PublicInvest Research

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PublicInvest Research Headlines - 13 Aug 2020

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US: Producer prices climb 0.6% in July, much more than expected. Partly reflecting a notable increase in prices for services, the Labor Department released a report showing US producer prices climbed by more than expected in the month of July. The Labor Department said its producer price index for final demand rose by 0.6% in July after dipping by 0.2% in June. The rebound in producer prices reflected the largest increase since October of 2018 and exceeded economist estimates for an uptick of 0.3%. Energy prices showed another substantial increase during the month, spiking by 5.3% in July after soaring by 7.7% in June. Meanwhile, the report said food prices fell by 0.5% in July after plunging by 5.2% in the previous month. Excluding food and energy prices, core producer prices still climbed by 0.5% in July after falling by 0.3% in June. Economists had expected core prices to inch up by 0.1%. The much bigger than expected increase in core prices came as prices for final demand services also rose by 0.5% in July following a 0.3% drop in June. (RTT)

EU: Investor confidence highest since February – Sentix. Euro area investor confidence rose for a fourth straight month in August to its highest level since February this year, as the assessment of the current economic situation improved and expectations were remained positive, survey data from Sentix. The investor confidence index rose to -13.4 from -18.2 in July. Economists had forecast a score of -15.1. The current situation index of the survey climbed to - 41.3 from -49.5 in the previous month. The latest reading was the highest since March. "After all, such a low index level means that the third quarter is still in recession," Sentix said. "Nonetheless, the recovery is progressing." The expectations sub-index slightly eased to 19.3 from 19.5 in July. "Expectations remain stably positive, meaning that the economic recovery should continue," Sentix said. (RTT)

EU: German ZEW economic confidence improves in August. Germany's economic confidence improved notably in August, survey data from the ZEW - Leibniz Centre for European Economic Research showed. The ZEW Indicator of Economic Sentiment increased unexpectedly to 71.5 in August from 59.3 in July. The score was forecast to fall to 58.0. Meanwhile, the current conditions index dropped 0.4 points to -81.3 in August, while it was expected to rise to -68.8. "Hopes for a speedy economic recovery have continued to grow, but the assessment of the situation is improving only slowly," ZEW President Achim Wambach, said. Financial market experts' sentiment concerning the economic development of the Eurozone improved, with the corresponding indicator climbing 4.4 points to a current level of 64.0 point. The indicator for the current economic situation in the currency bloc fell 1.1 points to minus 89.8 points. (RTT)

UK: Employment declines most since global financial crisis. UK employment declined the most since the global financial crisis of 2009 as the coronavirus pandemic took its toll on the labor market, data from the Office for National Statistics showed. As the lockdown and social distancing to curb the spread of the Covid-19 weighed on job creation, employment declined by 220,000 from the previous quarter to 32.92m in the 2Q20. The employment rate dropped 0.2 ppts to 76.4% in the 2Q20. In July, about 730,000 fewer people were in paid employment when compared with March, data showed.  The number of people out of work decreased 10,000 sequentially to 1.34,m in the three months to June. The unemployment rate was largely unchanged at 3.9%, while the rate was forecast to rise to 4.2%. The government's furlough program reduced the number of people looking for work. But the jobless rate is set to rise with the gradual withdrawal of the program. (RTT)

UK: Retail sales rise despite fewer High Street visits. Retail sales rose again in July, but shops are still trying to make up lost ground, industry body figures suggest. They show the number of visits to High Streets is still down significantly as people shop online instead. The British Retail Consortium (BRC) said some retailers continue to struggle due to the coronavirus crisis, and it made a fresh call for government help with rents. The housing ministry said landlords and tenants should "find solutions that work for both parties". Retail sales rose for the second consecutive month in July, the BRC said, up 3.2% compared with the same month last year. But the picture for retailers was mixed. Food sales continued to be strong, while furniture and homeware sales also did well as people "increasingly invest in their time at home", the BRC-KPMG retail sales report found. (BBC)

China: Bank lending declines in July. China's bank lending declined more-than-expected in July, data from the PBoC revealed. Banks extended CNY992.7bn loans in July. Economists had forecast bank lending to fall to CNY1.2trn from CNY1.81trn in June. The broad money supply M2 climbed 10.7% annually in July, which was slower than the 11.1% rise economists' had forecast. Iris Pang, an ING economist, said "With such unexpectedly small credit growth, we believe China's central bank has used actions rather than words to tell the market that it won't be easing any more this year." Tightening monetary policy is only expected when the economy is overheating, and it is unlikely to happen in 2020, the economist added. (RTT)

Singapore: Narrows 2020 GDP forecast range as economy sees record quarterly slump in 2Q. Singapore has narrowed its economic forecast for 2020 to a contraction between 5% and 7%, the Ministry of Trade and Industry (MTI) said, as the economy posted its worst quarterly performance in the 2Q20 amid the Covid- 19 pandemic. The earlier projection made in May was for the economy to shrink between 4% and 7%. Since then, the outlook for the Singapore economy has “weakened slightly”, MTI said in its report. “Notwithstanding the narrowing of the forecast range, there continues to be significant uncertainty over how the Covid-19 situation will evolve in the coming quarters, and correspondingly, the trajectory of the economic recovery in both the global and domestic economies,” it added. MTI said many of Singapore’s key final demand markets are seeing worse-than-projected economic disruptions in the 2Q20. They are also expected to experience a more gradual pace of recovery in the 2H20, given the threat of localised outbreaks and the continued need for restriction measures. (CNA)


Rubberex: Partners Titijaya unit to export gloves, PPE to China . Rubberex Corporation (M) has signed a distribution agreement with a unit of Titijaya Land to export gloves, personal protection equipment and medical products to China. The glove maker said it aims to distribute and export the products to the China market via Sinopharm Medical Equipment QuanZhou Co Ltd. (The Edge)

Kejuruteraan Asastera: Bags two contracts worth RM17.58m. Kejuruteraan Asastera has bagged two contracts worth a total of RM17.58m from China Communications Construction Company (M) SB. Kejuruteraan Asastera said it was appointed as the subcontractor for supply, installation, testing, commissioning and maintenance of electrical and extra low voltage services to Core Residences Project @ TRX (Main Building and External Works) for Core Precious Development SB on the three blocks of Pangsapuri Servis located here. (Bernama)

Green Packet: To raise up to RM99m via private placement to fund cloud business . Green Packet has proposed a private placement to raise between RM62.51m and RM98.94m to fund its cloud business. It said it will use RM2.54m as working capital for the cloud business. A balance of anywhere between RM59.78m and RM96.21m will be used to acquire IT infrastructure like servers and network equipment in the next two years. (The Edge)

Ni Hsin: Ni Hsin, Fiatec to jointly develop health, bioenergy products . Ni Hsin Resources has announced a collaboration with Fiatec Biosystem SB to develop health and bioenergy products for its new food and beverage (F&B) business. Its wholly-owned unit Ni Hsin Food & Beverages SB (NHSB) signed a two-year agreement with Fiatec, which is engaged in innovating and developing health food and technology and providing customised health food solution. (The Edge)

Solarvest: Bags two-year moneylender licence from KPKT . Solarvest Holdings has obtained a two-year moneylender licence from the Ministry of Housing and Local Government (KPKT). Solarvest said the licence allows SAMSB to undertake moneylending services in relation to solar panel leasing and other related activities. The two-year licence is effective from Aug 6 and is renewable upon the submission of an application to KPKT. (The Edge)

i-Stone: Enters deal to distribute Siemens software and hardware. i-Stone Group has entered into a deal to distribute Siemens Industry Software Pte Ltd's software and hardware. i Stone said the deal allows ISY to resell Siemens' products, as well as provide value-added integration services to customers. "At the same time, ISY can also cross-sell their own automation solutions to the customers. (The Edge)

Bertam Alliance: Unit bags contract worth RM22.9m. Bertam has secured a sub-contract job worth RM22.9m for the provision of maintenance and replacement of water tank services in six locations in Sabah. The contract was awarded by Teamcons Resources SB. “The commencement date of the contract will be one week from the date of acceptance and the completion date shall be Dec 20, 2021. (Bernama)

Market Update

The FBM KLCI might recover some of the losses yesterday after US stocks finished higher Wednesday as appetite for technology shares, which had taken a pause from their rally in recent days, resumed amid some signs of a slowdown in the spread of the coronavirus pandemic and stronger-than-expected economic data. The Dow Jones Industrial Average rose 289.93 points, or 1.1%, to end at 27,976.84. The S&P 500 added 44.66 points, or 1.4%, finishing at 3,380.35, after briefly trading above its all-time closing high of 3,386.15 set Feb, 19. The Nasdaq Composite climbed 229.42 points, or 2.1%, to end at 11,012.24. In Europe, the pan European Stoxx 600 Europe Index rose 1.1% and the FTSE 100 extended a 1.7% rally from the previous session, ending 2% higher on Wednesday.

Back home, the FBM KLCI pared losses after closing down 8.1 points or 0.52% at 1,556.64 as COVID-19 vaccine hopes prompted investors to buy beaten-down shares of companies badly affected by the coronavirus pandemic and sell shares of rubber glove manufacturers. In the region, China’s CSI 300 index fell 0.7%, while Hong Kong’s Hang Seng Index closed 1.4% higher and Japan’s Nikkei 225 Index edged up 0.4%.

Source: PublicInvest Research - 13 Aug 2020

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