PublicInvest Research

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


PublicInvest Research Headlines - 12 May 2021

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US: Job openings in US surge to a record high of 8.12m . US job openings surged in March to a record high, underscoring a rapid increase in labour demand as vaccinations accelerate and states reopen their economies. The number of available positions increased to 8.12m during the month, the highest in data back to 2000, from an upwardly revised 7.53m in Feb, the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS, showed. The number of vacancies exceeded hires by more than 2m, the largest gap on record and evidence of current hiring challenges. Many employers say they are unable to fill positions because of ongoing fears of catching the coronavirus, child-care responsibilities and generous unemployment benefits. (Bloomberg)

EU: Europe is set to take the growth baton . The European economy just flopped into a double-dip recession, but it already seems to be bouncing back and could even start outpacing the US, providing another engine for global growth. Among the reasons for optimism: economies are reopening, the delivery of vaccinations are finally accelerating and the EU’s multi-year joint stimulus fund is set to take off to complement already ultra-loose monetary policy. By the 3Q, economists at Goldman Sachs reckon euro-area output will be accelerating at an annualized pace of 13%. In contrast, they think US growth will peak at 10.5% in the current quarter as the pace of vaccinations slows. (Bloomberg)

EU: German investor confidence jumps to 21-year high on vaccines. Investor confidence in Germany’s economic recovery jumped to the highest level in more than 21 years after the country’s vaccine rollout gained speed. The ZEW institute’s gauge of expectations rose to 84.4 in May from 70.7 the previous month. A measure of current conditions improved, as did prospects for the euro zone. (Bloomberg)

EU: Italy industrial production falls in March . Italy's industrial production declined in March, figures from the statistical office Iast showed. Industrial production decreased 0.1% MoM in March, after a 0.1% growth in February. Economists had expected a 0.4% rise. On a yearly basis, industrial output accelerated 37.7% in March, after a 0.8% decrease in the preceding month. Economists had forecast a growth of 37.2%. Among all sectors, energy output increased 1.8% monthly in March. Capital goods output rose 0.2% and intermediate goods production grew 0.5%. Meanwhile, consumer goods production declined 1.5%. (RTT)

China: Inflation rises moderately; PPI inflation highest since 2017 . China's consumer price inflation rose moderately at a slower than-expected pace in April, while producer prices grew at the fastest pace in more than three years driven by higher commodity prices. Consumer price inflation rose to 0.9% in April from 0.4% in March, the National Bureau of Statistics reported. Nonetheless, the rate was slightly below economists' forecast of 1%. On a monthly basis, consumer prices dropped 0.3% versus an expected fall of 0.2%. Core inflation that excludes volatile energy and food prices picked up to 0.7% from 0.3%. Food prices dropped 0.7%, while non-food prices advanced 1.3%. (RTT)

Australia: Bolsters spending in drive for maximum employment . Australia unveiled a big-spending budget that aims to run the economy hot, joining the U.S. and Europe with a fiscal monetary tandem that seeks to drive unemployment down to levels rarely seen in the past 50 years. Treasurer Josh Frydenberg’s 2021- 2022 fiscal blueprint aligns both economic orthodoxy with the political needs of a government facing an election in the next year. While the budget deficit in the 12 months through June 2022 is wider than expected at 5% of GDP, it leaves the opposition Labor party struggling for a narrative when the conservative incumbent is spending so freely. (Bloomberg)

Korea: Jobless rate declines further as economy recovers . South Korea’s unemployment rate declined further in April as hiring improved, suggesting a long-awaited job market recovery is taking hold across the country. The unemployment rate edged down to 3.7% in April from 3.9% the previous month, the statistics office reported Wednesday. Economists had forecast no change from March. The economy added 652,000 jobs from a year earlier, a second month of gains, though it comes on the back of a low year-earlier base. (Bloomberg)


Axiata ( Neutral, TP: RM3.85): SoftBank Corp invests RM250m in ADA for 23.07% stake. SoftBank Corp is investing RM250m (USD60m) in Axiata Group’s digital marketing subsidiary ADA for a 23.07% stake in the company. (The Edge)

Comments: Following the entry of SoftBank, Axiata Digital, a 96.5% subsidiary of Axiata Group, will remain the majority shareholder of ADA with a 63.5% stake. ADA is essentially a data and artificial intelligence company that designs integrated digital, analytics and marketing solutions. Previously back in 2018, ADA has secured USD20m from Sumitomo Corp to fund its first external investment in Southeast Asia. Launched three years ago, ADA has been recording positive EBITDA in the last two years. Nevertheless, we believe its bottom line remains in net loss. Our earnings forecasts remain unchanged.

Careplus: Buys Seremban property for RM35.5m from Rapid Synergy. Careplus Group is acquiring a piece of land measuring 40,680 sqm (10.05 acres) in Oakland Industrial Park, Seremban for RM35.5m cash from Rapid Synergy. The acquisition is undertaken in line with the group’s expansion plans. (The Edge)

Bina Darulaman: Secures RM431m water treatment plant upgrading contract. Bina Darulaman has secured a RM431m contract to upgrade the Pelubang water treatment plant in Kedah by the Kedah state government. The three-year contract commences on May 20. (The Edge)

G Capital: To diversify into energy solutions. G Capital has proposed to diversify into the provision of energy solutions by tapping into its renewable energy assets. It has undertaken various measures over the last few years to transform into a more resilient and sustainable business. (The Edge)

WTK: No logging operations in PNG following tax evasion probe allegation. WTK Holdings has clarified that it is not involved in any logging operations in Papua New Guinea (PNG). It said this following a report in the Sarawak Report that the PNG government plans to audit 20 companies. (The Edge)

Ranhill: Re-strategises business, Hamdan & PACs' stake could rise to 46.83%. Ranhill Utilities has proposed to acquire stakes in two companies in line with its business expansion objectives and growth strategies to diversify its income streams into other businesses. (The Edge)

Public Bank: 1Q net profit jumps 15% to RM1.53bn. Public Bank kicked off its current financial year with a 15.1% jump in net profit to RM1.53bn in the 1Q ended March 31 2021. Group revenue, however, fell 9.74% to RM5.03bn. (BTimes)

JF Tech: Nine-month earnings hits new high, surpassing FY20. JF Technology posted a net profit of RM3.7m, an increase of 114.7% for the 3QFY21. Revenue increases 55.9% YoY to RM9.6m. On balance sheet strength, JFT remains in a net cash position with net cash per share of 9.1sen. (BTimes)

Media Chinese International: Projects RM7m net profit in 4Q on cost savings, improved business conditions. Media Chinese International Ltd expects to record a net profit of not less than USD1.7m (RM7m) for the 4QFY21, against a net loss of USD1.8m (RM7.41m) a year earlier. (The Edge)

Market Update

The FBM KLCI might track US stocks which closed lower on Tuesday as rising commodity prices and labor shortages fed fears that despite reassurances from the US Federal Reserve, near-term price spikes could translate into longer-term inflation. While all three indices pared their losses from session lows, the sell-off was fairly evenly dispersed across the sectors. Economic data released on Tuesday from the Labor Department showed job openings at US companies jumped to a record high in March, further evidence of the labor shortage hinted by Friday’s disappointing employment report. The report suggests labor supply is not keeping up with surging demand as employers scramble to find qualified workers. At the closing bell, the Dow Jones Industrial Average fell 473.66 points, or 1.36%, to 34,269.16, the S&P 500 lost 36.33 points, or 0.87%, to 4,152.1 and the Nasdaq Composite dropped 12.43 points, or 0.09%, to 13,389.43. European stocks also tumbled from all-time highs on Tuesday, with the travel, retail and technology sectors among the top losers after global sentiment turned risk averse on worries about rising inflation in the United States. The pan-European STOXX 600 index fell 2.0%, its biggest percentage decline since late December. The main bourses in Frankfurt, Paris and London all lost more than 2%.

Back home, the FBM KLCI closed in the red for the second consecutive day as regional markets slumped after Wall Street's dismal showing, and as investor sentiment was weighed by yesterday's announcement of a new nationwide movement control order to stem climbing Covid-19 infections. The benchmark index finished 6.28 points or 0.4% lower at 1,577.64, after trading in the negative territory throughout the session. The regional markets finished mixed. The Shanghai Composite gained 1.14%, while the Nikkei 225 led the Hang Seng lower. They fell 2.07% and 0.27% respectively.

Source: PublicInvest Research - 12 May 2021

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