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Author: PublicInvest   |   Latest post: Fri, 15 Oct 2021, 9:35 AM

 

PublicInvest Research Headlines - 29 Mar 2021

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Economy

US: Consumer sentiment jumps more than previously estimated in March . Reflecting the third round of stimulus checks and better than expected progress on Covid vaccinations, the University of Michigan released a report showing US consumer sentiment improved by even more than previously estimated in the month of March. The University of Michigan said its consumer sentiment index for March was upwardly revised to 84.9 from the preliminary reading of 83.0. Economists had expected the index to be upwardly revised to 83.6. The consumer sentiment index is well above the final February reading of 76.8, reaching its highest level since hitting 89.1 in the same month a year ago. "The data clearly point toward robust increases in consumer spending," said Surveys of Consumers chief economist Richard Curtin. "The ultimate strength and duration of the spending surge will depend on the rate of draw-downs in savings since consumers anticipate a slower pace of income growth." (RTT)

EU: Euro zone banks have enough capital to withstand pandemic hit – IMF. Euro zone banks have enough capital to withstand the impact of the COVID-19 pandemic and finance the economic recovery, even though they are highly exposed to sectors hard hit by the coronavirus, the International Monetary Fund said. “While the pandemic will significantly deplete banks’ capital, their buffers are sufficiently large to withstand the likely impact of the crisis,” the IMF said. “With the right policies, banks will be able to support the recovery with new lending.” The IMF said that based on its January 2021 projections, banks in the 19 countries sharing the euro would stay broadly resilient to the deep recession in 2020 and the partial recovery this year. “The aggregate capital ratio is projected to decline from 14.7% to 13.1% by the end of 2021 if policy support is maintained. Indeed no bank will breach the prudential minimum capital requirement of 4.5%, even without policy support,” the IMF said. (Reuters)

UK: BoE's Saunders says economy might have more spare capacity than thought . Bank of England policymaker Michael Saunders said there might be more spare capacity - potentially meaning less inflation pressure - in Britain’s economy after its COVID crash than the central bank said last month. “The pandemic and associated restrictions have significantly reduced potential output over recent quarters, but the majority of these effects are likely to be fairly temporary,” Saunders said in a speech. “I put more weight on the risk that the central forecast in the February MPR (Monetary Policy Report) overstated the temporary drop in potential output over the last year (and hence understated the extent of spare capacity in the economy at present) and was overly pessimistic on the path for potential output in the year ahead.” (Reuters)

China: Jan-Feb industrial profits surge in boost to economic recovery . Annual profits at China’s industrial firms surged in the first two months of 2021, highlighting a rebound in the country’s manufacturing sector and a broad revival in economic activity from the coronavirus crisis early last year. Profits stood at CNY1.11trn (USD170.31bn) in the first two months of 2021, up 179% from the same period last year when the COVID-19 pandemic paralysed economic activity, data from the National Bureau of Statistics (NBS) showed. They were also up 72.1% from the 2019 levels, bringing the two-year average growth to 31.2%, according to NBS. Profits had risen 20.1% in December. The figures combine data for January and February to exclude distortions caused by the week-long Lunar New Year, which fell in February in 2021. (Reuters)

Singapore: Industrial production increases in Feb . Singapore's industrial production grew in Feb, data from the Economic Development Board showed. Industrial output rose 16.4% YoY in Feb, following a 9.2% growth in Jan. Production was forecast to increase 16.5%. Excluding biomedical manufacturing, industrial production grew 13.6% yearly in Feb, following a 13.0% increase in the preceding month. On a monthly basis, industrial production rose 1.6% in February, slower than 4.3% gain in the previous month. Economists had expected a 2.9% fall. Production of electronics surged 30.3% annually in Feb and that of biomedical manufacturing rose by 23.9%. Precision engineering output gained 15.0% and chemicals increased 2.5%. Meanwhile, general manufacturing output declined 5.5% and transport engineering fell 24.2%. (RTT)

South Korea: Consumer confidence improves in March . South Korea's consumer confidence improved in March, survey results from Bank of Korea showed. The consumer confidence index rose to 100.5 in March from 97.4 in Feb. The indicator measuring current living standards rose two points to 89 in March and that concerning the outlook for living standards increased one points to 95. Consumer sentiment related to future household income remained unchanged at 96 and future spending index grew three points to 107. (RTT)

Markets

Genting (Outperform, TP: RM5.18): Medical-imaging arm expands business deal with UK firm. Genting’s 23.4%-owned associate Cortechs.ai and UK-listed IQ-AI Ltd's subsidiary Imaging Biometric LLC (IB) have expanded their business development agreement to offer IB's products on Cortechs.ai's platform. Cortechs.ai's and IB have joined forces to increase global access to clinical diagnostic accuracy tools. (The Edge)

Velesto Energy: Secures RM33ml job for Naga 7 . Velesto Energy has secured a contract from ConocoPhillips worth USD8m (RM33m) for the provision of jack-up rig services. The contract is to drill up to three wells offshore Sarawak with the tentative commencement sometime in 1H21. It will be drilling rig Naga 7 for this contract. (Starbiz)

Malton, Ho Wah Genting: Inks MoU to potentially invest in electric vehicle business. Malton has signed a MoU with Ho Wah Genting (HWGB) to potentially acquire a 14% stake in its wholly-owned electric vehicle (EV) unit HWGB EV SB. “The MoU enables Malton to have access to further information in relation to the EV project, and conduct its own internal assessment and feasibility study on the viability of investing in HWGB EV. The HWGB EV Investment represents an opportunity for Malton to invest in HWGB EV’s future business,” Malton said. (The Edge)

Mudajaya Group: MRCB George Kent executes agreement for LRT3 work packages. Mudajaya Group has executed an article of agreement with MRCB George Kent SB (MRCBGK) following the latter’s appointment as the turnkey contractor for the Light Rail Transit Line 3 (LRT3) project. The project includes works for the construction and completion of the LRT3 line from Bandar Utama to Johan Setia. The revision of the project comprises the change of the design and scope of the LRT3 project, where a new revised contract price was agreed at RM655m. (The Edge)

Reach Energy: Net profit slips to RM117.72min FY20. Reach Energy posted a lower net profit of RM117.72m for FY20 from RM128.4m in FY19. For 4QFY20, the group recorded a net profit of RM64.47m against RM92.55m in 4QFY19, while revenue amounted to RM22.44m compared with RM37.76m previously due to lower production. It said together with its major Kazakhstan sub-subsidiary, Emir-Oil, the group had developed a turn around plan to improve its performance for the near term and long term. The main target is to enhance its production, rectify violation issues, secure funding, and optimise cost. (The Edge)

Hai-O: Net profit surges 35% on better MLM, wholesale contributions. Hai-O Enterprise net profit grew 35.32% YoY to RM10.28m in (3QFY21, thanks to better contribution from its multilevel marketing (MLM) and wholesale divisions. The group, however, declared no dividend for the quarter. During the quarter, Hai-O said its MLM division continues to actively strategise product launches and devise various sales campaigns with different themes to excite distributors and boost overall sales. "The overwhelming response for one newly launched lady wear series had boosted sales. The division was also able to leverage on e-commerce and social media platforms to widen its reach and recruit higher number of new members," it said. (The Edge)

Market Update

US markets ended the week on a high as consumer sentiment numbers improved while fears of inflationary pressures eased after data showed subdued price pressures. Financial stocks rose after the US Federal Reserve said banks could resume buybacks and raise dividends starting end-June. The Dow Jones Industrial Average rose 1.4% on the day, though most of the gains were only seen in the final minutes of trading. The S&P 500 and Nasdaq Composite were 1.7% and 1.2% higher respectively. European markets were also higher as investors kept focus on growth prospects amid advances in COVID-19 vaccine rollouts. On the data front, UK retail sales recovered in February (+2.1% month-on month) while Germany’s Ifo business climate index beat analysts’ expectations with a reading at its highest in almost two years. UK’s FTSE 100 rose 1.0% while Germany’s DAX and France’s CAC 40 were 0.9% and 0.6% higher. Asian markets also ended the day higher earlier in the day, with shares in mainland China and Japan among the biggest gainers regionally. Both country’s benchmark indices rose 1.6%. The Hang Seng Index also gained 1.6% on the day. Amazing Parade Sdn Bhd is making a mandatory takeover offer to Eastern & Oriental (E&O) at 60sen per share after it bought a 10.9% stake from Sime Darby. E&O said it received notice of the MGO from Amazing Parade, the private vehicle of the Tee brothers, who control construction firm Kerjaya Prospek Group. Velesto Energy has secured a USD8m (RM33.2m) contract from ConocoPhilips Sarawak Ltd and ConocoPhilips Sarawak Oil Ltd for the provision of jack-up drilling services.

Source: PublicInvest Research - 29 Mar 2021

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