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Author: PublicInvest   |   Latest post: Mon, 23 Nov 2020, 11:55 AM

 

PublicInvest Research Headlines - 14 Aug 2020

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Economy

US: Jobless claims below 1m for first time in pandemic. The number of Americans applying for unemployment benefits fell below 1m for the first time since the pandemic began in March, suggesting the economic recovery is gaining some traction amid a deceleration in coronavirus infections. Initial jobless claims in regular State programs fell by 228k to 963k in the week ended Aug 8, Labor Department data showed. Continuing claims decreased to 15.5m in the week ended Aug 1, the lowest since early April. US stock futures reversed their earlier decline following the jobless claims, a day after the benchmark closed within 0.2% of its all-time high. Economists were expecting initial claims of 1.1m and continuing claims of 15.8m, based on median estimates. Both figures remain well above the highs reached during the last economic downturn. (Bloomberg)

US: Import prices climb more than expected, export price growth also exceeds estimates. Import and export prices in the US both increased by more than expected in the month of July, according to a report released by the Labor Department. The report said import prices climbed by 0.7% in July after surging up by 1.4% in June. Economists had expected import prices to rise by 0.4%. The bigger than expected increase in export prices came as prices for fuel imports soared by 6.9% in July after skyrocketing by 21.9% in June. The Labor Department said a 7.8% jump in petroleum prices more than offset a 9.1% slump in natural gas prices. Excluding fuel imports, import prices edged up by 0.2% in July after rising by 0.3% in June. (RTT)

EU: German consumer prices fall as estimated. German consumer prices fell in July, as initially estimated, mainly due to the reduction in the value added tax, final data from Destatis revealed. The consumer price index fell 0.1% in July, after a 0.9% rise in June, as initially estimated. On a monthly basis, consumer prices fell 0.5% July, as estimated. Prices for transport declined the most, by 3.2% yearly in July and communication cost fell 2.% . Prices for clothing and footwear, and furniture, household equipment decreased by 0.7% and 0.4%, respectively. Meanwhile, prices for alcoholic beverages and tobacco grew 3.2%. Excluding food and energy, inflation came in at 0.8%. (RTT)

EU: German companies expect to return to normal in 11 months – Ifo. German companies expect it would take eleven months on an average before their business situation turns to normal, a survey from the ifo Institute showed. The survey showed that the coronavirus is having particularly lasting effect on service providers. Service providers said it will take 11.7 months to return to business as usual. In construction, it is expected to take 11.1 months and 10.3 months in trade. Manufacturers said it might take 10.1 months to return to normal. "The road to normalcy is still very long for many companies," said ifo researcher Klaus Wohlrabe. "Even once all public restrictions are lifted, companies will still have to deal with their consequences." (RTT)

Japan: BoJ paying banks to boost pandemic relief, compensates for negative interest rates. As the BoJ tries to pump more funds to companies hit by the pandemic, it is offering banks hundreds of millions of dollars in bonuses. Record bank lending in recent months suggests the BOJ's plan is working -- a rare success of late in its battle to revive the economy -- but it is also a sign that policymakers' focus is now more on supporting banks, rather than keeping rates low. (Reuters)

India: Inflation accelerates in July. India's consumer price inflation accelerated in July as supply-side disruptions lifted food price growth, data from the National Statistical Office revealed. Consumer price inflation rose unexpectedly to 6.93% in July from 6.23% in June. Economists had forecast the rate to ease to 6.15%. Food price inflation accelerated to 9.62% from 8.72% a month ago. Clothing and footwear prices moved up 2.91% annually and housing cost advanced 3.25%. (RTT)

Markets

Wah Seong (Neutral, TP: RM0.77): Sells 70% stake in pipe manufacturing unit for RM30.37m . Wah Seong Corp is disposing of a 70% stake in Spirolite (M) SB (SPRL) to Lesso M Holdings SB for RM30.37m cash, to collaborate with the latter in the pipeline manufacturing business. Under the deal, Wah Seong will keep the remaining 30% in SPRL, but there is a put option to sell the remaining stake to Lesso. "The rationale is to collaborate with Lesso who is the current market leader that possesses state-of-the-art technology in the pipeline manufacturing business and wide international network which is capable of elevating the business to the next level," said Wah Seong. (The Edge)

GPA: Confirms receiving RTO offer . GPA Holdings confirmed that it has been approached by data centre operator for Regal Orion SB for a possible reverse takeover. The battery manufacturer said its board and major shareholder cum non independent and non-executive chairman Tan Sri Tan Hua Choon have been approached by several parties, including Regal Orion, for a possible asset injection into GPA. (The Edge)

Scientex: Proposes to acquire land in Melaka for RM260.2m. Scientex’s indirect unit, Scientex Heights SB, has proposed to acquire two parcels of freehold land measuring 549.342 hectares in Jasin, Melaka for RM260.2m to boost its existing landbank. Scientex Heights today entered into a sale and purchase agreement with the proprietor, IOI Corporation, and vendor, GLM Emerald Industrial Park (Jasin) SB. The group said the land are proposed to be developed into a mixed property development. “The landbank expansion is also in line with the goal of Scientex Group to build more affordable homes with an objective of completing 50,000 affordable homes throughout the nation by 2028,” it said. (Bernama)

Berjaya Corp: Calls off Singer acquisition . Berjaya Corp has mutually terminated the memorandum of understanding it entered into with Berjaya Retail SB on June 2 to acquire 100% of Singer (Malaysia) SB for RM536m. In a Bursa filing, the group said it was due to business challenges and uncertainty in the recovery of the economy after the Covid-19 outbreak. (SunBiz)

HSS Engineers: Expects revival in public transportation, water infra projects . HSS Engineers expects to see a revival in the public transportation and water infrastructure projects, as the federal government is anticipated to roll out pump-priming initiatives to generate multiplier effects in the overall economy. The positive progress of ongoing projects and contained operating expenditure enabled the group to report RM2.65m net profit in 2Q20, a turnaround from net loss of RM2.81m a year ago on the back of higher revenue. (SunBiz)

Heineken: Posts first loss-making quarter as MCO impacts, no dividends declared. Heineken Malaysia incurred a net loss of RM18.19m for its 2Q20 — its first loss-making quarter — compared with a net profit of RM65.7m it made a year ago, as its business was impacted by the MCO that was implemented to curb the spread of the Covid-19 pandemic. Quarterly revenue halved to RM253.74m from RM512.58m a year ago. In view of the current economic conditions, its board of directors did not recommend any dividend, saying it will re-evaluate the situation at the close of the financial year. (The Edge)

Market Update

The FBM KLCI might open lower today as US stocks finished mostly lower Thursday, with the S&P 500 slipping into negative territory after briefly trading above its all-time high from Feb. 19 for a second day in a row. Investors were cheered by data that showed an unexpectedly large drop in the number of first-time jobless claims last week, but continue to watch a stalemate between congressional Democrats and the White House over additional coronavirus aid. The Dow Jones Industrial Average fell around 80 points, or 0.3%, to close near 27,897 while the S&P 500 shed around 7 points, or 0.2%, finishing near 3,373. The Nasdaq Composite ended in positive territory, as enthusiasm for a rotation away from tech stocks toward more economically sensitive cyclicals continued to cool. The Nasdaq rose around 30 points, or 0.3%, to around 11,043. In Europe, the markets finished broadly lower with shares in London leading the region. The FTSE 100 was down 1.50% while France's CAC 40 was off 0.61% and Germany's DAX was lower by 0.50%.

Back home, the FBM KLCI closed up 19.78 points or 1.27% at its intraday high of 1,576.42, lifted partly by banking and rubber glove manufacturers’ share price rise as the broader market took cue from US stocks’ overnight gain. Today, trade volume across Bursa Malaysia however ended sharply lower at 11.67bn securities worth RM4.97bn. In the region, the Nikkei 225 gained 1.78% and the Shanghai Composite rose 0.04%. The Hang Seng lost 0.05%.

Source: PublicInvest Research - 14 Aug 2020

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