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PublicInvest Research

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

 

PublicInvest Research Headlines - 22 Oct 2020

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Economy

  • Global: World trade rebounding slowly, outlook uncertain - UN report. The value of global trade is set to fall by 7% to 9% in 2020 from the previous year, despite signs of a fragile rebound led by China in the 3Q, a United Nations report said on Wednesday. No region was spared by an estimated 19% YoY plunge in world trade in the 2Q, as the Covid-19 pandemic disrupted economies, the U.N. Conference on Trade and Development (UNCTAD) said. Global trade recovered somewhat in the 3Q, when it was estimated at about 4.5% less than in the same period a year ago, the agency said. “Trade in home office equipment and medical supplies has increased in 3Q, while it further weakened in the automotive and energy sectors,” UNCTAD said. Growth in the textiles sector was also strong. Its preliminary forecast put YoY growth for 4Q 2020 at 3% less, but the report said that uncertainties persisted due to how the pandemic would evolve. (Reuters)
  • US: Economy recovering slowly, but some sectors struggling - Fed survey. The US economy continued to recover at a slight to modest pace through early Oct as consumers bought homes and increased spending, but the picture varied greatly from sector to sector, the Federal Reserve said on Wednesday. The Fed’s Beige Book report was decidedly more upbeat than the Sept version, with more districts using the words “positive” and “optimistic” to describe various aspects of their local economies. Still, the anecdotal report of business conditions across Fed districts painted a picture of an uneven recovery from the pandemic-induced downturn. (Reuters)
  • US: Fed's Bullard says can wait on fiscal aid, businesses adapting. St. Louis Federal Reserve Bank President James Bullard on Wednesday repeated his view that US businesses are largely adapting to life amid Covid-19 and the US economy is on track to better-than-trend growth even without further fiscal stimulus. “In terms of the aggregate resources it seems like we should have enough” fiscal aid to bolster growth until the first quarter of next year, when any further need could be reassessed, Bullard said at the Federal Home Loan Bank of Des Moines Leadership Summit. Per-day fatalities per-million population in the coronavirus pandemic are down in the US from the peak in the spring, he said, adding he does not expect a resurgence, or a second wave, by that metric. (Reuters)
  • EU: Belgium consumer confidence weakens slightly. Belgium's consumer confidence weakened slightly in Oct amid a resurgence of the coronavirus pandemic, survey data from the National Bank of Belgium showed on Wednesday. The consumer confidence index eased to -17 from -16 in Sept. "The deterioration of the Covid-19 pandemic has most certainly weighed somewhat on consumer confidence, which has clearly been eroded over the survey period, that nevertheless closed before the curfew and renewed closure of bars and restaurants at national level were announced," the bank said. The survey period was from Sept 30 to Oct 15. All of the subindicators were largely unchanged in Oct. (RTT)
  • UK: Inflation accelerates in Sept. UK consumer price inflation accelerated in Sept as the end of the government's food discount scheme boosted restaurant and café prices, official data showed Wednesday. Inflation rose to 0.5% from a near five-year low of 0.2% in Aug, the Office for National Statistics reported. The rate came in line with expectations. Nonetheless, inflation was far below the central bank's target of 2%. Transport costs, and restaurant and café prices, following the end of the Eat Out to Help Out scheme, made the largest upward contributions. MoM, consumer prices advanced 0.4%, offsetting a 0.4% fall in the previous month. Prices were forecast to gain 0.5%. (RTT)
  • UK: BOE's Ramsden says not appropriate time to use negative rates. BOE Deputy Governor Dave Ramsden said on Wednesday that this is not the appropriate time to use negative interest rates as the UK economy and financial system are weighed down by the shock from the Covid-19 pandemic and concerns over a highly uncertain outlook. That said, negative rates will remain in the central bank's tool box for potential use in future when policymakers' assessment of their effectiveness change, he said. "As the MPC has made clear, we will keep the appropriateness of all tools, including negative rates, under review," Ramsden added. (RTT)
  • UK: House prices rise 2.5% on year in Aug. British house prices in Aug were 2.5% higher than a year earlier, compared with a 2.1% annual rise in July, broadly in line with the rate of growth before the coronavirus pandemic struck, official figures showed on Wednesday. The Office for National Statistics said Aug’s data largely reflected sales agreed before July’s cut in stamp duty house purchase tax was announced. (Reuters)
  • UK: To conduct spending review for 1 year. The UK government has decided to cut its planned spending review to one year from three years as the focus has shifted entirely to Covid-19 responses and supporting jobs. "The Chancellor and the Prime Minister have decided to conduct a one-year Spending Review, setting department's resource and capital budgets for 2021-22, and Devolved Administration's block grants for the same period," the HM Treasury said. The treasury said the precise date for the review will be last weeks of Nov. While the government would have liked to outline plans for the rest of this Parliament, the right thing today is to focus entirely on the response to Covid-19 and supporting jobs, the treasury said. (RTT)
  • Australia: Retail sales fall at slower pace in Sept. Australia's retail sales declined at a slower pace in Sept, preliminary data from the Australian Bureau of Statistics showed on Wednesday. Retail turnover decreased 1.5% MoM, following a 4% fall a month ago. This was the second consecutive decrease in sales. There were falls in turnover in food retailing, household goods retailing, and other retailing, in Sept. On a yearly basis, retail sales advanced 5.2% but weaker than the 7.1% increase seen in Aug. Final data is due on Nov 4. (RTT)
  • Australia: Leading index signals robust growth momentum. Australia's leading index improved in Sept suggesting that momentum continued to show a significant improvement consistent with the economy moving out of recession, data from Westpac showed Wednesday. The six-month annualized growth rate in the Westpac Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, rose to -0.5% in Sept from -2.3% in Aug. The leading index growth rate has lifted a whopping 5.11 percentage points since April, data showed. However, these gains have been partially offset by a bigger drag from commodity prices and the dwelling approvals. Westpac upgraded its growth outlook for 2021 to 2.8% and that for 2022 to 3.5%. (RTT)

Markets

  • Kerjaya Prospek: Bags RM64m Tanjung Pinang contract. Kerjaya Prospek has accepted a letter of award for RM64m from Tanjung Pinang Development, bringing its total contracts secured for the year to RM1.4bn. The award is for the execution and completion of a sewerage treatment plant and all associated works on plot 20 and infrastructure works on a sewerage reticulation system and roadside surface water drainage for the proposed Seri Tanjung Pinang Phase 2A Development in Penang. The works are expected to be completed favourably and represent a beneficial experience for the group. (SunBiz)
  • Kumpulan Powernet: To buy 51% stake in transportation firm, hopes to help fight Covid-19. Kumpulan Powernet is seeking to venture into the logistics business by acquiring a 51% stake in chemical and gas transportation firm Chemtrax SB for RM10m. Chemtrax is principally involved in the provision of chemical and gas transportation and forwarding services. Kumpulan Powernet said it has signed an agreement to buy the stake from Sabaka Group SB. The group could immediately leverage on the long-term established experience of Chemtrax and its existing platforms across chemical and gas transportation businesses for the multinational companies. (The Edge)
  • Ekovest: Buys more time to mull over stake buy in Bandar Malaysia developer. Ekovest has secured more time to consider a proposal to acquire a 40% stake in IWH-CREC SB, the main player in the Bandar Malaysia development. It said that it has mutually agreed with Iskandar Waterfront Holdings SB (IWH) for an extension of 30 market days, from Oct 22 till Dec 3, for the group to “deliberate and consider as well as to enable the parties to finalise the relevant agreements”. IWH-CREC is a 60:40 JV between IWH and China Railway Engineering Corp (M) SB (CREC). (The Edge)
  • Bintai Kinden: To settle subsidiary's RM23.39m debt with Handal Jayabina. Bintai Kinden (BKCB) has proposed to fully settle an outstanding debt of RM23.39m owed by its subsidiary, Optimal Property Management SB (OPM), to Handal Jayabina SB (Handal). The outstanding debt essentially comprised all outstanding sum under the construction contract whereby Handal had been appointed by OPM as the main contractor for Kolej University Islam Melaka’s (KUIM) in-campus accommodation construction. Settlement would be made via the issuance of 31.8m shares in BKCB worth RM20.5m, 28.5k shares issuance in OPM worth RM2m and the balance of RM886k to be settled by way of cash payments. (The Edge)
  • GDex: Proposes bonus issue of one-for-eight warrants. GD Express Carrier (GDex) is proposing a bonus issue of 705.18m Warrants C on the basis of one warrant for every eight existing ordinary shares. The exercise price of the Warrants C will be determined by the board and announced at a later date. However, based on the indicative exercise price of 40sen per Warrant C and assume it is fully exercised, the company is expected to raise gross proceeds of c.RM281.71m. The gross proceeds are expected to be utilised for the future working capital requirements of the group, which may include defraying administrative expenses such as staff related expenses as well as payment to suppliers and other creditors, and other operating expenses. (The Edge)

MARKET UPDATE

  • The FBM KLCI might open flat today after US stocks slipped and a decline in the dollar gathered pace on Wednesday as Democrats and Republicans inched closer to agreeing a second major fiscal stimulus for the world’s largest economy. The S&P 500 index ended the day 0.2% lower, after fluctuating between gains and losses earlier in the session. The tech-heavy Nasdaq Composite closed down 0.3%. The mixed session on Wall Street came after Nancy Pelosi, the Democratic speaker of the House of Representatives, and Treasury secretary Steven Mnuchin headed into their latest talks about a major relief package to help US businesses and households through the coronavirus pandemic. In Europe, the region-wide Stoxx 600 slipped 1.3% while London’s FTSE 100 slid 1.9%, with exporting sectors among the worst hit.

    Back home, the FBM KLCI finished in negative territory for a second straight day, dragged down by glove stocks which dominated Bursa Malaysia’s top losers. At 5pm, the benchmark index closed 18.57 points or 1.23% lower at 1,492.4. Market breadth remained mostly negative with 754 losers versus 374 gainers. In the region, Japan’s Nikkei 225 gained 0.31%, while South Korea’s Kospi closed up 0.53%. In China, the Hang Seng rose 0.75% while the Shanghai composite index fell 0.09%. Elsewhere, China’s central bank permitted the tightly controlled renminbi, which is not traded in international markets, to hit a 27- month high of Rmb6.64 against the dollar. The offshore version of the currency strengthened to around the same level. This week China reported third-quarter gross domestic product growth of 4.9 percent compared with a year ago, highlighting how its economy had rebounded from the worst of the pandemic.

Source: PublicInvest Research - 22 Oct 2020

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