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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 23 Oct 2020, 9:35 AM

 

PublicInvest Research Headlines - 24 Sep 2020

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Economy

  • EU: Private sector stagnates on virus resurgence. Following the resurgence of the coronavirus infection rates, the euro area private sector stagnated in September as faster growth in manufacturing was offset by a renewed downturn in the service sector, flash survey data from IHS Markit showed. The composite output index declined to 50.1 in September from 51.9 in August. Economists had forecast the reading to drop to 51.7. Having rebounded in July and August from Covid-19 lockdowns during the second quarter, the PMI has since indicated a near stalling of the economy as rising infection rates and ongoing social distancing measures curbed demand. The data suggest that the recovery is grinding to a halt, with activity in the services sector probably contracting, an economist at Capital Economics, said. And with some governments now imposing additional, stricter restrictions, there is a clear and growing risk that it goes into reverse, at least in the countries worst affected by the virus, the economist added. Manufacturing output growth accelerated in September to the fastest since February 2018, while services recorded the largest contraction of output since May. (RTT)
  • EU: German manufacturers benefit from foreign demand, but services lose steam – PMI. Germany’s private sector continued to recover from the coronavirus shock as foreign demand gave exportoriented manufacturers a boost which helped compensate for weakness in domestically-driven services, a survey showed. Markit’s flash composite PMI edged down to 53.7 in September from 54.4 in the previous month. This undershot the consensus forecast of analysts who had expected a smaller decline The main drag came from the service sector, where the flash PMI declined to 49.1, its lowest reading since June. Manufacturing proved more resilient, with the flash PMI rising to 56.6, its highest level in more than two years. Markit economist Phil Smith said the survey data showed a growing divergence in trends between manufacturing and services.to 54.1. (Reuters)
  • EU: German consumer confidence set to rise marginally in October. German consumer confidence is set to rise slightly in October, survey data from the market researcher GfK showed. The forward-looking consumer sentiment index rose to -1.6 in October from -1.7 in September. Despite rising infection figures and the increasing fear of tighter restrictions caused by the pandemic, the consumer climate has stabilized, Rolf Burkl, GfK consumer expert said. "The further course of the infection rate in Germany and the situation in the labor market will decide whether the previous month's downturn remains a flash in the pan and whether consumer mood is able to recover in the coming months." While economic and income expectations were on the rise, propensity to buy has taken a hit. Consumers assessed that the largest euro area economy is clearly on the road to recovery. The economic expectations index gained 12.4 points to 24.1 in September. A stable labor market and the falling number of short-time workers supported the rising economic optimism. (RTT)
  • UK: Private sector recovery loses momentum in September. The UK private sector growth eased in September due to the persistent disruptions to business operations caused by the coronavirus pandemic, flash survey data from IHS Markit showed. The IHS Markit/Chartered Institute of Procurement & Supply composite output index fell to 55.7 in from 59.1 in the previous month. The score was forecast to fall moderately to 56.3. The slowdown reflected weaker rises in both manufacturing production and service sector activity. The services PMI came in at 55.1, down from 58.8 a month ago and below economists' forecast of 56.0. Likewise, the manufacturing PMI declined to 54.3 in September from 55.2 in the prior month. The expected reading was 54.1. "The indication from the survey that growth momentum is quickly lost when policy support is withdrawn underscores our concern over the path of the labour market once the furlough scheme ends next month, and raises fears that growth could fade further as we head into the winter months, especially as lockdown measures are tightened further," Chris Williamson, chief business economist at IHS Markit, said. (RTT)
  • Japan: BoJ’s Kuroda vows to keep firms funded amid economic uncertainties. Bank of Japan (BoJ) governor Haruhiko Kuroda said the central bank will continue to work closely with the government to ease corporate funding strains, as the coronavirus crisis keeps the economic outlook highly uncertain. The BoJ will also pay heed to requests from businesses to keep assisting corporate funding, Kuroda said, signaling his readiness to extend the March 2021 deadline for programmes aimed at pumping money to companies hit by Covid-19. "It's true corporate funding remains tight. We'll of course monitor developments carefully and take additional easing steps without hesitation if necessary," Kuroda told. "We'd like to continue supporting corporate funding, working closely with the government," he said. With the immediate hit from the pandemic easing, the BoJ kept monetary policy steady and upgraded its view on the economy to say it was starting to pick up. (Reuters)
  • Singapore: Consumer prices decline further. Singapore's consumer prices continued to fall in August, data from the Monetary Authority of Singapore and the Ministry of Trade and Industry showed. The CPI fell 0.4% YoY in August, same as seen in June. Economists had expected a 0.5% decline. This fall in the CPI was largely due to a smaller decline in private transport costs. MAS core CPI, which excludes the costs of accommodation and private road transport, fell 0.3% annually in August, following a 0.4% decrease in the preceding month. The latest decline can be attributed to smaller declines in the costs of services, retail & other goods and electricity & gas. The statistical office expects external sources of inflation to remain benign in the coming quarters, amid weak global demand condition. Oil prices would remain low for a long period, while international food prices rises amid imporved supply chain condition, the agency said. Both MAS Core Inflation and CPI-All Items inflation are forecast to average between -1% and 0% in 2020, the statistical office and MAS said. (RTT)

Markets

  • Land & General: To launch two projects with RM677m GDV in 2021. Land & General aims to launch two new development projects in Shah Alam and Bandar Sri Damansara with a combined GDV of RM677m. He said unbilled sales now stand at RM160m, with its property overhang at RM30m. As for landbank, it has 1,423ha of land in Peninsular Malaysia including 1011.7ha of estate land earmarked for future township developments. (Bernama)
  • Ekovest: To list Duke in 3Q 2021, aims to raise RM2bn. Ekovest aims to list its toll concession arm in the 3Q of next year, targeting to raise about RM2bn to RM3bn to pare down debts and for working capital. The group's concession arm owns and operates the Duta-Ulu Kelang Expressway (Duke) comprising Duke 1, 2 and 3. Duke 1 and 2 are operational, while Duke 3 is under construction and set to collect tolls starting next year. (NST)
  • Favelle Favco: Clinches purchase orders totalling RM56.1m. Favelle Favco said it has bagged RM56.1m in purchase orders for its cranes since Aug 27. It will be supplying an offshore crane to ExxonMobile Exploration and Production Malaysia Inc, expected to be delivered in the 1Q2021. Two other contracts are to supply tower cranes to TES Inc and Noronha Holdings Pty Ltd respectively, to be delivered by 2Q21 and 4Q20 respectively. (The Edge)
  • WZ Satu: Files RM59m suit after subsidiary fails to meet profit guarantee. WZ Satu has filed a RM59.2m lawsuit over the failure by its subsidiary to achieve the profit guarantee and shareholders' fund guarantee given in 2014 when the subsidiary was acquired. The group said it is suing Datuk William Tan Chee Keong, Choi Chee Ken and Pacific Trustees over WZS BinaRaya SB's failure to achieve the two guarantees stated in the share sale agreement (SSA). (The Edge)
  • UMW: Court strikes out Deepak’s suit against UMW Toyota over Selangor land. The High Court has struck out a claim against UMW Holdings’ subsidiary UMW Toyota Motor SB made by carpet salesman Deepak Jaikishnan concerning three pieces of land in Selangor. The group said the court had also ordered Deepak to pay costs to UMW Toyota. (The Edge)
  • Encorp: Plans private placement to fund expansion activities and working capital. Encorp plans to raise RM5.5m via a private placement to fund its business expansion activities and working capital requirements, as well as to address its public shareholding spread. It said it will be placing 30.61m shares, representing 10% of its share capital to selected third-party investors. The exercise is expected to be completed in the 1Q of 2021. (The Edge)
  • Solution Group: Signs agreement with CanSino to distribute novel coronavirus vaccine. Solution Group's subsidiary Solution Biologics SB and China-based CanSino Biologics Inc signed a registration, manufacturing and commercialisation agreement, which will enable Solution Biologics to market and distribute in Malaysia the novel coronavirus vaccine developed by CanSino. It said Solution Biologics will register with Malaysia's National Pharmaceutical Regulatory Agency to apply for the market authorisation certificate. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today as major U.S. stock indices closed lower on Wednesday, sliding in the final hour of trade, as market participants struggled to shake off worries about a lack of a coronavirus aid package and rising COVID-19 cases. The Dow Jones Industrial Average tumbled 525.05 points, or 1.9%, to close at 26,763.13, while the S&P 500 lost 78.65 points, or 2.4%, ending at 3,236.92. The Nasdaq Composite Index shed 330.65 points, or 3%, finishing at 10,632.99, after plunging as low as 3%. On the economic front, Federal Reserve Vice Chairman Richard Clarida said Wednesday that policy makers won’t contemplate raising interest rates until inflation is clearly back at 2%—and possibly even beyond. Randal Quarles, the Fed’s vice chairman for banking supervision, said he’s optimistic about the outlook but also agreed with Fed Chair Powell that continued support will be required to sustain a robust recovery, in a Wednesday speech. A September composite purchasing managers index flash reading from IHS slipped to 54.4 in September from 54.6 in the prior month, signaling a slower pace of growth. The flash services purchasing managers index inched down to 54.6 from 55 in August. The flash manufacturing index rose to 53.5 in September from 53.1 in the prior month, still marking a 20-month high. The pan-European Stoxx Europe 600 Index closed 0.6% higher and the U.K.’s benchmark gained 1.2%.

Back home, the FBM KLCI dropped 0.62% amid news of a potential change in the Malaysian government, while other uncertainties including concerns over global economic recovery had spooked investors in Asia. At 5pm, the index posted a 9.3- point fall to close at 1,496.48 points, dragged by declines in blue chip heavyweights including Public Bank Bhd, Malayan Banking Bhd and CIMB Group Holdings Bhd. In the region, Hong Kong’s Hang Seng Index rose 1% and the Shanghai Composite Index closed 0.2% higher. Japan’s Nikkei slipped less than 0.1%.

Source: PublicInvest Research - 24 Sept 2020

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