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PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 24 Sep 2020, 10:46 AM

 

PublicInvest Research Headlines - 7 Aug 2020

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Economy

  • US: Weekly jobless claims fall, labour market struggling as Covid-19 epidemic spreads. The number of Americans seeking jobless benefits fell last week, but a staggering 31.3m people were receiving unemployment checks in mid-July, suggesting the labour market was stalling, as the country battles a resurgence in new Covid-19 cases that is threatening a budding economic recovery. Other data showed a 54% surge in job cuts announced by employers in July. The reports followed on the heels of news this week of a sharp step-down in private payrolls in July and continued declines in employment at manufacturing and services industries. (Reuters)
  • US: Household debt falls in lockdown for first time in 6 years. Americans cut back on credit cards and other types of consumer borrowing in the second quarter as the pandemic froze the economy, sending overall household debt down for the first time in six years even as mortgage loans continued to rise. Total debt declined 0.2% to USD14.27trn, from USD14.3trn in the first quarter, the Federal Reserve Bank of New York said in a report. The decline was led by a drop in outstanding credit-card balances, which fell by USD76bn as shutdowns limited consumer spending and households set aside more cash to clear their liabilities. (Bloomberg)
  • US: Trump reimposes tariffs on raw Canadian aluminum, says needs to defend US industry. President Donald Trump moved to reimpose 10% tariffs on some Canadian aluminum products to protect US industry from a “surge” in imports, angering Ottawa and some US business groups. The US Trade Representative’s office said the 10% tariffs apply to raw, un-alloyed aluminum produced at smelters. The tariffs do not apply to downstream aluminum products. “Several months ago, my administration agreed to lift those tariffs in return for a promise from the Canadian government that its aluminum industry would not flood our country with exports and kill all our aluminum jobs, which is exactly what they’ve done,” Trump said. “Canadian aluminum producers have broken their commitment. A Canadian government source said Canada will respond by slapping retaliatory tariffs on US goods. (Reuters)
  •  EU: Germany's factory orders growth exceeds expectations. Germany's factory orders grew more than expected in June on strong domestic demand as consumption benefited from the easing of lockdown measures, data from Orders advanced 27.9% on a monthly basis in June, faster than the 10.4% increase seen in May and much bigger than economists' forecast of 10.1% rise. New orders expanded for the second straight month in June after three months of declines due to the coronavirus related lockdown. (RTT)
  • UK: Interest rates not to turn negative soon, BoE chief says. The BoE is unlikely to cut interest rates below zero anytime soon, Governor Andrew Bailey said. Negative rates are part of the toolbox, Bailey said. "But at the moment we do not have a plan to use them." Earlier in the day, the bank had retained its interest rate at a record low 0.10% and retained the size of the asset purchase programme at GBP 745bn. The bank had projected the jobless rate to rise materially, to around 7.5% by the end of the year. Bailey said this is a very bad story for the UK. (RTT)
  • China: Central bank says it will make prudent monetary policy more flexible and targeted. China's central bank said it will make prudent monetary policy more flexible and targeted, and keep liquidity appropriately ample. The People's Bank of China (PBOC) said it expected the macro leverage ratio to gradually return to a reasonable level, and vowed to help banks to replenish capital and step up disposal of non-performing loans. China will also stabilise land prices, home prices and property market expectations, the PBOC said in its second-quarter monetary policy implementation report, posted on its website, reiterating that it will not use the housing market as a short-term stimulus. (Reuters)
  • India: Central bank holds rates unchanged. The Reserve Bank of India left its key interest rates unchanged on Thursday, defying expectations for a quarter-point reduction, as tries to keep inflation in check after the economy started showing signs of recovery after businesses started opening up following the relaxation of the lockdown restricitions to battle the coronavirus pandemic. The Monetary Policy Committee decided to hold the repo rate unchanged at 4%, the central bank said in a statement. (RTT)
  • Japan: Push to cut China reliance may be boost for Southeast Asia. Japan’s quiet push to protect its supply chains in the era of Covid-19 may prove a boon for Southeast Asian nations looking to gain from the growing backlash against China. The Japanese government is paying about JPY12bn (USD114m) to 30 companies to increase production in Southeast Asia, in the first round of a multi-billion dollar program to diversify supply chains after Covid-19 and worsening relations between the US and China. Japan wants to cut its reliance on China or any other individual nation and the money will hasten the trend of firms moving out of China and into cheaper neighbors like Vietnam or Thailand. (Bloomberg)
  • Japan: Decline in Japan household spending narrows amid reopening. Declines in Japan’s household spending narrowed in the first- full month after the end of a nationwide state of emergency as more businesses reopened and people ventured out. Spending fell 1.2% in June from a year earlier, following a record 16.2% drop in May, the internal affairs ministry reported Friday. Economists had forecast a 7.8% decline. A separate report showed wages dropped for a third month in June, with overtime pay falling by about a quarter. (Bloomberg)

Markets

  • Gas Malaysia: Unit sets up RM1bn IMTN, ICP programme. Gas Malaysia’s unit Gas Malaysia Distribution SB (GMD) has established Islamic medium term note (IMTN) and Islamic Commercial Paper (ICP) programmes. It said both programmes have a nominal value of RM1bn each and have a combined issuance limit of up to RM1bn under the shariah principle of Muharabah. The IMTN and ICP Programmes will have a tenure of 15 years and seven years respectively from the date of first issuance. (The Edge)
  • AEON: Court sets aside RM142m judgment in default against AEON BiG. The Alor Setar High Court has set aside a judgment in default involving RM142m in damages against AEON BiG (M) Sdn Bhd. “Therefore, Mega Continental no longer has any judgment against AEON BiG and AEON BiG has instructed its solicitors to proceed to file an application to strike out the suit filed by Mega Continental,” AEON BiG said. (The Edge)
  • Advanceon: Inks MoU to instal solar power system at Mydin outlet in Bandar Seremban Utama. Advancecon Holdings’ solar power unit has inked an agreement with hypermarket operator Mydin Mohamed Holdings to develop a rooftop solar power system to be installed at the latter's outlet in Bandar Seremban Utama, Negeri Sembilan. Its wholly-owned Advancecon Solar SB shall develop a 2,344.32kWp solar photovoltaic system for the said outlet. (The Edge)
  • JAG: To capitalise on renewable energy sector. JAG has established a new subsidiary, JAG Renewable Energy SB (JRESB), in July. JRESB has entered into a commercial agreement with RH Silver SB, a Perak-based construction and property development firm, to lease 112 acres of land in Mukim Lumut, Manjung to participate in the bidding process for the LSS@MEnTARI programme (Large Scale Solar) by the Malaysian government, for a proposed capacity of up to 29MWac. (SunBiz)
  • Ho Wah: To co-develop Covid-19 vaccine with US firm. Ho Wah Genting, via subsidiary HWGB Biotech SB, has partnered with US-based E-MO Biology Inc (EBI) to undertake phase four clinical trials of poliomyelitis virus vaccine for Covid-19. The collaboration will see HWGB investing USD1m into EBI, entitling it 40% of the profit from the commercialised vaccine. (Business Times)
  • Key Alliance: Plans rights issue with warrants to fund medical venture. Key Alliance Group (KAG) plans to raise some RM5m through a renounceable rights issue with warrants to fund the diversified firm's foray into the medical equipment business. The group has proposed a renounceable rights issue of up to 982.2m shares in KAG, on the basis of one rights share for every one ordinary share held by entitled shareholders, it said. (The Edge)
  • Borneo Oil: Exploratory works at Bukit Ibam reveal golden potential. Borneo Oil’s wholly-owned subsidiary Borneo Oil & Gas Corp SB has completed the first part of exploration on one of the eight zones in its Bukit Ibam gold prospect in Pahang and has prepared a report under the Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves. (SunBiz)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks extended their winning streak Thursday, as lawmakers pledged to keep working on another coronavirus financial-aid package and President Donald Trump said he could issue executive orders on some relief measures. Slightly better-than-expected weekly U.S. jobless benefit claims data may also have eased investors’ concerns about the recent impact of a resurgence of the COVID-19 pandemic on the economy. The Dow Jones Industrial Average rose 185.46 points, or 0.7%, to end at 27,386.98, recording its fifth day in a row of gains. The S&P 500 climbed 21.39 points, or 0.6%, to close at 3,349.16, also extending its streak of gains to five straight sessions. The Nasdaq Composite Index gained 109.67 points, or 1%, finishing at 11,108.07 to book its 32nd record close of the year. In Europe, the Stoxx Europe 600 index closed 0.7% lower, and the FTSE 100 lost 1.3% after the Bank of England struck a gloomy tone over the UK’S economic outlook.

Back home, the FBM KLCI closed up 20.44 points or 1.3% at its intraday high of 1,588.57 while trade volume across Bursa Malaysia topped 16bn securities to hit another all-time peak for the second time this week. In Asia, China’s CSI 300 index ended trade off 0.3%, while Japan’s benchmark Nikkei closed 0.4% lower. Hong Kong’s Hang Seng Index closed off 0.7%.

Source: PublicInvest Research - 7 Aug 2020

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