PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 30 Oct 2020, 10:22 AM


PublicInvest Research Headlines - 18 Sept 2020

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US: Jobless claims resume drop in sign of gradual improvement . The number of Americans applying for jobless benefits resumed its decline, signaling a gradual improvement inthe battered labour market. Jobless claims in regular State programs decreased by 33,000 to 860,000 in the week ended Sept 12, which coincides with the reference period for the Government’s monthly jobs report, according to Labor Department figures. Continuing claims, the total number of Americans on state benefit rolls, fell by almost 1m, to 12.6m, in the week ended Sept 5. The decline in the number of Americans seeking financial help after losing work — following a slight increase in the prior week — is a welcome sign that the economic rebound is still grinding forward despite a struggle to contain the coronavirus. At the same time, overall claims remain historically high, and the continuing stalemate over a new round of federal stimulus is squeezing millions of people after supplemental benefits expired in July and another temporary program started to run out of funds. (Bloomberg)

US: Housing starts fall more than forecast on multifamily drop . US home starts fell more than forecast in Aug, reflecting less construction of apartments and a decline in the tropical storm-hit South, representing a pause in momentum for a housing market that’s been a key source of fuel for the economy. Residential starts decreased 5.1%, to a 1.42m annualized rate from a month earlier, according to a government report released. The decline follows a downwardly revised 17.9% surge in the prior month. Applications to build, a proxy for future construction, decreased 0.9%, reflecting fewer permits for multifamily 12 years. The 1.47m rate of permits was below the median estimate for 1.51m though it remains above the Feb pre-pandemic rate. (Bloomberg)

EU: Euro zone banks get EUR73bn ECB relief to withstand pandemic . The ECB gave euro zone banks relief worth EUR73bn from a key capital requirement in order to help them keep credit flowing amid the coronavirus pandemic. The 115 banks directly supervised by the ECB will be allowed to exclude some of their exposure to the central banks, including deposits, from the calculation of their leverage ratio until next June. The ECB said this exclusion would raise the aggregate leverage ratio of 5.36% by about 0.3%age points, equal to some EUR73bn based on the latest available data as of the end of March. (Reuters)

UK: BoE Holds Rate At Record Low; QE At GBP745bn . Policymakers of the BoE unanimously decided to hold its record low interest rate and quantitative easing unchanged. The nine-member Monetary Policy Committee unanimously voted to hold the interest rate at 0.10%, as widely expected. The bank had altogether reduced the rate by 65 basis points at two unscheduled meetings in March. The bank retained the size of the asset purchase programme at GBP745bn. The Committee judged that the existing stance of monetary policy remains appropriate. The MPC said it does not intend to tighten monetary policy until there is clear evidence that significant progress is being made in eliminating spare capacity and achieving the 2% inflation target sustainably. CPI inflation is expected to remain below 1% until early 2021, albeit slightly higher than expected at the time of the August Report. (RTT)

Hong Kong: Jobless rate steady in Aug . Hong Kong's jobless rate remained stable in the June to Aug period, data from the Census and Statistics Department showed. The jobless rate remained unchanged at 6.1% during the June to Aug. Economists had forecast a 6.3% rate. The underemployment rate rose to 3.8% during June to Aug from 3.5% in May-July. The number of unemployed persons increased by 5,800 to 248,300 during June Aug from 242,500 in the preceding period. Employment rose by 3,400 to 3.64m in the three month ended in Aug from 3.64m in the previous month. (RTT)

Indonesia: Leaves rates unchanged again . Indonesia's central bank left its key interest rates unchanged on Thursday it expects inflation to remain low and economic expansion to be gradual. Bank Indonesia left the 7-day reverse repo rate unchanged at 4% as expected. The bank had reduced the key interest rate four times this year to support the economy amid the crisis caused by Covid-19. The overnight deposit facility rate and the lending facility rate were maintained at 3.25% and 4.75%, respectively. "The decision is consistent with the need to maintain rupiah exchange rate stability against a backdrop of projected low inflation," the bank said. (RTT)

New Zealand: Economy in deepest recession as 2Q GDP shrinks. New Zealand fell into its deepest economic slump on record in the 2Q as its battle against the coronavirus pandemic paralysed business activity, official data showed. GDP contracted a seasonally adjusted 12.2% QoQ, its sharpest quarterly contraction on record and largely in line with forecasts of a 12.8% decline from economists polled by Reuters. GDP fell 12.4% YoY. The Reserve Bank of New Zealand had forecast a quarterly and annual GDP decline of 14% in its Aug statement. Growth has been hit by a standstill in economic activity as a strict nationwide coronavirus lockdown in April and parts of May forced almost everyone to stay at home and businesses to shut. (Reuters)

Japan: Overall inflation slows to 0.2% on year in Aug . Overall nationwide consumer prices in Japan were up 0.2% on year in Aug, the Ministry of Internal Affairs and Communications said - in line with expectations and slowing from 0.3% in July. Core CPI, which excludes volatile food costs, sank an annual 0.4% - again matching forecasts following the flat reading in the previous month. Individually, prices were down for fuel, education and recreation - while prices were higher for food, housing, furniture, clothing and medical care. On a seasonally adjusted monthly basis, overall inflation slipped 0.1% and core CPI dropped 0.4%. (RTT)


PetGas: Issues RM3bn sukuk to diversify funding for PLNG2. Petronas Gas' (PetGas) 65% owned unit, Pengerang LNG (Two) SB (PLNG2) is raising RM3bn sukuk for capital structure optimisation, general capital expenditure, working capital and revenue-liability hedging. PetGas said the proceeds from the issuance would be utilised for the repayment of shareholders' advances and/or redemption of redeemable preference shares, payment towards prepayment of the jetty usage agreement between Pengerang Terminals (Two) SB and PLNG2 as well as for working capital. (Business Times)

Advancecon: Bags RM30m ECRL job. Advancecon Holdings' wholly-owned Advancecon Infra SB (AISB) has been appointed as subcontractor for the construction and completion of subgrade and related works of the East Coast Rail Link (ECRL) worth RM29.8m. Advancecon said AISB had received the Letter of Acceptance (LoA) from China Communications Construction (ECRL) SB. The contract is for 14.5 months from March 1, 2021 till May 15, 2022. Advancecon plans to fund the contract via internally generated funds and/ or external borrowings. (Business Times)

ACO Group: Seeks to raise RM23m to partly fund acquisition. ACO Group plans to buy a 49% stake in Focus Electrical Malaysia SB (FEMSB) for RM7.35m, which will be satisfied by a combination of RM5.9m cash and the remaining RM1.47m via the issuance of new shares in ACO Group. To finance the proposed acquisition of FEMSB and the subsequent working capital injection, ACO Group is proposing to raise RM22.6m via a private placement of up to 56.5m new shares. The proposed acquisition and private placement exercise are expected to be completed by the 4Q of this year. (The Edge)

Sino Hua-An: Unit inks deal with South African firm for SnappiStore App. Sino Hua-An International’s unit Touchpoint International SB has inked a deal with Technische Investment (PTY) Ltd for the use and commercialisation of a mobile application called SnappiStore App (SSA). The deal allows the group to gain a footprint in South Africa, in line with its overall strategy to establish its presence in the international scene. (The Edge)

XOX: In pact to deploy cybersecurity solutions with Hong Kong-based Nexion . XOX has signed an agreement with Nexion to explore a deployment of next generation cyber security systems in Malaysia. Nexion, listed on the Hong Kong Stock Exchange's Gem Board, is a cyber security software company, handling various aspects of cyber security including anti malware, anti-phishing and data protection. (Business Times)

Daibochi: Wraps up FY20 with record RM47.7m net profit. Daibochi posted a net profit of RM11.2m for its 4QFY20, while its revenue for the period stood at RM155.8m, as the regional and domestic demand for flexible plastic packaging (FPP) from the F&B and fast moving consumer goods (FMCG) sectors remained resilient. For the full year, the group posted its highest-ever net profit of RM47.7m. The group has proposed a final dividend of 3 sen per share payable on Jan 15, 2021. (SunBiz)

Market Update

The FBM KLCI might end with a negative note today as US stocks finished Thursday with losses, but were well off the session lows, as investors digested Federal Reserve Chairman Jerome Powell’s dour economic outlook along with lackluster US economic data. The Dow Jones Industrial Average closed 130.40 points, or 0.4%, lower at 27,901.98, after touching a low of 27,647.93. The S&P 500 index fell 28.48 points to end at 3,357.01, a decline of 0.8%, following a momentary dip below its 50-day moving average at around 3,339. The Nasdaq Composite Index retreated 140.19 points, or 1.3%, to 10,910.28. European equities also traded lower, with the Stoxx Europe 600 index ending down 0.5%, and the U.K.’s benchmark FTSE 100 closing 0.5% lower.

Back home, the FBM KLCI finished 1.19% or 18.21 points lower at 1,513.07 points, in line with declines seen among other regional indices following the release of the US Federal Reserve’s policy statement. In the region, Hong Kong’s Hang Seng Index closed 1.6% lower and the Shanghai Composite lost 0.4%. Japan’s Nikkei closed 0.7% lower.

Source: PublicInvest Research - 18 Sept 2020

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