergence of new largest shareholder as MMAG divests stake. MMAG Holdings has sold its entire 29.9% stake in MSCM Holdings (previously known as PanPages) to Penang's Hong Seng Group for RM18.1m cash. MMAG said its cost of investment in MSCM amounted to RM16.8m. MMAG plans to use part of the proceeds from the disposal to fund the purchase of two freehold plots in Kawasan Perusahaan Valdor, Pulau Pinang. The balance would be used as working capital to set up a northern logistics hub. (The Edge)
  • UPA: Venturing into healthcare business. UPA Corp is venturing into the healthcare business with the manufacture of melt-blown non-woven fabric made of ultra fine polypropene which is a key material in the production of 3-ply mask and surgical face mask, via its wholly owned subsidiary UPA Healthcare Products SB. It said that the investment into the project is estimated at RM10m and it will be funded internally. The production line will be installed in its existing facility in Seri Kembangan, Selangor, and it is expected to commence production by end-Nov this year. (SunBiz)
  • Watta: Executive chairman launches mandatory takeover offer. Watta Holding executive chairman Datuk Lee Foo San has launched a mandatory takeover offer of the remaining shares in the company. Lee, together with two other parties acting in concert (PAC), offered to buy the remaining Watta shares at 50 sen each. (Business Times)
  • KLCC REIT: 2Q net profit drops 22% to RM140.5m. KLCC Real Estate Investment Trust's (KLCC REIT) net profit dropped 22.1% to RM140.5m in the 2QFY20 from RM180.4m recorded a year ago. It said this was mainly dragged by lower contribution from its property investment segment due to the provision of rental assistance to the tenants in response to the Movement Control Order imposed by the government in curbing the spread of Covid-19. (Business Times)

MARKET UPDATE

  • The FBM KLCI might open higher today after U.S. stocks closed higher Wednesday, leaving the Nasdaq Composite Index with its 31st record close this year, as investors embraced corporate earnings and service-sector data that surprised to the upside. Reports of some progress in Congress toward a fresh coronavirus relief package also offered some support for the bulls. The Dow Jones Industrial Average rose 373.05 points, or 1.4%, to settle at 27,201.52, its largest daily percent gain since July 14, while the S&P 500 gained 21.26 points, 0.6%, to end at 3,327.77. The Nasdaq Composite Index added 57.23 points, 0.5%, closing at 10,998.40, after briefly setting an intraday 11,002.11 record high. Equity markets in Europe also closed higher. The Stoxx Europe 600 index gained 0.5% to 365.16, and the FTSE 100 jumped 1.1%.

    Back home, the FBM KLCI finished 0.5% lower, weighed down by declines in Hap Seng Consolidated Bhd, Kuala Lumpur Kepong Bhd (KLK) and Hong Leong Financial Group Bhd (HLFG). At the closing bell, Malaysia’s benchmark index closed 0.5% or 7.81 points lower at 1,568.13 point. In Asia, China’s CSI 300 index was flat and Japan’s benchmark Nikkei closed 0.3% lower.

Source: PublicInvest Research - 6 Aug 2020

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