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Author: PublicInvest   |   Latest post: Mon, 21 Jun 2021, 11:47 AM

 

PublicInvest Research Headlines - 23 Mar 2021

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Economy

  • US: Existing home sales plunge much more than expected in February. Existing home sales in the US tumbled by much more than expected in February, according to a report released by the National Association of Realtors (NAR). NAR said existing home sales plunged by 6.6% to an annual rate of 6.22m in February after inching up by 0.2% to a downwardly revised rate of 6.66m in January. Economists had expected existing home sales to slump by 3.0% to a rate of 6.49m. The report said existing home sales in February were up by 9.1% compared to a rate of 5.70m a year ago. (RTT)
  • EU: Current account surplus declines in Jan. The euro area current account surplus declined in January, the European Central Bank (ECB) said. The current account logged a surplus of EUR30bn in January, down from EUR37bn in the previous month. The surplus on trade in goods rose to EUR39bn from EUR38bn in December. Likewise, the surplus on services increased to EUR12bn from EUR11bn. Primary income showed a shortfall of EUR4bn versus +EUR1bn a month ago. The deficit on secondary income widened to EUR17bn from EUR14bn. (RTT)
     
  • EU: German economy to contract sharply in 1Q – Bundesbank. The German economy is likely to shrink sharply in the 1Q21, Bundesbank said in its monthly report. The central bank cautioned that service sector activity is set to drop sharply again due to the Covid-19 containment measures. Experts assumed that in addition to Covid-19 related measures, the higher VAT rates since the beginning of the year also played a role. The central bank noted that industrial output decreased slightly at the start of the year but export increased. (RTT)
     
  • China: Leaves benchmark lending rates unchanged. China left its benchmark lending rates unchanged, as widely expected. The one year loan prime rate was retained at 3.85% and the five-year loan prime rate was maintained at 4.65%. The one-year and five-year loan prime rates were last lowered in April 2020. The one-year loan prime rate was cut by 20bps and five-year rate by 10bps in April. The inaction did not come as a surprise since the People's Bank of China had not adjusted the rate on its medium-term lending facility this month as it did ahead of the past three LPR moves. The scope for hiking rates this year is diminishing. The PBOC appears to favor quantitative controls on lending instead, they noted. Either way, credit conditions are set to be less favorable this year. (RTT)
     
  • Hong Kong: Inflation eases in February. Hong Kong's consumer prices increased in February, albeit at a softer pace, data from the Census and Statistics Department showed. The composite consumer price index rose 0.3% YoY in February, after a 1.9% increase in January. Excluding the effects of all government one-off relief measures, the composite consumer price index decreased 0.1% yearly in February, following a 0.5% decline in the previous month. "Taking the first two months of 2021 together to neutralize the distortions caused by the timing of the Lunar New Year, underlying consumer prices registered a small YoY decline of 0.3%, mainly reflecting the narrowed increase in food prices and the enlarged fall in private housing rentals," a government spokesman said. (RTT)
  • Japan: Leading index rises less than estimated in Jan. Japan's leading index rose less than initially estimated in January, final data from the Cabinet Office showed. The leading index, which measures the future economic activity, rose to 98.5 in January, the highest since October 2018, from 97.7 in the previous month. However, the score was revised down from 99.1. The coincident index came in at revised 90.3 versus 87.4 a month ago. The flash reading was 91.7. The lagging index improved to 91.4 from 90.5 last month but below the flash estimate of 91.9. (RTT)
  • Taiwan: February export orders surge as work-from-home trend drives tech demand. Taiwan's February export orders rose more than expected for the 12th month in a row to a record high, boosted by sustained demand for telecommuting products during strict lockdowns worldwide to contain the Covid-19 pandemic. New smartphone launches by brands such as Apple also fuelled demand. Taiwan's export orders, a bellwether of global technology demand, jumped 48.5% YoY to USD42.59bn in February, the highest by value for the month, data from the Ministry of Economic Affairs showed. The ministry also attributed Feb's strong performance to a lower base for comparison last year. (Reuters)

Markets

  • AirAsia (Underperform, TP: RM0.39): To acquire remaining 20% stake in BigLife for RM103m. AirAsia Group (AAGB), announced that it has entered into a memorandum of understanding with Aimia Holdings UK II Ltd to buy the remaining 20% equity interest in BigLife SB held by the latter for RM103.04m. The low cost carrier said the acquisition will be settled by issuing 85.86m new AAGB shares, which is equivalent to a 2.2% stake, to Aimia at RM1.20 per share. (The Edge)
  • MMC: Buys Tradewinds' 50% stake in Retro Highland for RM250m. MMC Corp is acquiring Tradewinds Corp's 50% stake in developer Retro Highland SB for RM250m cash, in a relatedparty transaction. The acquisition price is inclusive of RM55m in shareholder's loans advanced by Tradewinds to Retro Highland, including interest, MMC said. Retro Highland is a 50:50 JV between Tradewinds and S P Setia. (The Edge)
  • Ekovest: RM1.1bn Iskandar Malaysia land buy from IWH falls through. Ekovest said its proposed acquisition of 96.28 acres of freehold land in Pulai, Johor from Iskandar Waterfront Holdings SB for RM1.11bn has fallen through. The related party transaction, proposed to expand Ekovest’s landbank in Iskandar Malaysia, had faced hiccups since it was first proposed in November 2019. The scrapping of the deal is also an indication of the impact of Covid-19. (The Edge)
  • MMAG: Sells 15% stake in Line Clear to KTG. MMAG Holdings is selling a 15% stake in Line Clear Express & Logistics SB (LCEL) to KTG Bhd for RM22m, as part of a strategic partnership for the two companies to grow their delivery business. Proceeds from the disposal will be utilised to expand the group's logistics business. The 15% investment in LCEL by KTG would form a strategic partnership between MMAG Group and KTG Group. (StarBiz)
  • Westports: Westports, Klang Port jointly acquire Boustead Cruise terminal for RM230m. Westports Holdings and Klang Port Management SB (KPM) jointly acquire Boustead Cruise Centre SB (BCC) from Boustead Holdings for RM230m. Westport inked an agreement with KPM, a wholly-owned subsidiary of Northport (Malaysia) Bhd (Northport), for the acquisition and will be paid by Westports and KPM in a 50:50 ratio. Upon the acquisition, Westports and KPM will each jointly hold a 50% shareholding in BCC. (NST)
  • Kronologi: To place out 105m new shares to independent third-party investors. Kronologi Asia has proposed to undertake a private placement of up to 104.68m new shares in the IT firm to independent third-party investors, a move that will help the company raise additional funds expeditiously for business expansion. (The Edge)
  • Lay Hong: Suspension of Lay Hong's Jeram 1 farm lifted after DVS finds all farms free of Salmonella. The suspension of Lay Hong Bhd's production from its Jeram 1 farm in Selangor was lifted today as all of the group's farms are declared free of Salmonella Enteritidis (SE). The group said the test conducted by the Department of Veterinary Services (DVS) at all farms returned with negative results for the disease. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today after global equities gained and safe-haven assets such as US Treasuries rallied on Monday as investors weighed rising coronavirus cases in Europe against a break in the recent run-up of bond yields sparked by concerns of higher global inflation. On an unsettled day for global markets, risk assets such as oil rose alongside safe havens such as Treasuries, while Turkish assets took a beating after a surprise weekend decision to replace the country’s hawkish central bank governor. On Wall Street, the Dow Jones Industrial Average rose 103.17 points, or 0.32%, to 32,731.14; the S&P 500 gained 27.46 points, or 0.70%, to 3,940.56; and the Nasdaq Composite added 162.31 points, or 1.23%, to 13,377.54. MSCI’s gauge of stocks across the globe gained 0.42%, with slight gains in Europe.

Back home, the FBM KLCI closed at its intraday low of 1,616.73, as investors turned cautious amid muted trading in regional markets. At 5pm, the benchmark index closed 9.46 points lower, down 0.58% lower from Friday (March 19)'s close of 1,626.19. Across the region, Japan's Nikkei 225 fell 2.07%, while South Korea's Kospi dropped 0.13%. In China, Hong Kong’s Hang Seng skidded 0.36%, while the Shanghai Stock Exchange Composite Index closed up 1.14%.

Source: PublicInvest Research - 23 Mar 2021

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