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PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 3 Dec 2020, 9:02 AM

 

PublicInvest Research Headlines - 23 Oct 2020

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Economy

  • US: Business borrowing for equipment falls 13% in Sept - ELFA. US companies’ borrowings for capital investments fell about 13% in Sept from a year earlier, the Equipment Leasing and Finance Association (ELFA) said on Thursday. The companies signed up for USD8.7bn in new loans, leases and lines of credit last month, down from USD10bn a year earlier. Borrowings in Sept rose 24% from the previous month. “Despite the drop in Sept YoY new business, a look at the data beginning with the advent of the pandemic in Feb shows that the industry, in general, is holding its own,” ELFA CEO Ralph Petta said. (Reuters)
  • US: Existing home sales spike much more than expected in Sept. Reflecting record-low interest rates and an abundance of buyers, the National Association of Realtors released a report on Thursday showing a much bigger than expected spike in US existing home sales in the month of Sept. NAR said existing home sales soared by 9.4% to an annual rate of 6.5m in Sept after jumping by 2% to a revised rate of 5.9m in Aug. Economists had expected existing home sales to surge up by 5% to a rate of 6.3m from the 6m originally reported for the previous month. "Home sales traditionally taper off toward the end of the year, but in Sept they surged beyond what we normally see during this season," said Lawrence Yun, NAR's chief economist. (RTT)
  • US: Leading economic index increases at slower rate in Sept. Suggesting the US economy could be losing momentum heading into the final quarter of 2020, the Conference Board released a report on Thursday showing a slowdown in the pace of growth by its reading on leading economic indicators. The Conference Board said its leading economic index climbed by 0.7% in Sept after surging up by a revised 1.4% in Aug. Economists had expected the index to rise by 0.6% compared to the 1.2% jump originally reported for the previous month. The continued increase by the leading economic index was driven primarily by declining unemployment claims and rising housing permits. (RTT)
  • US: Weekly jobless claims fall, many unemployed losing benefits. The number of Americans filing new claims for unemployment benefits fell more than expected last week, but remained very high as the labor market recovery shows signs of strain amid a relentless COVID-19 pandemic and ebbing fiscal stimulus. Initial claims for state unemployment benefits dropped 55,000 to a seasonally adjusted 787,000 for the week ended Oct 17. Data for the prior week was revised to show 56,000 fewer applications received than previously reported. Economists polled by Reuters had forecast 860,000 claims in the latest week. California, the most populous state in the nation, resumed the processing of new applications after a two-week pause in late Sept to combat fraud. (Reuters)
  • EU: Eurozone consumer confidence at 5-month low. Eurozone consumer confidence weakened more-than-expected to its lowest level in five months in Oct, preliminary figures from the European Commission showed on Thursday. The flash consumer confidence index for the euro area dropped to -15.5 from -13.9 in Sept. Economists had expected a fall to -15.0. The reading was the weakest since May, when it was at -18.8. The consumer confidence index for the EU also fell to a five-month low, down to -16.5 from - 14.9 in the previous month. Both readings were below their longterm averages of -11.2 and -10.6, respectively. Data for the survey was collected from Oct 1 to 21. The final reading for the consumer confidence index is set to be released on Oct 29 along with the monthly economic sentiment survey results. (RTT)
  • EU: French business confidence weakens in Oct. French business confidence weakened in Oct, monthly survey data from the statistical office Insee showed on Thursday. The manufacturing confidence index fell unexpectedly to 93 in Oct from Sept's revised score of 94. The expected reading was 96.0. The indicator had been steadily recovering since May 2020 from its historical fall caused by the health crisis. Nonetheless, the score has remained well below its long-term level of 100. The balance of opinion on personal production expectations worsened again in Oct. The corresponding index slid to 4 from 10 a month ago. Likewise, the indicator for general production expectations weakened to -12 from -3. Overall business confidence weakened in Oct driven by services and manufacturing. The business sentiment index came in at 90, down from 92 in Sept. (RTT)
  • UK: Consumer sentiment falls by most since start of pandemic - GfK. British consumer sentiment fell this month by the most since a slump at the start of the coronavirus pandemic as lockdown restrictions tightened across much of the country, according to a long-running survey published on Friday. The GfK Consumer Confidence Index tumbled to -31 in Oct, its lowest level since late May and down sharply from a nine-month high of -25 in Sept, as well as being below all forecasts in a Reuters poll of economists. The six-point fall in the index in the space of a month was the largest since the 25 point decline recorded just after the start of the lockdown in March. (Reuters)
  • UK: Manufacturing decline abates in Oct - CBI survey. British manufacturing orders fell in Oct but by the smallest amount since March, according to a survey on Thursday that showed an improvement in expectations despite a resurgence of the Covid-19 pandemic. The Confederation of British Industry’s (CBI) monthly order book balance - the difference between factories reporting a rise and a fall in orders - became less negative in Oct at -34, compared with -48 in Sept. While still historically low, it was the best reading since March and above the median forecast in a Reuters poll of economists that had pointed to a figure of -45. “Conditions remain tough in the manufacturing sector, with output and orders still down on the quarter, albeit to a lesser degree,” said CBI chief economist Rain Newton-Smith. The CBI’s quarterly gauge of business optimism rose to its highest level since Jan. (Reuters)
  • Hong Kong: Consumer prices fall for third month. Hong Kong's consumer prices declined for the third consecutive month in Sept, data from the Census and Statistics Department showed Thursday. The composite consumer price index fell 2.2% YoY in Sept, following a 0.4% drop in Aug. The annual decline was mainly due to the exemption of public housing rents by the Hong Kong Housing Authority in Sept. Excluding the effects of all government one-off relief measures, the composite consumer price index advanced 0.5% annually versus a 0.1% rise in Aug. (RTT)
  • Thailand: Household debt levels to rise even further. Thailand’s household debt levels, already at the highest in 17 years, are expected to rise further, the central bank governor said on Thursday, as the coronavirus pandemic hammers its trade-and tourism-reliant economy. Southeast Asia’s second’s largest economy suffered its biggest contraction in 22 years in the 2Q and could shrink a record 7.8% this year, the Bank of Thailand (BOT) has forecast. “The pandemic had cut jobs, reducing households’ income and debt servicing ability,” Governor Sethaput Suthiwartnarueput said. “The employment situation has not yet returned to normal,” he said, noting the economy would not get back to pre-Covid levels until the 3Q of 2022. As of June, household debt rose to THB13.6trn (USD435bn), equal to 83.8% of GDP, the highest since 2003 and among the highest levels in Asia. (Reuters)
  • Australia : Manufacturing PMI slips to 54.2 in Oct - IHS Markit. The manufacturing sector in Australia continued to expand in Oct, albeit at a slower pace, the latest survey from IHS Markit revealed on Friday with a manufacturing PMI score of 54.2. That's down from 55.4 in Sept, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. Services activity rose solidly in Oct, building on a mild gain in Sept. Inflows of new work also increased further, though at a pace insufficient to put pressure on capacity in the service sector. Firms consequently reduced their workforces further, but at a rate noticeably slower than in Sept. The survey also said the services PMI rose to 53.8 from 50.8 last month and the composite PMI came in at 53.6 - up from 51.1. (RTT)

Markets

  • AirAsia (Underperform, TP: RM0.50): Secures loan, capital raising progressing. AirAsia has secured a loan as part of its ongoing capital raising plans. Riad Asmat, CEO of the group's Malaysian unit, AirAsia, said "a loan has been approved and disbursed", in response to query about a report that said the airline had secured a RM300m loan to keep it afloat. The report said the airline took the loan from Sabah Development Bank and that it would tide the airline over for two months, financing local operations. (Reuters)
  • Green Packet: KipleX makes maiden investment in Singapore-based startup ION Mobility. KipleX, the new venture studio of Green Packet established to support local and regional entrepreneurs and startups has made its maiden investment in Singapore-based smart electric motorbike company ION Mobility. ION Mobility announced it has raised USD3.3m (c.RM13.68m) in seed funding recently. The funding will be used to launch its electric motorbikes in Southeast Asia, expand market presence and develop its R&D, supply chain and manufacturing capabilities. (SunBiz)
  • MMC: Mulls reviving USD1bn port assets IPO – sources. MMC Corp is reviving an IPO plan for its port assets, which could be the biggest listing in the Southeast Asian nation since 2012, according to people familiar with the matter. MMC is seeking to raise about USD1bn from the first-time share sale. The firm is in talks with potential advisers and a listing could take place as early as the end of next year. (The Edge)
  • Luster: Outlines steps to ensure new glove venture success. Luster Industries has outlined a series of steps to be taken in ensuring the success of its rubber glove business considering that the company does not have any track record in the new venture. It proposed to team up with Fortune Tac SB (FTSB) in setting up a 56:44 JV company, Glovmaster SB (GSB), to jointly undertake the business of manufacturing, sales and distribution of gloves. Through the JV, Luster is able to leverage on the technical skillsets, business knowhow and the experience of FTSB / Yee Voon Hon in the glove industry to undertake the glove business. (The Edge)
  • Vitrox: Robust demand drives 3Q revenue to record high while net profit more than doubles. Vitrox Corp’s net profit for the 3QFY20 more than doubled as its quarterly revenue soared to a record high of RM123.75m boosted by strong sales volume and the optimisation of production capacity. The group’s quarterly net profit leaped 114% YoY to RM29.71m in 3QFY20. Vitrox attributed the strong revenue growth to demand for its Machine Vision System and Automated Board Inspection that skyrocketed by 122% and 66% respectively. (The Edge)
  • Eupe: 2Q net profit up 56.85% YoY on higher property sales. Eupe’s net profit jumped 56.85%YoY to RM16.21m in 2QFY21, underpinned by strong contributions from its property division. Its revenue also surged 53.37% YoY to RM121.46m. The performance reflects the consistently strong contributions from its property development division, with high sales take-up rate and solid momentum in the construction progress of Parc3@KL South, with Novum@South Bangsar handed over to its purchasers in June 2020. (The Edge)

MARKET UPDATE

  • The FBM KLCI might open higher today after the yield curve on US government debt steepened and the stock market gained ground after fresh optimism on a government stimulus deal and positive US employment data. The yield on the US 30-year Treasury bond climbed almost 5 basis points to 1.68%, its highest level since March. Gains for bank stocks helped the S&P 500 index to rise 0.5%, erasing morning losses, while the tech-heavy Nasdaq Composite gained 0.2%. The rebounds from dips early in the day came after Nancy Pelosi, speaker of the House of Representatives, provided a positive outlook on discussions over a US stimulus bill between Democrats and Republicans. The rise in stock prices was helped along by data released in the morning that showed US jobless claims this month fell to their lowest level since March and by encouraging corporate earnings dat. In Europe, the regional Stoxx 600 traded flat after Germany reported weak consumer confidence data and delays to a US fiscal stimulus deal.

    Back home, the FBM KLCI closed 6.4 points or 0.43% higher at 1,498.80 after a final hour spike helped the 30-stock index erase losses as world markets took a cue from a surge in global Covid19 infections and US stimulus negotiations. The regional markets finished mixed with the Hang Seng gained 0.13%, while the Nikkei 225 led the Shanghai Composite lower. They fell 0.70% and 0.38% respectively

Source: PublicInvest Research - 23 Oct 2020

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