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PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 21 Jan 2021, 11:57 AM

 

PublicInvest Research Headlines - 25 Nov 2020

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Economy

Global: World economy risks buckling into 2021 despite vaccine nearing. The surging coronavirus is stoking fears of a fresh downturn for the world economy, heaping pressure on central banks and governments to lay aside other concerns and do more to spur demand. Hopes are mounting that Covid-19 vaccines will become available as soon as Dec, but widespread delivery will take months and infections are rising again in many large economies. Wall Street economists now say that it wouldn’t take much for the US, euro area and Japan to each contract again either this quarter or next, just months after they bounced from the deepest recession in generations. Bloomberg Economics guages of high-frequency data point to a double-dip downturn, with European factory indexes justifying that worry, though a US measure of business activity was upbeat. (Bloomberg)

US: Holiday sales expected to rise up to 5.2% — NRF. US holiday sales are expected to rise up to 5.2% in 2020, the National Retail Federation (NRF) said, as Americans look to spend more on gifts during the festive period, while Covid-19 cases rise. The US retail group forecast sales, which exclude automobile dealers, gasoline stations and restaurants, to grow between 3.6% and 5.2% or between USD755.3bn and USD766.7bn, compared with the 4% growth last year. The NRF said reduced spending on personal services, travel and entertainment during the health crisis has freed up money for retail spending. "Given the pandemic, there is uncertainty about consumers' willingness to spend, but with the economy improving most have the ability to spend," NRF Chief Economist Jack Kleinhenz said. (Reuters)

US: Biden will likely have to reimagine the future of economic leadership in Asia, says expert. The Biden administration will likely have to reimagine the future of US economic leadership in Asia-Pacific following two massive free trade agreements signed by countries in the region, according to a former foreign policy advisor. The first of the two trade agreements is the Trans-Pacific Partnership (TPP): More recently, 15 countries including China, Australia, Japan, South Korea as well as Southeast Asian nations, signed the Regional Comprehensive Economic Partnership (RCEP): “So far, the incoming administration has not committed one way or the other to the future of the TPP,” Richard Fontaine, CEO of the Center for a New American Security, told CNBC’s “Street Signs Asia”. He explained that President-elect Joe Biden and his administration will enter an era where the US is party to neither the TPP nor the RCEP. “They are going to have to at least consider what the future of US economic leadership in Asia looks like,” he said. (CNBC)

EU: German 3Q GDP rebounds at faster than expected rate. Following the relaxation of Covid-19 restrictions, the German economy rebounded at a faster than expected pace in the 3Q, offsetting a large part of the massive contraction in the second quarter, revised data from Destatis revealed. GDP grew 8.5% sequentially in the 3Q, reversing the 9.8% decline in the 2Q caused by the coronavirus pandemic. The 3Q GDP rate was revised up from 8.2% estimated on Oct 30. While the slump in the second quarter was less severe than in most other eurozone countries, the rebound in the third quarter was also less pronounced, Carsten Brzeski, an ING economist said. With an extension and tightening of the second lockdown looming, a double-dip is in the making, the economist added. (RTT)

EU: German business confidence falls amid renewed Covid-19 restrictions. German business sentiment deteriorated in Nov as companies were more pessimistic about future amid the second wave of coronavirus infections interrupting the economic recovery, survey results released by the Munich-based ifo Institute showed. The business climate index fell to 90.7 in Nov from revised 92.5 in the previous month. The reading was forecast to ease to 90.1 from Oct's initially estimated value of 92.7. The decline was largely caused by more pessimistic view about the future. The assessment of current situation also worsened a little in Nov. (RTT)

UK: BOE says economic outlook likely lifted by vaccine news. The development of Covid-19 vaccines has been faster than the BoE assumed when it compiled its latest forecasts and could brighten the outlook, according to top policy makers. Officials at the central bank had counted on a gradual phasing in of treatments from the middle of next year, Chief Economist Andy Haldane said Monday in a hearing with parliament’s Treasury Committee. Success rates reported by drug makers Pfizer Inc., Moderna Inc. and AstraZeneca Plc are “to the positive side” of that assumption, he said. BOE Governor Andrew Bailey described the results as “excellent news” that could reduce uncertainty. Fellow Monetary Policy Committee member Silvana Tenreyro said it lends weight to calls for targeted fiscal policies to support the recovery. (Bloomberg)

Hong Kong: Exports drop in Oct. Hong Kong's merchandise exports dropped in Oct after rising in the previous month, data from the Census and Statistics Department showed. Exports fell 1.1% YoY in Oct, after a 9.1% decrease in Sept. Imports rose 0.6% annually in October, after a 3.4% increase in the previous month. The trade deficit widened to HKD36.756bn in Oct from HKD30.590bn in the same month last year. The value of merchandise exports decreased slightly in October from a year ago, as exports to the Mainland and the US switched to mild declines, the government spokesman said. (RTT)

Markets

Top Glove (Trading Buy, TP: RM9.70): Estimates 3% of FY21 revenue to be impacted. Top Glove expects its revenue for FY21 to be impacted by 3% following the temporary suspension of manufacturing facilities in Klang, Selangor. However, it said it does not anticipate a penalty from the delay in delivery. “The impact from this temporary disruption is expected to cause some delay in our delivery schedule by about 2-4 weeks for those facilities affected,” it said. Moreover, the company is also diverse in location and countries with business continuity plans as part of its risk management strategy. (Malay Mail)

Omesti: Unit bags RM19.88m network equipment maintenance contract from Federal Court. Omesti’s 51%- owned unit has bagged a two-year contract to provide network equipment maintenance services for the Federal Court’s eCourts Phase 2 project. The contract, which was awarded by the Federal Court Chief Registrar’s Office, is worth RM19.88m. (The Edge)

ARB: Partners with Chinese telco to undertake smart building projects in Malaysia. ARB has teamed up with China’s state-owned China United Network Communications Group Co Ltd (China Unicom) to undertake smart building projects and other ancillary businesses in Malaysia. Under the agreement, both parties agreed to collaborate in artificial intelligence, internet of things (IoT) and smart buildings platforms and applications in Malaysia. (The Edge)

Inari: 1Q net profit jumps 47% as revenue expands, pays 2 sen dividend. Inari reported a 47% YoY jump in its net profit for 1QFY21 to RM70.07m, as an expansion in revenue on higher volume loading of products, together with a reversal of deferred tax provision, helped offset unfavourable movements in foreign exchange. It also declared a dividend of 2sen per share. Inari is positive on its earnings prospect for FY21, as it expects the strong demand it sees in the RF business to continue into the next few quarters, due to the launch of and growth in new 5G phones with 5G frequency bands, which require additional RF components over 4G ones. (The Edge)

Leong Hup: 3Q net profit up 38.5% QoQ on improved revenue in Vietnam. Leong Hup’s net profit came in at RM22.52m in 3QFY20, up 38.5% QoQ, on the back of improved revenue in Vietnam and smaller losses from operations in Indonesia. Revenue grew 10.4% QoQ to RM1.57bn in 3QFY20 on higher sales volume of livestock feed in Indonesia and Vietnam. "With the gradual economic recovery taking place in 2H20 and the group's strategy to move further downstream into the business-to-consumer channel to improve margin stability," said Leong Hup. (The Edge)

Pos Malaysia: 3Q loss narrows with mild operating profit. Pos Malaysia’s net loss narrowed QoQ to RM7.43m in 3QFY20, from RM19m, on the back of easing nationwide movement restrictions and resumption of economic activities that benefited its mail, retail and logistics businesses. On prospects, it said the reinstatement of partial movement restrictions in Oct should result in an increase in online shopping and will likely have a positive impact on its courier business. “We foresee that parcel volume will be high in 4QFY20, driven by 11.11 and year-end online sales,” said Pos Malaysia. (The Edge)

MARKET UPDATE

The FBM KLCI might open with a positive bias today, tracking US stocks which surged to new highs on Tuesday, alongside global equities, as the path for a smooth transition of power in the US cleared. The Dow Jones Industrial Average climbed 1.5% higher, pushing one of Wall Street’s oldest stock market indices beyond 30,000 for the first time. The wider S&P 500 gained 1.6% to close at a new record peak of 3,635. A rotation into industries that are set to benefit most from an economic recovery propelled indices higher worldwide, with the energy and financials sectors leading gains. The move marked an acceleration of a trend that began in the wake of Joe Biden’s election win earlier this month and has gained traction following a series of positive results from trials of Covid-19 vaccines. In Europe, the region-wide Stoxx 600 closed up 0.9%, while London’s FTSE 100 rose 1.6% and German’s Xetra Dax climbed 1.3%.

Back home, the FBM KLCI closed down 19.09 points or 1.2% at 1,578.39 while the number of Bursa Malaysia decliners rose sharply to above 1,000 as the surge in the country’s new Covid-19 cases to a record high weighed on investor sentiment. Anticipation on the Budget 2021 vote in Parliament this Thursday (Nov 26) also led to profit taking in the stock market. Regional market meanwhile closed mixed. In China, the CSI 300 index of Shanghai and Shenzhen-listed shares closed down 0.6%, while Japan’s Topix rose to its highest level in two years, climbing 2%, after traders returned from a long weekend.

Source: PublicInvest Research - 25 Nov 2020

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