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PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 26 Nov 2020, 11:22 AM

 

PublicInvest Research Headlines - 11 Aug 2020

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Economy 

  • US: July employment growth slows sharply. US employment growth slowed considerably in July amid a resurgence in new Covid-19 infections, offering the clearest evidence yet that the economy’s recovery from the recession caused by the pandemic was faltering. Nonfarm payrolls increased by 1.76m jobs last month after a record 4.79m in June, the Labor Department said on Friday. Economists polled by Reuters had forecast 1.6m jobs were added in July. The unemployment rate fell to 10.2% from 11.1% in June, but it has been biased downward by people misclassifying themselves as being “employed but absent from work.” At least 31.3m people were receiving unemployment checks in mid-July. (Reuters) 
  • US: Wholesale inventories decline further in June. US wholesale inventories fell less than initially estimated in June, likely reflecting a rebound in goods imports after the Covid-19 pandemic disrupted trade flows. The Commerce Department said on Friday that wholesale inventories decreased 1.4% in June, instead of dropping 2.0% as estimated last month. Stocks at wholesalers fell 1.2% in May. The component of wholesale inventories that goes into the calculation of gross domestic product dropped 1.4% in June. Goods imports rebounded by the most in more than five years in June as trade flows improved. Inventories subtracted almost 4 percentage points from GDP, the most since the 4Q of 1982. (Reuters) 
  • EU: Germany industrial production growth accelerates. Germany's industrial production grew at a faster pace in June, data from Destatis revealed. Industrial production advanced 8.9% MoM in June, faster than the 7.4% increase seen in May. Economists had forecast a monthly growth of 8.1%. On a yearly basis, industrial production fell 11.7% in June after declining 19.5% in May. Excluding energy and construction, industrial output was up by 11.1% in June. Within industry, intermediate goods output showed an increase of 5.0%. At the same time, output of consumer goods grew 7.3% and that of capital goods advanced 18.3%. Outside industry, energy production grew 5.5% and construction output climbed 1.4%. Production in the automotive industry in June continued to increase markedly by 54.7% MoM, data showed. (RTT) 
  • EU: German exports growth improves in June. Germany's exports and imports grew at faster rates in June, data from Destatis showed. Exports advanced 14.9% MoM, following May's 8.9% increase. Shipments were forecast to grow 13.3% in June. At the same time, imports growth advanced to 7% from 3.6% in May. However, this was slower than economists' forecast of 10.9% rise. The trade surplus rose to a seasonally adjusted EUR14.5bn from EUR7.5bn a month ago. The expected level was EUR10.1bn. On a yearly basis, exports decreased 9.4% in June versus a 29.8% decline in May. Likewise, the fall in imports eased to 10% from 21.7%. The current account surplus increased to EUR22.4bn from EUR19.5bn registered in the same period last year. (RTT) 
  • UK: House prices rise for first time in 5 months – Halifax. UK house prices increased for the first time in five months in July driven by pent-up demand, data from the Halifax and IHS Markit showed. House prices grew 1.6% MoM in July after staying flat in the previous month. This was the first rise since February. During three months to July, house prices were 0.2% lower than in the preceding three months. On a yearly basis, house prices advanced 3.8%. The latest data adds to the emerging view that the market is experiencing a surprising spike post lockdown, Russell Galley, Managing Director, Halifax, said. As pent-up demand from the period of lockdown is released into a largely open housing market, a low supply of available homes is helping to exert upwards pressure on house prices, Galley noted. However, looking further ahead, there is still a great deal of uncertainty around the lasting impact of the pandemic. As government support measures come to an end, the resulting impact on the macroeconomic environment, and in turn the housing market, will start to become more apparent, Galley added. (RTT) 
  • UK: One in three employers plans to cut job this quarter. One in three UK employers plans to cut staff this quarter, highlighting the growing risk of a labor market crisis derailing the post-lockdown recovery as government support is withdrawn. The problem is particularly acute within private companies, with almost 40% expecting to make layoffs, according to a survey of 2,000 employers by human resources body the CIPD and Adecco Group. Wage growth also looks set to be subdued. Those bosses who do intend to review salaries anticipate making 1% increases to basic pay, compared with 2% this time last year. Even so, hiring intentions rose, indicating that businesses are reshaping in response to the crisis. The specter of mass unemployment is looming large over the UK economy as it begins its fragile recovery following months of lockdown. While the government has been paying the wages of 9.6m jobs at a cost of GBP33.8bn (USD44bn) as of Aug. 2, it has started to wind down the program, even as many businesses are still struggling. The BoE warned unemployment will rise to about 7.5% by the end of the year. (Bloomberg) 
  • China: Exports surge on foreign demand. China's exports grew notably in July as most of the economies relaxed lockdown measures introduced to curb the coronavirus spread, data from the General Administration of Customs revealed. Driven by demand for medical supplies, electronics and automobiles, exports grew 7.2% on a yearly basis in July, confounding expectations for a drop of 0.2%. At the same time, imports dropped 1.4% on year in contrast to a 1% rise economists' had forecast. As a result, the trade surplus totaled USD62.33bn. Economists had forecast the surplus to fall to USD42bn from June's USD46.42bn surplus. The trade balance will continue to support economic growth, an economist said. But the jump in external demand in July may not last long because some Covid-19 clusters have emerged since late July, as caution was relaxed too early in some places, the economist added. (RTT)

Markets 

  • Star Media (Neutral, TP: RM0.37): Wins damages in legal tussle with JAKS Resources over Section 13 land deal. Star Media Group Bhd said the High Court has partly allowed its summary judgment application in respect of its corporate guarantee claim against JAKS Resources. The court has ruled that the group be paid damages by JAKS, being late payment interest at a rate of 8% per annum on the RM134.5m owed from Oct 25, 2015 and July 6, 2020. (The Edge) 
  • Tenaga (Neutral, TP: RM13.28) Tenaga, Pulau Indah Power Plant ink power purchase agreement. Tenaga Nasional Bhd entered into a power purchase agreement (PPA) with Pulau Indah Power Plant SB (PIPP) involving a proposed combined cycle gas power plant in Selangor. Tenaga said PIPP would construct, own, operate and maintain a gas-fired combined cycle electricity generating facility with a total nominal capacity of 1,200 megawatts at Pulau Indah, Selangor. It said the PPA is valid for a period of 21 years from the commercial operation date of the first generating block on Jan 1, 2024. (Bernama) 
  • Pecca: Mass production of N95 face masks to start this month. Pecca Group plans to purchase additional face mask machinery to expand its production capacity. MD Datuk Teoh Hwa Cheng said the decision was made after the group received encouraging sales leads for its personal protective equipment products. (The Edge) § Texchem: Receives MIDA’s green light to produce face shields.
  • Texchem Resources’s unit has received the Malaysian Investment Development Authority’s green light to produce face shields. Sold under the brand name ‘Tex-Shield’, the face shield has since been exported to countries such as Singapore, Japan, Thailand, Vietnam, Indonesia and the US. (The Edge) 
  • Bursa Malaysia: Teams up with World'Vest Base to offer regional digital offerings. Bursa Malaysia is to collaborate with intelligent solutions provider World'Vest Base Inc (WVB) to offer value-added data solutions. Bursa said it will provide relevant market data from Malaysia, while WVB will provide international financial and company-specific fundamental data. (The Edge) 
  • AppAsia: Pelaburan MARA emerges as substantial shareholder. AppAsia said Pelaburan MARA has emerged as a substantial shareholder of the company. This was after the strategic investment and asset management arm of Majlis Amanah Rakyat (MARA) acquired 4.4m shares in AppAsia off market, the group said in a bourse filing. (The Edge) 
  • Vizione: Acquires SDF Hydro, bags RM90m hydropower contract. Vizione Holdings has secured an RM90.03m contract from SDF Hydro SB for a hydropower project in Kedah. The contract came after Vizione Energy SB, another subsidiary of the group, signed a deal to acquire 150,085 shares representing a 75% stake in Tunjang Tenaga SB for RM150,058. (The Edge) 
  • Inix Technology: Eyes turnaround with Macau tycoon at helm. Inix Technology is eyeing a turnaround in operations, after it appointed Macau multi billionaire Wan Kuok Koi as its new chairman. In a statement, Inix said Wan’s intention in taking charge was to to deploy his rubber glove business in Malaysia, while assisting the fight against Covid-19 pandemic worldwide. (SunBiz)

MARKET UPDATE 

  • The FBM KLCI might open higher today after major US stock indices closed mostly higher Friday, capping off another week of sharp gains, despite Washington’s failure to produce a last-minute coronavirus aid package before Congress takes a summer recess, leaving America’s economic recovery hanging in the balance. Rising tensions between Beijing and Washington also were in focus, after the Trump administration ordered a ban on transactions with a pair of China-based technology companies. The Dow Jones Industrial Average closed 46.50 points, or 0.2%, higher at 27,433.48, after flipping positive in the final hour of trade. The S&P 500 index eked out a gain of 2.12 points, or 0.1%, to close at 3,351.28. The Nasdaq Composite Index retreated 97.09 points, or 0.9%, ending at 11,010.98, after trading down more than 1.5%. In Europe, the Stoxx Europe 600 index closed up 0.3%, booking a 2% gain for the week, and the FTSE 100 rose 0.1%, ending the week 2.3% higher.

    Back home, the FBM KLCI closed down 10.43 points or 0.66% at 1,578.14 as trade volume across Bursa Malaysia topped 20bn securities for the first time ever while world markets took cue from the US-China spat. In Asia, China’s CSI 300 index ended trade off 1.2%, while Japan’s benchmark Nikkei closed 0.4% lower. Hong Kong’s Hang Seng Index closed off 1.6%.

Source: PublicInvest Research - 10 Aug 2020

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