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PublicInvest Research Headlines - 16 Apr 2021

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Economy

US: Business inventories rise solidly in February. US business inventories increased solidly in February, suggesting restocking could again contribute to economic growth in 1Q. Business inventories rose 0.5% after increasing 0.4% in January, the Commerce Department. February's gain was in line with economists' expectations. Inventories fell 2.4% on a YoY basis in February. Retail inventories were unchanged in February as estimated in an advance report published last month. That followed a - 0.3% decline in January. Motor vehicle inventories decreased fell 2.6% as previously reported. (Reuters)

US: Manufacturing output rebounds in March. Production at US factories rebounded in March amid strengthening domestic demand, with output of motor vehicles rising despite a global semiconductor chip shortage that has forced some automakers to cut production. Manufacturing production jumped 2.7% last month after declining 3.7% in February, the Federal Reserve said. Manufacturing production remains slightly below its pre-pandemic level. Economists polled by Reuters had forecast manufacturing output increasing 4.0% in March. (Reuters)

US: Weekly jobless claims tumble much more than expected. A report released by the Labor Department showed first-time claims for US unemployment benefits pulled back by much more than anticipated in the week ended April 10th. The Labor Department said initial jobless claims tumbled to 576k, a decrease of 193k from the previous week's revised level of 769k . Economists had expected jobless claims to decline to 700k from the 744k originally reported for the previous week. (RTT)

EU: Germany consumer prices rise most in more than a year. Germany's consumer prices increased at the fastest rate in more than a year in March, final data from Destatis showed. Consumer prices grew 1.7% YoY in March, in line with preliminary estimate, following a 1.3% rise in February. A similar higher rate was last reported in February 2020. Consumer prices increased for the third month in a row after the temporary reduction of the value added tax rates had ended. Prices of goods advanced 1.9% and that of services gained 1.6% in March. Food prices were up 1.6% and energy prices advanced 4.8% . Excluding energy, inflation was 1.4% in March. At the same time, harmonized inflation based on the EU measure climbed to 2% in March from 1.6% in February. (RTT)

UK: Demand for secured lending to rise in 2Q – BoE. British lenders expect demand for secured lending as well as the availability of secured credit to households to increase in the next three months to end-May, the Credit Conditions Survey results from the Bank of England (BoE) showed . The availability of secured credit to households increased in three months to end-February, while demand for secured lending for both house purchase and remortgaging decreased in 1Q . Lenders reported that the availability of unsecured credit to households decreased slightly in 1Q, but was expected to increase over the next quarter. At the same time, demand for unsecured lending was unchanged in 1Q, but was expected to increase in the 2Q. (RTT)

Japan: Manufacturers’ mood hits 2-year high on chip demand. Confidence among Japanese manufacturers rose to a more than two year high in April, as strong demand in the electronics market and favourable exchange rate conditions boosted prospects for exporters, a Reuters poll showed. Manufacturers in the service sector were also slightly less pessimistic than the previous month, according to the Reuters Tankan poll . But manufacturers highlighted uncertainty about the global economic outlook and cited problems with sourcing materials for production, in a sign Japan’s recovery from the coronavirus crisis remains patchy. Many companies are reluctant to invest amid worries over a fourth wave of COVID-19 cases. “The semiconductor market is recovering, but on the other hand conditions for acquiring materials are tight due to a rapid rise (in demand),” a manager at a machinery maker said. (Reuters)

India: Wholesale price inflation rises in March. India's wholesale prices rose in March, data from the Ministry of Commerce & Industry showed. The wholesale price index increased 7.39% YoY in March, following a 4.17% rise in February. Economists had expected a 5.9% rise. The primary articles price index grew 6.4% annually in March, following a 1.82% increase in the previous month. Food prices rose to 5.28% in March, following a 3.31% growth in the previous month. Fuel and power prices gained 10.25% in March, following a 0.58% rise in the prior month. Prices of manufactured products grew 7.34% in March, following a 5.81% gain in the previous month. The final wholesale prices rose 2.51% in January. (RTT)

Indonesia: Trade surplus increases in March. Indonesia's trade surplus increased in March, figures from Statistics Indonesia showed. The trade surplus rose rose to USD1.56bn in March from USD715.7m a year ago. Economists had expected a surplus of USD1.64bn. In February, the trade surplus was USD1.991bn. Exports grew 30.47% YoY in March. Economists had expected a rise of 11.74% . Imports rose 25.73% annually in March. Economists had forecast an increase of 6.0% . On a MoM basis, exports increased 20.31% and imports gained 26.55% in March. (RTT)

Markets

UEM Edgenta: Faces lawsuit over alleged failure to complete MRT2 sub-contract. UEM Edgenta is being sued for allegedly failing to complete a RM87m sub-contract under the MRT2 project. The suit was filed in the High Court by Ahmad Zaki Resources which had awarded the sub-contract in 2016. It involves the relocation of telecommunication works to facilitate the construction of a viaduct guideway from Persiaran Dagang in Bandar Sri Damansara to Jinjang. (The Edge)

Malayan Cement: To raise RM227m via private placement to repay debts and fund working capital . Malayan Cement plans to raise RM226.95m via a private placement to be used for working capital and debt repayment. The exercise involves the issuance of 85m new shares, or 10% of its share capital of 849.7m shares, to third party investors. The proceeds will be used for working capital requirements. (The Edge)

Paramount Corp: Invests into P2P financing platform. Paramount Corp is investing in a peer-to-peer (P2P) financing platform by acquiring a 30% stake in Omegaxis SB for RM13.7m, which the group sees as its entry point into the fintech sector. Omegaxis is a special purpose vehicle set up to facilitate Paramount’s proposed investment in P2P financing platforms, with the 70% in the vehicle held by P2P Venture. (The Edge)

UMW Holdings: 1Q automotive sales jump 35% to 74,911 units. UMW Holdings’ automotive sales jumped 35% to 74,911 units in the 1Q2021 from 55,560 units recorded a year ago. This was mainly due to new model introductions from both UMW Toyota Motor SB and Perusahaan Otomobil Kedua SB, as well as the sales tax exemption. UMW Toyota saw sales surging 60.6% YoY in the first three months to 17,000. (Business Times)

Transocean Holdings: To raise RM3m via private placement for logistics services segment capex. Transocean Holdings plans to raise RM3.12m via a private placement of 4.1m new shares, equivalent to 10% of its issued share capital to fund the capital expenditure of its logistics services segment. The shares will be issued at an indicative price of 76 sen. The money raised will be used to purchase motor vehicles. (The Edge)

WZ Satu: Secures contract worth RM243m. WZ Satu has secured a contract worth RM243.44m for the provision of engineering, procurement, construction, and commissioning of effluent management at source project. It has accepted the letter of award for the contract from Malaysia Refining Company SB. The 27-month contract is targeted to be completed by June 30, 2023. (The Edge)

Fajarbaru Builder: Plans rights issue with free warrants to raise up to RM37.4m. Fajarbaru Builder Group has proposed to undertake a rights issue with free warrants to raise up to RM37.39m. The rights issue of up to 373.88 million shares will be on the basis of one rights share for every one existing share held. (The Edge)

LPI Capital: Posts higher net profit of RM82.31m in 1Q. LPI Capital posted a higher net profit of RM82.31m for the 1Q ended March 31, 2021 from RM77.92m a year ago. Revenue improved 9.1% to RM440.79m mainly driven by growth in gross earned premium of 8.2% or RM30m from its general insurance segment. EPS rose to 20.66sen from 19.56sen before. (Bernama)

Market Update

The FBM KLCI might open higher today after global stock markets extended a five-day run of fresh highs on Thursday, fueled by upbeat earnings and strong US economic data that herald a solid recovery ahead, while Russian markets tumbled at the prospect of the harshest US sanctions in years. On Wall Street, the Dow Jones Industrial Average rose 0.9% and the S&P 500 advanced 1.11%. The Nasdaq Composite added 1.31%. US retail sales rebounded 9.8% in March, the largest increase since May 2020, in a gain that pushed the level of sales 17.1% above its pre-pandemic level to a record high, the Commerce Department said. The pan-European STOXX 600 index rose 0.5% in its third session of gains, with miners jumping 1.5%. The UK’s commodity-heavy FTSE 100 rose 0.6% to its highest level since February 2020 as a surge in metals prices lifted shares of companies such as Rio Tinto, Anglo American and BHP.

Back home, the FBM KLCI finished up 0.62% despite pervasive negative sentiment, while the Healthcare Index continued to rise, as growing cases of Covid-19 globally fuelled buying of stocks in glove manufacturers. At 5pm, the benchmark index closed at its day’s high of 1,608.25 points, up by 9.97 points from yesterday's closing of 1,598.78 points. In China, Hong Kong’s Hang Seng Index fell 0.37% while the Shanghai Stock Exchange Composite Index dropped 0.52%. Japan's Nikkei pared early gains to finish 0.07% higher.

Source: PublicInvest Research - 16 Apr 2021

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