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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 27 Nov 2020, 11:04 AM

 

PublicInvest Research Headlines - 29 Sept 2020

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Economy

US: Income inequality narrowed slightly over last three years - Fed. Income inequality in the US narrowed in the first three years of the Trump administration as rising wages and a low unemployment rate fueled gains for lower-income and less educated families, according to US Federal Reserve data released on Monday. Wealth inequality was largely unchanged, with the top 10% of families holding about 71% of family wealth in 2019, roughly the same as in 2016, the Fed said. The survey provides a snapshot of how income, assets and debt are distributed across the population, and in this case how the benefits of the final years of a decade-long economic expansion had begun flowing to typically less advantaged parts of the population. (Reuters)

US: House democrats release new USD2.2trn stimulus proposal . House Democrats released a scaled back USD2.2trn proposal to extend support to the US economy in face of the continuing damage from the coronavirus pandemic. The plan follows through on discussions last week to prompt a last-ditch attempt at negotiations with the White House and break an impasse on Covid-19 relief that’s lasted since early Aug. While the details of the legislative text adds clarity to the talks, the top-line spending level is no closer to that so far supported by Republicans. President Donald Trump has indicated he could support as much as USD1.5trn in aid, still higher than the USD650bn put forth in a “skinny” aid package by Senate Republicans earlier this month. (Bloomberg)

EU: Lagarde says ECB ready to act as pandemic burdens economy. The ECB is ready to deploy more monetary stimulus to aid the recovery if needed as the pandemic damps prospects for the economy, according to President Christine Lagarde. Addressing European lawmakers on Monday, Lagarde called the recovery across the 19-nation euro zone uncertain and incomplete, with consumers cautious to spend and companies reluctant to invest. “The public health crisis will continue to weigh on economic activity and poses downside risks to the economic outlook,” she said. The Governing Council “continues to stand ready to adjust all of its instruments, as appropriate.” Resurgent coronavirus infections are threatening new restrictions, jeopardizing the economic progress made since lockdowns earlier this year plunged the region into a deep recession. (Bloomberg)

EU: Sweden retail sales growth slows, trade deficit falls. Sweden's retail sales rose at the softer rate in Aug, and the trade deficit decreased, figures from Statistics Sweden showed on Monday. Retail sales rose 3.0% YoY in Aug, after a 3.7% increase in July. In June, retail sales rose 2.7%. Retail sales in durables gained 3.1% in Aug, while those of consumables, excluding sales at the state-owned chain of liquor stores increased 1.6%. On a monthly basis, retail sales rose a seasonally adjusted 0.3% in Aug. Economists had expected a 1.0% rise. The trade deficit decreased to SEK1.6bn in Aug from SEK5.4bn in the same month last year. In June, the trade surplus was SEK4bn. (RTT)

UK: Boris Johnson to unveil funding boost for adult job training. Boris Johnson will unveil plans to boost training for adults Tuesday as his government seeks to tackle rising unemployment and provide the skilled workers businesses say they need. The UK prime minister will announce a package of measures to provide support for ongoing vocational education so employees and people who are out of work can retrain and gain new skills. More than 700,000 people have already lost their jobs as a result of coronavirus restrictions and Chancellor of the Exchequer Rishi Sunak said last week he expects the “tragedy” of unemployment to affect many more as the UK economy is crimped by the pandemic and government support is withdrawn. (Bloomberg)

Japan: Tokyo inflation stays negative for second month in Sept. Tokyo inflation remained negative for a second month in Sept, highlighting the challenge facing the BOJ and new Prime Minister Yoshihide Suga in trying to restore price momentum amid the pandemic. Tokyo consumer prices excluding fresh food declined 0.2%, after dropping 0.3% in Aug, the ministry of internal affairs reported Tuesday. Economists had forecast a 0.3% drop. Prices in the capital are a leading indicator of the national trend. The impact of government discounts to help the tourism industry eased a little in Sept after the end of the summer travel season, but soft energy markets and weak consumer spending continue to weigh on prices. (Bloomberg)

India: Central bank to keep rates on hold, provide economic forecasts. The Reserve Bank of India is expected to keep key rates unchanged this week, but may for the first time since Feb provide guidance on how the economy is performing amid the coronavirus pandemic. All 66 respondents in a Reuters poll expect the repo rate to remain unchanged at 4.0% after its policy review on Thursday, and a large majority see no cuts until the Jan-March quarter. The RBI will then likely stay on hold until the end of 2021. The central bank must manage high retail inflation while keeping policy accommodative to support an economy which nosedived 23.9% last quarter, the weakest performance on record. It has so far slashed rates by 115 basis points in response to the Covid-19 pandemic since late March. (Reuters)

Markets

Key Alliance: To develop Rice Information Management System. Key Alliance Group has entered into a JV with Rimbun Daun Ventures (RDV) and Fortifoods SB to develop Rice Information Management System (RIMS), an integrated rice production management platform. It said the project is in line with the Federal government's agenda of addressing national food security by promoting agro technology and precision farming. This project aims to reduce national farmer subsidies and increasing the overall income of smallholder rice farmers by leveraging on the latest available technologies. (Bernama)

Country Heights: To invest RM50m to develop cryptocurrency payment infrastructure. Country Heights will invest about RM50m to develop infrastructure, including financial infrastructure, within the Mines Resort City to enable selected cryptocurrency payment for the purchase of the company’s goods and services in the next 6-12 months as part of its digital transformation plan. MD Datuk Jared Lim said the digital transformation plan would see synergies between Country Heights and technology partners including Huawei Malaysia, Touch Point International and Coloinstar Capital. (StarBiz)

UOA REIT: Proposes RM700m purchase of UOA Corporate Tower, private placement. The trustee of UOA REIT has entered into a conditional SPA with UOA Development’s unit Distinctive Acres SB for the proposed acquisition of UOA Corporate Tower for RM700m cash. To fund the transaction, the REIT's management has proposed a private placement to raise proceeds of up to RM280m for a yet-to-be-determined price and number of placement units. In addition to that, funding for the acquisition will be raised from the REIT's debt programme, which entails a five-year RM422m revolving credit facility. (StarBiz)

Solution: Unit forges partnership with CanSion to distribute Covid-19 vaccine. Solution Group has forged a partnership with China-based CanSino Biologics Inc (CanSinoBIO) to market and distribute a coronavirus vaccine in Malaysia. The vaccine, Adenovirus Type 5 Vector, will be registered after completing a Phase 3 clinical trial with Malaysia’s NPRA, it said. “We hope to secure the vaccine as soon as CanSinoBIO completes the trial, which is in compliance with the Current GMP regulations of the US FDA standards,” said Solution Group. (The Edge)

Yinson: 2Q net profit jumps to RM100.36m. Yinson’s net profit in 2QFY20 rose 144% YoY to RM100.36m. Revenue jumped to RM995.58m from RM213.44 million a year ago, mainly due to the recognition of EPCIC business activities contribution. “Amid the challenging global economic environment and the volatility of other currencies against the USD, the company will strive to achieve satisfactory results,” it said. (Malay Mail)

LKL: To buy dialysis player as quarterly profit jumps on higher sales. LKL’s net profit for 1QFY21 rose to RM1.24m, from RM124k a year earlier, on higher sales of medical and healthcare beds as well as peripheral medical accessories. LKL also said it is acquiring a 60% stake in Tahmaz Meditech SB for RM12m. It will pay for the stake via the issuance of 12m new LKL International shares at RM1 apiece. Tahmaz Meditech is involved in the trading of dialysis machines, filters and other related peripherals. (The Edge)

Market Update

The FBM KLCI might open higher today as US stock indices booked solid gains Monday, kicking off the week on a positive note as investors embraced hopes of additional fiscal stimulus, but looked for more clarity on the White House race and the state of the economy. The S&P 500 rose 53.14 points, or 1.6%, to end at 3,351.60. The Nasdaq Composite climbed 203.96 points, or 1.9%, to close at 11,117.53. The Dow Jones Industrial Average advanced 410.10 points, or 1.5%, finishing at 27,584.06, while booking its third session of gains in a row. On the economics front, Cleveland Federal Reserve Bank President Loretta Mester warned on Monday that the U.S. economy remained “fragile” and won’t fully recover until actions are taken to promote a more inclusive economy, during a webinar sponsored by the African American Chamber of Commerce of Western Pennsylvania. But China’s national statistics office said industrial profits surged in August, signaling the world’s second-largest economy was moving past the effects of the coronavirus-induced downturn. In Europe, the Stoxx Europe 600 index booked a 2.2% gain and the U.K.’s FTSE 100 rose 1.5%.

Back home, the FBM KLCI closed 2.52 points or 0.17% higher at 1,511.66 on fund managers' quarter-end window dressing and as broader global markets took cue from the rising number of Covid- 19 cases. Meanwhile in the region, Japan’s Nikkei gained 1.3% and Hong Kong’s Hang Seng Index rose 1%.

Source: PublicInvest Research - 29 Sept 2020

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