PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 22 Oct 2020, 9:57 AM


PublicInvest Research Headlines - 4 Sept 2020

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US: Weekly jobless claims pull back below 1m. A report released by the Labor Department showed first-time claims for US unemployment benefits tumbled by more than expected in the week ended August 29th. The Labor Department said initial jobless claims declined to 881,000, a decrease of 130,000 from the previous week's revised level of 1.011m. Economists had expected jobless claims to drop to 950,000 from the 1.006m originally reported for the previous week. However, Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics, noted the decrease in jobless claims was largely due to a shift by the Labor Department to a new seasonal adjustment process. (RTT)

US: Service sector growth slows modestly in August. Service sector activity in the US saw continued growth in the month of August, according to a report released by the Institute for Supply Management, although the pace of growth slowed modestly. The ISM said its services PMI dipped to 56.9 in August from 58.1 in July. Economists had expected the index to edge down to 57.0. The modest decrease by the headline index partly reflected a notably slower pace of growth in new orders, as the new orders index tumbled to 56.8 in August from 67.7 in July. The business activity index also slumped to 62.4 from 67.2. Meanwhile, the ISM said the employment index jumped to 47.9 in August from 42.1 in July, indicating a modest contraction in employment in the service sector. (RTT)

EU: Private sector recovery loses momentum. The euro area private sector recovery lost momentum in August amid fears of another wave of coronavirus infections, final data from IHS Markit showed. Another report from Eurostat showed that retail sales fell unexpectedly in July on weak non-food products turnover. The composite output index fell to 51.9 in August from 54.9 in July. However, the score was above the neutral 50.0 and the flash estimate of 51.6. There was a divergence in performance between manufacturing and service sectors. Manufacturing output grew the most since April 2018, while the growth in services eased markedly from July. (RTT)

UK: Service sector growth accelerates as economy reopens. The UK service sector expanded at the fastest pace in more than five years in August as the economy reopened after the lockdown period in the second quarter, final data from IHS Markit showed. The IHS Markit/Chartered Institute of Procurement & Supply final services Purchasing Managers' Index rose to 58.8 in August from 56.5 in July. This was the highest since April 2015 but the score was below the flash estimate of 60.1. (RTT)

UK: Job losses accelerate in August, PMI shows. Job losses at British companies accelerated in August despite an upturn in demand, a survey showed, in a bleak sign ahead of the closure of the government's coronavirus furlough scheme at the end of next month. The IHS Markit/CIPS Composite PMI rose to a six-year high of 59.1 from 57.0 in July. Still, that was revised down from a preliminary "flash" reading of 60.3, hinting at a weaker end to activity last month. (Reuters)

China: Service sector expands strongly in August. China's services activity expanded strongly in August as businesses continued to recover from the coronavirus pandemic, survey data from IHS Markit showed. The Caixin services PMI fell marginally to 54.0 from 54.1 in July. The latest uptick extended the current sequence of growth to four months, signaling that the sector continued to recover from the marked drops in activity earlier in the year following the Covid-19 outbreak. (RTT)

Indonesia: Economy to contract in 3Q, says Finance Minister. Indonesian Finance Minister Sri Mulyani Indrawati predicted that the country's economic growth in the third quarter would undergo contraction, reported Xinhua news agency. "The economic growth would also be still under the neutral growth in the 4Q20 because efforts to recover economic activities are still very weak," the minister told a working meeting with the House of Representatives. Public activities had been increasing since May to June in the hope the consumption would recover gradually, she said, adding that the expectation index from June to July was flat. (Bernama)


Hibiscus (Neutral, TP: RM0.65): Unit wins three licences to mature, producing blocks in offshore UK . Hibiscus Petroleum has won three licences from the UK Oil and Gas Authority. One license is for Block 21/24d, located 4km away from the Teal Manifold of the Anasuria Cluster. Another license is for Blocks’ 21/19c and 21/20c which are contiguous with the Cook field. The third licence is for Block 15/17a which is 8km away from the Marigold field operated by the group. (The Edge)

Astro (Outperform, TP: RM1.55): Sees headroom for growth in sports, eyes new ways to drive revenue in digital space . Astro Malaysia Holdings is ramping up to provide its most far reaching coverage of the Premier League football competition that begins on Sept 12. As the official and exclusive Premier League broadcaster in Malaysia, it will televise all 380 matches live on television and on Astro Go.

TNB (Neutral, TP: RM12.42): Expects slightly lower electricity tariff next year. Tenaga Nasional Bhd (TNB) projects slightly lower electricity tariff next year following the reduction in the cost of production of coal and gas currently. President/chief executive officer Datuk Seri Amir Hamzah Azizan said, however, the tariff rate would depend on the Energy Commission (ST) which would make a detailed evaluation before proposing it to the Cabinet. "The price of coal is around RM43 per tonne compared with RM65 per tonne during the same time last year, so there’s some savings there," (The Star)

Axis REIT (Neutral, TP: RM1.91): To buy Shah Alam warehouse for RM11.87m . Axis REIT is to buy a single-story warehouse located on 8,732.6 sq m of leasehold industrial land in Section 15, Shah Alam for RM11.87m from Melewar Industrial Group. The purchase is aimed at strengthening its portfolio of industrial properties. Axis REIT will use a financing facility from existing credit lines to buy the warehouse. (The Edge)

Ho Wah Genting: Calls off ICPS plan. Ho Wah Genting has called off its proposed placement of up to 63.69m irredeemable convertible preference shares (ICPS) shares to 15 investors, including its substantial shareholder Ho Wah Genting SB (HWGH) for 49.7 sen per ICPS share. It will still issue 40.25m new ordinary shares at 49.7 sen apiece to settle RM20m worth of debts owed to HWGH and Prime King Investment Ltd. (The Edge)

K-One Tech: Gets nod from Medical Device Authority to supply nasal swabs . K-One Technology has received the greenlight from the Medical Device Authority to supply nasal swabs in Malaysia. It plans to sell the swabs on their own or in a bundle with vials, depending on the requirements of end users. (The Edge)

UWC: 4Q net profit soars 85% from a year ago . UWC’s net profit for the 4QFY20 soared by 85.1% to RM18.65m, from RM10.07m in the same quarter of the previous year, attributed to improved manufacturing efficiencies, higher product value and lower expenses due to the absence of listing fees incurred previously. The group said it remains optimistic over its prospects ahead despite unfavourable economic conditions due to the Covid-19 pandemic disruption to the global supply chain and economic sentiment. (SunBiz)

Market Update

The FBM KLCI might open lower today after US technology and other high-flying stock sectors suffered steep losses Thursday as investors appetite waned following an extraordinary rally in the past month, dragging the rest of the stock market lower. The Dow Jones Industrial Average ended with a loss of 807.77 points, or 2.8%, at 28,292.73, after dropping more than 1,000 points at its session low. The S&P 500 closed 125.78 points lower, down 3.5%, at 3,455.06. The Nasdaq Composite tumbled 598.34 points, or 5%, to end at 11,458.10. The declines marked the biggest one-day drops for all three indices since June. The Stoxx Europe 600 index declined 1.4%, while the UK’s benchmark FTSE lost 1.5%.

Back home, the FBM KLCI closed down 22.14 points or 1.44% at 1,515.40 while the number Bursa Malaysia decliners rose past 800 on profit-taking and as investors took cue from China share losses. In the region, Hong Kong’s Hang Seng Index fell 0.5% and China’s CSI 300 closed 0.6% lower. The Nikkei rose 0.9%.

Source: PublicInvest Research - 4 Sept 2020

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