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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 4 Dec 2020, 10:06 AM

 

PublicInvest Research Headlines - 26 Aug 2020

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Economy

US: Consumer confidence at six-year low; underscores concerns about economic recovery. US consumer confidence dropped to a more than six-year low in Aug as households worried about the labour market and incomes, casting doubts on the sustainability of the economy's recovery from the Covid-19 recession. The second straight monthly decrease in consumer confidence reported by the Conference Board, overshadowed an acceleration in new single-family home sales to a more than 13-1/2- year high in July. The ebb in confidence followed the expiration of a USD600 weekly unemployment benefit supplement on July 31 and a flare-up in new coronavirus infections across the country, which forced some jurisdictions to shut down businesses again or pause reopenings. (Reuters)

US: New-home sales surge to highest since December 2006. New-home sales in the US jumped to the highest level in almost 14 years in July, as low mortgage rates helped fuel a suburban construction boom. Purchases of new single-family houses climbed 13.9% from June to a 901,000 annualised pace from an upwardly revised 791,000, government data. Sales of new houses have taken off during the pandemic because borrowing costs have never been lower and listings for previously-owned homes are in short supply. (Bloomberg)

US, China: Trade deal 'alive and well' after top officials review purchase plans . Top US and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal and discussed how to increase lagging Chinese purchases of American goods, lending support to financial markets. The pledge was made in a telephone call between US Trade Representative Robert Lighthizer, US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He — their first formal dialogue since early May — amid concern the deal could be on shaky ground because of worsening US-China ties. "Both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement," the US Trade Representative's office (USTR) said in a statement, after what it described as a regularly scheduled call. (Reuters)

UK: Retail sales fall unexpectedly in August - CBI . UK retail sales declined unexpectedly in Aug despite easing of lockdown measures, survey data from the Confederation of British Industry. The retail sales balance fell to -6% from +4% in July. A net 17% forecast sales to fall further next month, Distributive Trades Survey revealed. At -45%, the retail employment fell at the fastest rate since Feb 2009 in the year to Aug, with an even sharper decline anticipated in the year to Sep. A net 52% forecast employment to fall in the quarter ahead. (RTT)

EU: German 2Q2 GDP contracts less than estimated, business sentiment improves . Germany's economy shrank less than initially estimated in the 2Q but the pace of contraction was the sharpest on record as the coronavirus pandemic shattered spending, investment and trade, revised data from Destatis. Elsewhere, survey results from the ifo Institute showed that German business confidence improved for the fourth straight month in Aug. Gross domestic product fell 9.7% sequentially after shrinking 2% in the 1Q. (RTT)

Australia: High household debt poses risk to spending — RBA . Australia’s household debt, among the highest in the developed world, could exacerbate a severe economic downturn by forcing a pullback in consumption, a Reserve Bank research report showed. “We find that a severe stress scenario would have a somewhat larger effect on consumer spending today than it would have had a decade or two earlier,” according to the report, lead-authored by Jonathan Kearns, head of financial stability at the RBA. The increased sensitivty reflects higher debt levels, a shift to riskier investments and changes in consumer spending patterns, they said. Australians racked up enormous debts as rising incomes and falling interest rates allowed them to take out larger mortgages to pursue escalating property prices. (Bloomberg)

Markets

Rimbunan Sawit: Plans RM192.5m capital reduction to eliminate accumulated losses. Rimbunan Sawit has proposed to undertake a capital reduction to cancel RM192.5m of its issued share capital aimed at eliminating the company's accumulated losses. The capital reduction entails the reduction of its issued share capital via the cancellation of the paid-up share capital which is lost or unrepresented by available assets of RM192.5m, it said. The proposal, subject to shareholders' approval, is expected to be completed by the 4Q of 2020. (The Edge)

TCS: Wins RM68.4m house construction contract from SimeProp. TCS Group Holdings has secured a contract worth RM68.4m from a wholly-owned unit of Sime Darby Property for the construction of 218 units of houses in Elmina Green Three in Sungai Buloh. TCS received the letter of acceptance from Sime Darby Property (City of Elmina) SB, the group said. The contract is for the construction of the double-storey link houses, together with a power sub-station with other infrastructure works, it said. (The Edge)

Tex Cycle: Inks 21-year renewable energy PPA with TNB for Kedah plant. Tex Cycle Technology (M) said its subsidiary has signed the renewable energy power purchase agreement with Tenaga Nasional for a feed-in-tariff (FiT) concession period of 21 years. This is in relation to electricity generated from 4MW biomass at its renewable energy power plant in Gurun, Kedah, the group said. The FiT that was approved by SEDA was at 37.84 sen per kwh, and is scheduled to commence on May 6, 2023. Its 60%-owned subsidiary, Pakar B2E SB has to finalise its financing agreement by Oct 30, 2021. (The Edge)

Lagenda Properties: Buys land in Tapah from UEM Sunrise for affordable housing project. Lagenda Properties, formerly known as DBE Gurney Resources, is buying five parcels of leasehold agriculture land in Tapah, Perak that it plans to develop into an affordable housing township. The group said it will pay RM1.10 per sq ft, or a total of RM29.8m, for the land measuring 623.07 acres in aggregate. The land, which is currently owned by with UEM Sunrise’s subsidiary Symphony Hills SB, has a market value of RM31m, Lagenda said. (The Edge)

Nestle: Registers RM105.5m net profit for 2Q. Nestle (Malaysia) net profit fell by 32.7% to RM105.5m for the 2QFY20, from RM156.9m reported in the same quarter of the previous year, due to the impact of the MCO to its hotel, restaurant & café (Horeca) channels. For the period, Nestle declared an interim dividend of 70 sen per share in respect of the FYE Dec 31, 2020 which will be paid on Oct 8, 2020 (SunBiz)

Pos Malaysia: Narrows net loss in 2Q thanks to strong growth in courier business. Pos Malaysia's net loss for the 2QFY20 narrowed to RM19m, from RM49.2m in the previous quarter, due to higher revenue. Quarterly revenue grew 8.5% QoQ to RM606.1m, which Pos Malaysia attributed the higher revenue mainly to the postal segment, especially its courier business as well as higher postal tariffs. It said the group's courier business recorded a 45% QoQ revenue growth with the increase in demand from e-commerce and online marketplace, with volume growing significantly by 57%. (The Edge)

Market Update

The FBM KLCI might open flat today after the S&P 500 and the Nasdaq notched records Tuesday, on the back of buying in communication services, health care and consumer discretionary sectors. Enthusiasm for equities, however, momentarily buckled earlier in the session after a report on consumer confidence highlighted a division in the perception of the economy on Main Street compared with Wall Street, where equities have recovered to new record highs recently. The Dow Jones Industrial Average traded 60.02 points, or 0.2%, lower to close at 28,248.44, while S&P 500 index rose 12.34 points, or 0.4%, to end at 3,443.62, marking its 17th record close of the year. The Nasdaq Composite Index climbed 86.75 points, or 0.8%, to end at 11,466,47, to end near its intraday record high and log its 38th record finish of 2020. The Stoxx Europe 600 closed off 0.3% and U.K.’s FTSE benchmark posted a 1.1% loss on the day.

Back home, the FBM KLCI closed lower by 13.62 points or 0.87% mainly due to profit-taking activities seen across glove makers. At 5pm, FBM KLCI closed at 1,555.96 points.In the region, China’s CSI 300 rose 0.1%, the Shanghai Composite ended 0.4% higher and Japan’s Nikkei closed with a gain of 1.4%

Source: PublicInvest Research - 26 Aug 2020

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