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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 22 Jan 2021, 10:40 AM

 

PublicInvest Research Headlines - 21 Aug 2020

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Economy

US: Rise in weekly jobless claims clouds labor market recovery. The number of Americans filing a new claim for unemployment benefits rose unexpectedly back above the 1m mark last week, a setback for a struggling US job market crippled by the coronavirus pandemic. Still, in a sign some rehiring is underway, the rolls of those continuing to receive jobless benefits is slowly declining, the Labor Department reported on Thursday, and other data indicated a recovery from the recession triggered by Covid-19 continues, though at a more fitful pace than earlier. (Reuters)

US: Leading economic index jumps for third straight month in July. The Conference Board released a report on Thursday showing its leading economic index for the US increased for the third straight month in July, although the pace growth by the index slowed from the two previous months. The report said the leading economic index jumped by 1.4% in July after surging up by 3.0% in June and by 3.1% in May. "Despite the recent gains in the LEI, which remain fairly broad-based, the initial post-pandemic recovery appears to be losing steam," said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. He added, "The LEI suggests that the pace of economic growth will weaken substantially during the final months of 2020." The Conference Board said the coincident economic index climbed by 1.2% in July following a 2.9% spike in June. (RTT)

EU: German tax revenues stabilize in July, industry seen recovering further. German tax receipts stabilized in July with the expected plunge in fiscal revenues caused by lockdown measures to contain the Covid-19 pandemic proving less steep than originally feared, the finance ministry said on Thursday. Tax receipts of the federal government and the 16 regional state governments edged down by 0.3% YoY after tumbling in the previous months, the ministry said. The economy contracted at its steepest rate on record in the 2Q as consumer spending, company investment and trade collapsed during the peak of the coronavirus pandemic. (Reuters)

EU: ECB policymakers debated flexibility, purchase envelope of asset purchases. ECB policymakers discussed the flexibility and target of the bank's emergency bond purchases that were unveiled to support the euro area economy amid the disruption caused by the Covid-19 pandemic, the minutes of the July 15-16 policy meeting showed on Thursday. The flexibility of the Pandemic Emergency Purchase Programme, or PEPP, was highlighted as the key element of its effectiveness and efficiency in policy transmission, the minutes, which the ECB calls "account", showed. (RTT)

Hong Kong: Inflation turns negative in July. Hong Kong's consumer price inflation turned negative in July due to the government's public housing rental payments, the Census and Statistics Department showed Thursday. Consumer prices fell 2.3% on a yearly basis in July, reversing a 0.7% rise in June. The decrease in July was mainly due to the government's payment of public housing rentals and waiver of two-thirds of rent for tenants of Group B estates by Hong Kong Housing Society in July 2020. Netting out the effects of government measures, underlying inflation slowed to 0.2% from 1.2% in June. (RTT)

Taiwan: July export order growth hits two-and-a-half-year high on work-from-home boom. Taiwan's July export orders grew at the strongest pace in two-and-a-half-years, surging on strong demand for telecommuting products, as the coronavirus pandemic forced millions of people around the world to stay home. The island's export orders, a bellwether of global technology demand, rose 12.4% in July from a year earlier to USD45.6bn, Ministry of Economic Affairs data showed on Thursday. The outcome far exceeded a 3.7% rise projected in a Reuters poll and a 6.5% increase in June. It was the fifth consecutive month of gains and the strongest since Jan 2018. (Reuters)

Philippine: Central bank refrains from rate cut. The Philippine central bank refrained from cutting rates further from the current record low as policymakers await the real impact of previous easing on the economy. The Monetary Board of the Bangko Sentral ng Pilipinas, or BSP, on Thursday, retained the overnight reverse repurchase facility rate at a record low 2.25%. The interest rates on the overnight deposit and lending facilities were also kept unchanged at 1.75% and 2.75%, respectively. The bank had reduced its key rate by 50 basis points each in June, April and March and by 25 basis points in Feb. (Reuters)

Markets

SunCon: Unit signs agreement with MRCB George Kent for LRT3 package. Sunway Construction’s (SunCon) unit has signed an agreement with MRCB George Kent (MRCBGK) for Package GS07-08 of the LRT3 project. SunCon said the agreement was signed following the appointment of MRCBGK as a turnkey contractor as a result of the change from a project delivery partnership to a turnkey contract pursuant to a contract between Prasarana and MRCBGK. (The Edge)

PUC: Aborts portable battery rental collaboration with Jiedian, opts for Anker. PUC has aborted plans to collaborate with China's Shenzhen Jiedian Technology Co Ltd to enter into the portable battery rental market in Malaysia. In Dec 2019, PUC's had entered into a MoU with JieDian for the purpose. PUC and JieDian had mutually agreed to terminate the MoU with immediate effect in view that PUC has entered into a separate JV agreement with Anker Innovations Ltd to undertake the business. (The Edge)

Pos Malaysia: Sells 51% of loss-making air cargo unit for RM40m cash. Pos Malaysia is selling 51% of its air cargo business in East Malaysia to Asia Cargo Network SB (ACN) for RM40m cash. It has entered into a share subscription agreement (SSA) and shareholders agreement (SHA) with ACN to dispose of a 51% stake in Pos Asia Cargo Express. Pos Malaysia noted that WCA is a non-core business, allowing for the latter to be managed more effectively with improved reliability and service performance by ACN. (The Edge)

Pharmaniaga: Posts higher 2Q net profit, revenue at RM645.8m. Pharmaniaga’s net profit increased 7.5% YoY to RM9.98m in 2QFY20. It said this was driven by increased demand in the non-concession business. Revenue in 2QFY20 edged up 7.3% YoY to RM645.76m. Acting MD Mohamed Iqbal Abdul Rahman said its performance was primarily a result of higher sales of PPE due to the ongoing Covid-19 pandemic. "In tandem, Pharmaniaga continued to ensure a stable stream of medicines and medical supplies to MoH facilities, coupled with provision of logistics and distribution services." (NST)

Gagasan Nadi Cergas: Projects to show earnings visibility in years. Gagasan Nadi Cergas’ revenue for 2QFY20 dipped to RM40.1m, while its net profit stood at RM1.6m, compared to RM6.9m previously, bogged down by MCO. It expects progress in its projects to catch up in 2H20, with ongoing construction of affordable houses and essential projects including hospital and college providing earnings visibility for the next six years. Group MD Wan Azman Wan Kamal said the company was optimistic of future prospects given its RM1.2bn outstanding construction order book that would mitigate its weaker 2QFY20 results. (NST)

Automotive (Neutral): Vehicle sales expand 13% YoY in July despite Covid-19 pandemic. Despite the Covid-19 pandemic, Malaysia’s July 2020 car sales volume rose 13% YoY and 29% MoM to 57,552 units on sales tax exemption incentive for CKD and CBU vehicles amid aggressive promotional campaigns by manufacturers and distributors, according to MAA. Looking forward, MAA said it expects sales volume in Aug 2020 to be maintained at July 2020 levels on sales tax exemption incentive for CKD and CBU vehicles besides ongoing promotional campaigns by car companies. (The Edge)

Market Update

  • The FBM KLCI might open higher today after U.S. stock-market benchmarks booked gains on Thursday and the Nasdaq closed at a record high, as investors rushed to large-capitalization technology and e-commerce shares for safety, after a pair of economic reports set off concerns about the broader U.S. economy’s tenuous recovery from the coronavirus epidemic. The Dow Jones Industrial Average gained 46.85 points, or 0.2%, to end at 27,739.73, fending of a four-session losing streak. The S&P 500 rose by 10.66 points, or 0.3%, to close at 3,385.51. The Nasdaq Composite climbed 118.49 points, or 1.1%, to wrap up at 11,264.95, marking its 35th record of 2020. Global equities were on the backfoot. China’s CSI 300 fell 1.3% and Japan’s Nikkei closed 1% lower. The Stoxx Europe 600 finished off 1.1% and U.K.’s FTSE benchmark ended the session off 1.6%

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Source: PublicInvest Research - 21 Aug 2020

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