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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 18 Jun 2021, 10:10 AM

 

PublicInvest Research Headlines - 7 May 2021

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Economy

US: Labor productivity rebounds 5.4% in 1Q, more than expected. After reporting a sharp pullback in US labor productivity in the previous quarter, the Labor Department released a report showing productivity rebounded by more than expected in 1Q21. The Labor Department said labor productivity spiked by 5.4% in 1Q after tumbling by a revised 3.8% in 4Q20. Economists had expected productivity to surge up by 4.3% compared to the 4.2% nosedive that had been reported for the previous quarter. The rebound in productivity, a measure of output per hour, came as output shot up by 8.4% compared to a 2.9% increase in hours worked. "Looking ahead, we expect productivity to strengthen in coming quarters and remain well supported as the economy experiences a mini boom in activity and the labor market lags to overall economic recovery," said Oxford Economics. (RTT)

US: Jobless claims drop more than expected, failing below 500k. With the more closely watched monthly jobs report looming, the Labor Department released a report showing first-time claims for US unemployment benefits fell by much more than expected in the week ended May 1st. The report said initial jobless claims slid to 498,000, a decrease of 92,000 from the previous week's revised level of 590,000. Economists had expected initial jobless claims to edge down to 540,000 from the 553,000 originally reported for the previous week. With the much bigger than expected decrease, jobless claims once again fell to their lowest level since hitting 256,000 in the week ended March 14, 2020. The less volatile four-week moving average also dropped to a more than one-year low of 560,000, a decrease of 61,000 from the previous week's revised average of 225,500. (RTT)

EU: Retail sales beat expectations in March. Euro zone retail sales rose by more than expected in March, data showed =, pointing to pent-up consumer demand as pandemic lockdowns ease.The European Union’s statistics office Eurostat said that retail sales in the 19 countries sharing the euro jumped 2.7% MoM in March for a 12.0% YoY surge. Economists polled by Reuters had expected a 1.5% monthly rise and a 9.6% annual gain. The sales were driven mainly by demand for non-food products excluding automotive fuel, which jumped 4.6% in March against February for a 25.0% YoY rise. Online purchases surged 37.2% YoY, Eurostat said. Internet supermarket Amazon.com Inc posted record profits in 1Q and signalled that consumers would keep spending, making it one of the biggest winners of the Covid-19 pandemic. Since the start of the coronavirus outbreak, shoppers have relied increasingly on Amazon for delivery of home staples, and the company sees this trend continuing post-pandemic, particularly for groceries. (Reuters)

EU: Germany construction sector shrinks further. Germany's construction sector continued to decline in April, survey data from IHS Markit showed. The PMI for the construction sector fell to 46.2 in April from 47.5 in March. Commercial activity weakened sharply in April and civil engineering work dropped dramatically. Inflow of new works declined further in April and average lead times on building materials lengthened. Expectation for the future declined to the weakest level thus far this year from a thirteen-month high in March. Purchase prices accelerated in April and the overall rate of cost inflation rose to a record high. Employment declined in April and the rate of job shedding was the quickest since November last year. (RTT)

EU: Germany factory orders growth tops expectations. Germany's factory orders growth accelerated more than expected in March underpinned by both foreign and domestic demand, data from Destatis revealed. Factory orders increased 3% MoM in March, faster than the revised 1.4% increase seen in February. Orders were expected to climb 1.7% . Excluding major orders, real new orders in manufacturing were 1.6% higher than in the previous month. Domestic orders were up 4.9% and foreign orders increased 1.6% in March. Orders from the euro area rose 0.7%, and that from other countries gained 2.2% compared with February. Among major segments, manufacturers of intermediate goods reported an increase of 2.8%. (RTT)

UK: BoE keeps interest rate at record-low 0.1%. The Bank of England (BoE) said it had decided to keep its main interest rate at a record-low 0.1% as the UK economy emerges from its coronavirus lockdown. “The outlook for the economy continues to depend on the evolution of the pandemic, measures taken to protect public health, and how households, businesses and financial markets respond to these developments,” the BoE said. The BoE voted also at its yesterday meeting to maintain the vast amount of stimulus pumping around the UK economy. As the pandemic erupted in March 2020, the BoE slashed its key interest rate to a record-low 0.1%, where it has remained. (Malay Mail)

UK: Service sector grows most since 2013. The UK service sector grew at the fastest pace since October 2013, driven by sharp increases in business and consumer spending amid easing of restrictions related to the Covid-19 pandemic, final data from IHS Markit showed. The Chartered Institute of Procurement & Supply services business activity index advanced to 61.0 in April from 56.3 in March. The score was well above the flash estimate of 60.1. Service providers noted that the roadmap for easing Covid-19 restrictions across the UK had been a key factor helping to boost activity. New orders increased the most since December 2013. Sales to overseas customers remained relatively subdued, largely reflecting tight restrictions on international travel and hesitancy among clients due to the pandemic. (RTT)

Taiwan: Inflation rises in April. Taiwan's consumer price inflation rose in April, data from the Directorate-General of Budget, Accounting and Statistics showed. The consumer price index increased 2.09% YoY in April, after a 1.26% growth in March. Economists had expected a 1.7% rise. Prices for fuels and lubricants grew 47.95% yearly in April and those of transportation gained 14.75% . Meanwhile, prices for fruits declined 5.43% . On a MoM basis, consumer prices fell 0.64% in April. Excluding fruits, vegetables and energy, core consumer prices increased 1.35% annually in April and rose 0.64% from the previous month. Separate data showed that the wholesale prices gained 9.62% annually in April, after a 4.36% rise in the preceding month. (RTT)

Markets

Maybank (Outperform, TP: RM9.30): Retains RM4.6 billion provision for impaired loans. Malayan Banking (Maybank) has cited the imposition of the movement control order 3.0 (MCO 3.0) in affected areas to combat the rising number of Covid-19 infections as a factor for retaining the RM4.6bn impaired loans provision made previously. (SunBiz)

AirAsia (Underperform, TP: RM0.39): Reports higher passenger traffic in March. AirAsia Group said all of its entities performed better in March, in terms of total number of passengers carried, compared with Feb. AirAsia Malaysia recorded an increase of 84% in passengers carried MoM, while AirAsia Philippines and AirAsia Indonesia reported a growth of 57% and 29% respectively. (The Edge)

MyEG: Wins project from MIMOS to provide service desk for vaccine traceability system. My EG Services (MyEG) has won a contract from MIMOS to provide service desk and its related services for a vaccine traceability system. The one-year project will be effective June 1, with an option for a further one-year extension. It is valued at RM400,000 for the first year and RM250,000 for the optional one-year extension. (The Edge)

Berjaya Land: Launches The Tropika’s Tower C. Berjaya Land recently launched Tower C of The Tropika, a mixed development in Bukit Jalil, Kuala Lumpur, at a virtual event streamlined on Facebook. Despite the ongoing pandemic, the registration so far has been encouraging. The commercial component will be handed over to its main anchor tenant at the end of the year. (SunBiz)

OCR Goup: Steadfast on aim to deliver Priya Kuantan first phase in early 2022. OCR Group remains steadfast in its aim to deliver the first phase of Kuantan’s largest affordable homes scheme, Priya Kuantan, in early 2022. Despite numerous challenges faced in 2020 due to the Covid-19 pandemic, OCR ramped up its construction activities through site planning optimisation and appointment of additional contractors. (SunBiz)

MISC: Returns to black with RM429.8m net profit, revenue at RM2.54bn. MISC has returned to the black with a net profit of RM429.80m in the 1Q ended March 31, 2021. This was a turnaround from the net losses of RM1.15bn a year ago due to large provision for litigation claims. Group revenue rose 1.1% to RM2.54bn. The profit was recognised by a one-time gain from a contract extension secured by a joint venture. (BTimes)

Berjaya Food: Reports profitable 3Q as operations not adversely impacted by MCO 2.0. Berjaya Food reported a net profit of RM11.61m for its 3QFY21, against a net loss of RM1.39m a year earlier. Noting that the second Movement Control Order (MCO 2.0) was implemented during the quarter, the group's operations were not as adversely impacted as in 3QFY20. (The Edge)

Sentral REIT: 1Q net property income down 4% on-year; up in quarterly terms. Sentral REIT first quarter net property income (NPI) fell 4.2% to RM31.41m from a year earlier on lower revenue and higher property operating expenses amid Covid-19 pandemic-driven uncertainties which affected the Malaysian real estate market. (The Edge)

Market Update

US markets traded higher again overnight even as investors waited on the all-important April jobs report to assess the pace of labor market recovery, with the unemployment expected to have fallen to 5.8% from 6.0%. The jobs report will also bear some importance as the Federal Reserve works to fulfill its pledge of a zero-rate policy and keeping other easing measures in place until it believes the labor market is stronger and inflation hotter. On the day, the Dow Jones Industrial Average and S&P 500 gained 0.9% and 0.8% while the Nasdaq Composite inched 0.4%. Gains were bolstered by a better-than-expected reading on initial jobless claims numbers. European markets were mostly higher as investors here monitored a slew of corporate earnings and comments from the Bank of England (BoE). On the latter, the BoE raised 2021 growth outlook for the UK to 7.25%, slightly above analyst expectations, though also saying inflation will be a bit “bumpy” this year. On the data front, Euro zone retail sales also beat expectations in March, rising by 2.7% month-on-month. UK’s FTSE 100 outperformed with a 0.5% gain. Elsewhere, Germany’s DAX and France’s CAC 40 rose 0.2% and 0.3%. Over in Asia, markets were also mostly higher with China and Japan returning from public holiday though with mixed fortunes. Japan’s Nikkei 225 jumped 1.8% higher while China’s Shanghai Composite Index slipped 0.2%. Australia was in the spotlight after China, the country’s largest trading partner, reportedly suspended all activities “indefinitely” under the China-Australia Strategic Economic Dialogue in the middle of a strained relationship between Beijing and Canberra. The Hang Seng Index rose 0.8% while the FBM KLCI pared intraday losses to end 0.2% higher.

Inari Amertron Bhd plans to raise up to RM1.1bn via a private placement to be used for capital expenditure, acquisitions and investments. Mitsui & Co is exploring a deal to take IHH Healthcare private, according to people with knowledge of the matter.

Source: PublicInvest Research - 7 May 2021

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