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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 16 Apr 2021, 9:35 AM

 

PublicInvest Research Headlines - 4 Mar 2021

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Economy

US: Service sector growth unexpectedly slows in Feb. After reporting US service sector activity at a nearly two-year high in January, the Institute for Supply Management released a report showing the pace of growth in the sector slowed in February. The ISM said its services PMI dropped to 55.3 in February from 58.7 in January. The pullback by the services PMI came after the index reached its highest level since hitting 58.8 in February of 2019. The decrease by the headline index was partly due to a slowdown in the pace of growth in new orders, as the new orders index tumbled to 51.9 in February from 61.8 in January. The business activity index also slid to 55.5 in February from 59.9 in January, while the employment index fell to 52.7 from 55.2. (RTT)

US: Private sector job growth falls well short of estimates in February. Payroll processor ADP released a report showing private sector employment in the US increased by much less than expected in February. ADP said private sector employment rose by 117,000 jobs in February after climbing by an upwardly revised 195,000 jobs in January. Economists had expected employment to increase by 177,000 jobs compared to the addition of 174,000 jobs originally reported for the previous month. The report showed employment in the service-providing sector increased by 131,000 jobs, reflecting notable job growth in trade/transportation/utilities and health care/social assistance. (RTT)

EU: Producer prices remain stable in January. Eurozone producer prices remained stable in January, data from Eurostat showed. The producer prices index remained unchanged YoY in January, after a 1.1% fall in December. Economists had forecast a fall of 0.4%. Excluding energy, producer prices increased 0.7% in January, after a 0.1% rise in December. Prices of durable consumer goods rose 1.2% YoY in January. Prices of intermediate goods and capital goods grew by 0.9% and 0.8%, respectively. Meanwhile, prices of energy declined 1.6% and that of non-durable consumer goods fell 0.5%. On a MoM basis, producer prices gained 1.4% in January, following a 0.9% rise in the preceding month. (RTT)

EU: Private sector contracts a slower pace in February. The euro area private sector continued to contract in February, albeit at a slower than previously estimated pace, final data from IHS Markit showed. The final composite output index rose to 48.8 in February from 47.8 in January. It is becoming clear that many virus-fighting measures will need to be in place for some time to come, in part due to the slow vaccine roll-out, Chris Williamson, chief business economist at IHS Markit said. This could extend the drag on the economy from the pandemic into the 2H of the year and subdue the pace of recovery, Williamson added. The survey suggested a broadly two-speed economy. (RTT)

UK: Service sector downturn slows in February. The UK service sector output declined only moderately in February after a sharp downturn at the start of 2021, as the third national lockdown has caused limited damage to the economy, results of a survey showed. The Markit/Chartered Institute of Procurement & Supply final services PMI rose to 49.5 in February from an eight-month low of 39.5 in January. The flash score was 49.7. The latest reading signaled the slowest decline in service sector output over this period. New business fell only slightly in February. Nonetheless, Brexit-related difficulties held back sales. At the same time, new work from abroad continued to fall sharply. (RTT)

China: Services sector grows at slowest rate in 10 months in Feb – Caixin PMI. China's services sector activity grew at its slowest pace in 10 months in February as firms struggled with sluggish demand and high costs, prompting them to cut jobs. The Caixin/Markit services PMI fell to 51.5, the lowest since April, from 52.0 in January. A sub index for employment stood at 47.9, slipping into contraction after six months of growth, as businesses laid off workers, the survey showed. New export business also shrank after expanding for three months. The loss of momentum came as China faced coronavirus flare-ups at the start of the year, while overseas demand continued to be hit by the Covid-19 pandemic. (Reuters)

Japan: Services sector shrinks for 13 th month as emergency weighs. Japan's services sector extended declines in February for a 13th straight month, as business activity was hit by curbs put in place to stop the spread of the coronavirus pandemic, leading to weak demand. The contraction hitting the services sector comes as a state of emergency for Tokyo and three surrounding prefectures put in place in part to take pressure off the nation's medical system. The final Jibun Bank Japan Services PMI came in at a seasonally adjusted 46.3. The survey result, which compared to the prior month's 46.1 and a preliminary 45.8 reading, was largely the result of a faster decline in new business and a continuing contraction in export business. That showed demand remained in a fragile condition as the impact of the pandemic dragged on, said IHS Markit. (Reuters)

Markets

Greatech (Outperform, TP: RM6.80): To centralise Kedah manufacturing operations in Penang . Greatech Technology is erecting a second factory building at Batu Kawan Industrial Park to relocate its Kedah manufacturing and assembly operations to a single location at Batu Kawan Industrial Park in Penang. It has awarded the letter of award for the construction of the main building works. (The Edge)

Genting Malaysia (Neutral, TP: RM2.86): Senior management takes temporary voluntary 20% salary cut . Genting Malaysia’s senior management team has taken a temporary voluntary 20% salary cut for three months, and the company has written to staff for them to consider a variation in their employment contract, with a suggested variation staggered depending on job grade, from 15% to 20% reduction in salary or one day no pay leave per week, according to a letter sighted by The Edge. (The Edge)

Yinson: Unit bags RM1.5bn solar project in India . Yinson Holdings said a unit has secured the letter of award to develop 190MW grid-connected solar photovoltaic power project in Rajasthan, India. Its 80% owned Rising Sun Energy (K) Pvt Ltd (RSEK) will enter into a Power Purchase Agreement (PPA) to supply 25 years of solar power generated electricity to NTPC Ltd. Yinson said the contract was estimated to be valued at RM1.5bn. “Commercial operation of the Plant is scheduled to commence in April 2022," it said. (StarBiz)

Datasonic: Eyes Vietnam e-passport opportunity. Datasonic Group has teamed up with a partner in Vietnam to target electronic passport and other ICT projects. The company said has entered into a teaming agreement with Pham Gia Ecocon Plus Vietnam Co Ltd to work together in proposing the ePassport and/or other ICT projects to the Ministry of Public Security in Veitnam. The agreement is for a period of five years. (StarBiz)

Vivocom: Proposes private placement, 3-for-1 bonus warrant issue. Vivocom International Holdings has proposed to undertake a private placement to raise up to RM99.37m as well as a bonus issue of up to 371.7m free warrants. It planned to place up to 10% of its issued shares to third party investor(s) to be identified later, the telecommunication engineering services company said. Based on an indicative issue price of 98 sen per share, Vivocom said it would raise between RM88.83m and RM99.37m in gross proceeds. (New Straits Times)

Minetech: Is now a solar PV investor with SEDA . Minetech Resources has registered as a solar photovoltaic (PV) investor with Sustainable Energy Development Authority Malaysia under the Net-Energy Metering (NEM 3.0) Programme. The group said as a registered PV investor, the group is now allowed to sell electricity via the renewable power purchase agreement under the NEM 3.0 programme to government agencies, businesses and individuals. (The Edge)

Nexgram: Proposes RM143m share capital reduction . Nexgram Holdings has proposed to cancel RM142.6m of its issued share capital, in a move to reduce the group’s accumulated losses. The group said the exercise will enable it to reduce its accumulated losses via cancellation of the share capital which is lost or unpresented by available assets of the group. (The Edge)

Market Update

The FBM KLCI might open lower today after Wall Street fell on Wednesday as investors sold off technology stocks, while shares from Asia to Europe were flat and the dollar rose even as US jobs data disappointed investors and virtual currency Bitcoin jumped. The Dow Jones Industrial Average fell 119.98 points, or 0.38%, to 31,271.54, the S&P 500 lost 50.51 points, or 1.31%, to 3,819.78 and the Nasdaq Composite dropped 361.04 points, or 2.7%, to 12,997.75. The pan-European STOXX 600 index rose 0.05% and MSCI’s gauge of stocks across the globe shed 0.68%. High-flying technology shares sold off as investors pivoted to sectors more likely to benefit as the economy recovers due to fiscal stimulus and vaccination. The US economy’s modest recovery continued over the first weeks of this year, with businesses optimistic and housing demand “robust,” with slow improvement in the job market, the Federal Reserve reported. Other data showed US services industry activity unexpectedly slowed in February due to winter storms, while private payrolls increased less than expected as manufacturing and construction jobs declined.

Back home, the benchmark FBM KLCI index closed at 1,588.45 points after trading between 1,568.67 and 1,583.43. KLCI constituents Supermax Corp Bhd, Top Glove Corp Bhd and Hartalega were among blue-chips that powered the benchmark index. Across the region, Japan's Nikkei 225 rose 0.51%, while South Korea's Kospi gained 1.29%. In China, Hong Kong’s Hang Seng added 2.7%, while the Shanghai Stock Exchange Composite Index closed up 1.95%.

Source: PublicInvest Research - 4 Mar 2021

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