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PublicInvest Research

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

 

PublicInvest Research Headlines - 25 Sep 2020

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Economy

  • Global: Economic outlook ‘somewhat less dire’ than expected – IMF. The global economic outlook is not quite as dark as expected even just three months ago, a top International Monetary Fund official said, citing better-than-anticipated economic data from China and other advanced economies. However, IMF spokesman Gerry Rice told that the overall global outlook remained challenging as a result of the coronavirus pandemic and its impact on many economic sectors. The situation remained "precarious" in many developing countries and emerging markets other than China, he said, noting that the IMF was also concerned about rising debt levels. TIn June, it slashed its 2020 global output forecasts further, forecasting the global economy would shrink by 4.9%, compared with a 3% contraction predicted in April. (Reuters)
  • US: Weekly jobless claims unexpectedly inch up to 870k. In a sign of continued weakness in the labor market, the Labor Department released a report showing an unexpected uptick in firsttime claims for US unemployment benefits in the week ended September 19th. The report said initial jobless claims inched up to 870k, an increase of 4k from the previous week's revised level of 866k. The modest increase surprised economists, who had expected jobless claims to drop to 843k from the 860k originally reported for the previous week. Meanwhile, the Labor Department said the less volatile four-week moving average fell to 878.25k, a decrease of 35.25k from the previous week's revised average of 913.5k. The report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also slid by 167k to 12.58m in the week ended September 12th. (RTT)
  • US: New home sales unexpectedly jump to nearly 14-year high in August. A report released by the Commerce Department unexpectedly showed another significant increase in new home sales in the US in August. The Commerce Department said new home sales jumped by 4.8% to an annual rate of 1.011m in August after skyrocketing by 14.7% to an upwardly revised rate of 965k in July. Economists had expected new home sales to pull back by 1.2% to a rate of 890kfrom the 901k originally reported for the previous month. With the unexpected increase, new home sales surged up to their highest level since reaching 1.016m in September of 2006. (RTT)
  • US: Powell hints smalls business, unemployment aid most important. Federal Reserve Chair Jerome Powell indicated that aid to small businesses and support for the unemployed should be prioritized if Congress were to reallocate money away from backstopping the central bank’s emergency-lending programs. Powell said an expansion of the Paycheck Protection Program and “something more” for Americans who have lost their jobs because of the coronavirus pandemic would have the greatest economic impact. (Bloomberg)
  • EU: German business sentiment at 7-month high. German business confidence improved to a seven-month high in September as the economy showed signs of stabilization despite rising number of coronavirus infection, survey results from the ifo Institute showed. The business confidence index rose to 93.4 in September from 92.5 in August. This was the highest reading since February but was slightly below economists' forecast of 93.8. The very small increase in the business confidence for September is further evidence that the recovery has run out of steam, Andrew Kenningham, an economist at Capital Economics, said. (RTT)
  • UK: Retail rise most in 18 months – CBI. UK retail sales grew at the fastest pace since April 2019 with a surge in grocery sales, the Distributive Trades Survey from the Confederation of British Industry showed. The retail sales balance rose unexpectedly to +11% in September from -6% in August. The balance was forecast to fall to -10%. Respondents forecast retail sales to remain flat in October. "The latest results suggest that the recovery in retail spending over the summer months has continued into September, which is welcome news, but retailers appear cautious over the nearterm outlook," Ben Jones, CBI principal economist, said. (RTT)

Markets

  • Hextar (Outperform, TP: RM0.91): Secures RM30m financing from Al Rajhi Bank. Hextar Global has secured an RM30m Islamic financing facility from Al Rajhi Banking & Investment Corp (Malaysia) for working capital. Hextar said the facility — in the form of structured commodity financing (SCF-i) — would be used by its subsidiaries Hextar Chemicals SB, Halex (M) SB and Halex Woolton (M) SB. The SCF-i will be on a floating rate, and has a tenure of four months from the initial disbursement. It will be secured by a corporate guarantee made by Hextar Chemicals. Hextar said that as a result of securing the facility, its gearing is expected to rise to 0.83 times, from 0.67 times currently. (The Edge)
  • Axiata (Neutral, TP: RM3.70): Bangladesh unit gets IPO nod. Axiata Group Bhd's unit Robi Axiata Ltd has received approval from the the Bangladesh Securities and Exchange Commission (BSEC) for its listing on the Dhaka Stock Exchange Ltd and Chittagong Stock Exchange Ltd in Bangladesh. Axiata, which owns 68.69% of Robi, said further details will be announced upon the receipt by Robi of the approval letter from BSEC. (Bernama)
  • AirAsia (Underperform, TP: RM0.50): Plans to raise capital for digital venture. AirAsia Group is looking to raise capital to fund its digital venture arm, AirAsia Digital, said group CEO Tan Sri Tony Fernandes. He did not disclose the amount of the capital but said that it need not be huge to make the whole digital journey successful. "It could be convertible debt or equity. We built all of these (referring to AirAsia's digital initiatives) on our own capital so far, just like how we built AirAsia," he told a media briefing. (Bernama)
  • Sapura Energy (Neutral, TP: RM0.10): Refutes bribery, corruption allegations. Sapura Energy and its group of companies have refuted any involvement in bribery or corruption in its business dealings in Brazil and anywhere else in the world, in relation to the recent news of investigations into the group’s and Seadrill’s alleged bribery involvement relating to Petrobras contracts. In its Bursa filing, it clarified that an investigation by the Brazilian authorities in 2016 and 2017 had cleared Sapura Energy from all allegations of bribery or corruption. The group highlighted that it has a clause in all of its agreements on antibribery which will make the agreement void if bribery is involved or is suspected to be involved as part of its governance and processes. (The Sun Daily)
  • Ho Wah Genting: Encouraing progress in Covid-19 vaccine research. Ho Wah Genting’s wholly owned subsidiary, HWGB Biotech SB’s joint venture partner, E-Mo Biology Inc (EBI) is collaborating with a US-based lab facility to develop and produce companion diagnostic systems. Ho Wah Genting spokesman Dr Yaman Walid Kassab said the group is encouraged by the progress made with the clinical study programme undertaken in its joint venture with EBI. (The Sun Daily)
  • Mah Sing: To issue RM100m redeemable convertible sukuk for future investments and working capital. Mah Sing Group is issuing up to RM100m seven-year redeemable convertible sukuk Murabaha for investments and working capital. It is part of its RM1bn Islamic medium term notes programme. The sukuk can be converted into shares at 75.5 per share. (The Edge)

MARKET UPDATE

The FBM KLCI might open flat today as US stock benchmark indexes ended with modest gains Thursday, reflecting a market that has struggled to find its footing amid signs of softening economic data and a raft of uncertainties ahead. The Dow Jones Industrial Average rose 52.31 points, or 0.2%, to close at 26,815.44, after touching an intraday peak of 27,094.85. The S&P 500 picked up 9.67 points, or 0.3%, to end at 3,246.59, after earlier breaching a level below correction territory — defined as a drop of 10% from a recent peak — for the index at 3,222.76. The Nasdaq Composite Index gained 39.28 points, or 0.4%, finishing at 10,672.27. The pan-European Stoxx Europe 600 Index closed 1% lower and the U.K.’s benchmark FTSE 100 shed 1.3%.

Back home, renewed buying interest in glove counters helped to lift the FBM KLCI to close higher at 1,500.80, up 4.32 points, bucking the trend of its regional peers. In the region, Hong Kong’s Hang Seng Index tumbled 1.8% and the Shanghai Composite Index closed 1.7% lower. Japan’s Nikkei closed down 1.1%.

Source: PublicInvest Research - 25 Sept 2020

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