PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 19 Jul 2019, 8:51 AM


PublicInvest Research Headlines - 30 Apr 2019

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US: Consumer spending roars back, but inflation tame. US consumer spending increased by the most in more than 9-1/2 years in March as households stepped up purchases of motor vehicles, but price pressures remained muted, with a key inflation measure posting its smallest annual gain in 14 months. The surge in consumer spending reported by the Commerce Department sets a stronger base for growth in consumption heading into the 2Q after it slowed sharply in the first three months of the year. It further allayed concerns about the economy’s health, which had been brought to the fore by a temporary inversion of the US Treasury yield curve last month. Tame inflation, however, supported the Federal Reserve’s recent decision to suspend further interest rate increases this year. (Reuters)

US: Personal income inches up less than expected but spending jumps. A report released by the Commerce Department showed a smaller than expected uptick in US personal income in the month of March, although the report also showed a significant increase in personal spending during the month. Personal income inched up by 0.1% in March after edging up by 0.2% in Feb. Disposable personal income, or personal income less personal current taxes, crept up by less than a tenth of a percent in March after ticking up by 0.1% in Feb. Meanwhile, the report said personal spending jumped by 0.9% in March after inching up by 0.1% in Feb and rising by an upwardly revised 0.3% in January. (RTT)

US: Cuts borrowing estimate as Fed slows balance sheet runoff. The US Treasury Department indicated that the government will need to borrow less than previously estimated as the Federal Reserve slows the reduction of its asset portfolio on its balance sheet. The department expects to issue USD30bn in privately held net marketable debt between April and June, assuming a cash balance of USD270bn at the end of the period. The amount is USD53bn lower than the estimate that it made in Jan. The Fed announced last month it would start slowing the shrinking of its balance sheet in May, dropping the cap on monthly redemptions of Treasury securities from the current USD30bn to USD15bn and halt the drawdown altogether at the end of Sept. (Bloomberg)

EU: Economic sentiment erodes sharply as industrial confidence plummets. Eurozone economic sentiment weakened for a tenth straight month in April to its lowest level in nearly three years, amid a sharp deterioration in the morale in industry to its weakest level in about five years. The economic sentiment index decreased to 104 from 105.6 in March, survey data from the European Commission showed on Monday. Economists had expected a score of 105. The latest reading was the weakest since Sept 2016, when the score was 103.8. The industrial confidence index eased sharply to -4.1 from -1.6, marking the lowest reading since Dec 2014, when it was at the same level. Meanwhile, the services measure was steady at 11.5. The consumer confidence index fell to -7.9 from -7.2, in line with its flash estimate. (RTT)

EU: M3 growth at 14-month high; lending to households slows. Eurozone M3 money supply annual growth improved for a second straight month to its highest level in over a year, figures from the European Central Bank showed on Monday. M3, a measure of broad money supply, grew 4.5% YoY in March after a 4.3% increase in Feb. Economists had forecast M3 growth of 4.1%. The latest growth was the fastest since Jan 2018, when M3 grew 4.6%. The annual growth of the narrower monetary aggregate M1, which comprises of currency in circulation and overnight deposits, accelerated to 7.4% from 6.6%. Meanwhile, the pace of growth in loans to households slowed to 3.2% from 3.3% annually in Feb, and matching the rate in Jan. (RTT)

Indonesia: Jokowi mulls USD33bn move for Indonesia capital outside java. Indonesia plans to relocate its administrative capital from Jakarta, with the move set to take up to a decade and cost as much as USD33bn. President Joko Widodo ordered ministers to formulate a financing plan for the move, with private investment set to play a key role. The plan envisages relocating government and its executive branch, ministries and the parliament while retaining the central bank as well as trade and investment functions in Jakarta. While moving Indonesia’s administrative center has been discussed periodically for decades, there is now a sense of urgency as Jakarta fast approaches total gridlock. (Bloomberg)


Kimlun: Bags RM204.4m job to build two apartment blocks in Selangor. Kimlun Corp has bagged a RM204.4m contract to build two blocks of apartments in Selangor. Kimlun secured the job from Rexpoint Resources SB. The construction work is expected to be completed by 2022. (The Edge)

WZ Satu: Gets RM101.8m subcontract job under Gemas-JB double track project. WZ Satu was awarded with a RM101.84m subcontract job for the construction of bridges at Section 4 from Renggam to Kulai, for the electrified double track project from Gemas to Johor Bahru. The Group has accepted the LoA from SIPP-YTL JV. The Group’s scope of works covers substructures to superstructures, which includes casting pier, cross head, precast beam, deck slab and associated works. (The Edge)

CBIP: Bags RM48.58m palm oil mill job in Indonesia. CBIP has bagged a RM48.58m job to build a continuous sterilisation palm oil mill with a processing capacity of 45mt of fresh fruit bunches per hour. CBIP’s PalmitEco Engineering SB, together with its subsidiary PT CB Polaindo, entered into three contracts with Indonesian plantation company PT Nabire Baru, to undertake the job. (The Edge)

Far East Holdings, Harn Len: Far East Holdings buys palm oil plantation in Rompin from Harn Len for RM183m. Far East Holdings is proposing to acquire 2,134 ha of oil palm plantation land in Rompin, Pahang, and a palm oil mill from Harn Len for RM183m cash. Far East said it will fund the acquisition through internallygenerated funds. The group said the palm oil mill has a capacity of 40 tonnes of fresh fruit bunches per hour. Far East said the proposed acquisition is in line with its expansion plan and would broaden the group’s income base, through increased plantation acreage at a ‘reasonable’ cost and at a strategic location. (The Edge)

MAHB: Inks MoU with Mimos to further develop maintenance capabilities. Malaysia Airports Holdings has inked a three-year MoU with national applied R&D agency MIMOS for the adoption of advanced technologies to enhance the maintenance of Malaysian airports. The memorandum will serve as a strategic technologydriven commitment in providing technical advisory services for the development of a unified Internet of Things (IoT) technology platform for MAHB. The platform will have machine learning capabilities for predictive maintenance for MAHB's airports and systems, and its development is in line with the National IoT Strategic Roadmap. (The Edge)

PetChem: Expects PIC's petrochemical plants to start operations by 4Q19. Pengerang Integrated Complex (PIC)'s petrochemical plants remain on track to kick-off operations by 4Q19 despite the recent fire. The fire only affected the Atmospheric Residue Desulphurisation (ARDS) unit, which is used to produce lowsulphur fuel oil and hydrotreated feedstocks. Its PIC petrochemical plants are not affected by the fire. The petrochemical plants, which produce polymers, glycol, isononanol, are at 97.7% completion as of Mar 2019. (The Edge)

Market Update

The FBM KLCI might open higher today after Wall Street equities rose on Monday to new record peaks, as muted inflation and robust consumer spending further support the Federal Reserve’s dovish stance and embolden investors to snap up high-growth stocks. The S&P 500 climbed 0.1% to close at 2,943 having struck a fresh intraday higher earlier in the session as well, ticking above the previous historic intraday high that was set in September 2018. The benchmark index’s rise was fuelled by a roughly 0.9% increase in financials and communications services that was partially offset by the real estate sector. The index had first reached a record closing high last week and sentiment was boosted further after stronger-than-expected US growth data for the first three months of 2019. Meanwhile, the tech-heavy Nasdaq Composite also struck a new high, rising 0.2% to 8,162, having joined the S&P 500 in notching a fresh intraday peak earlier in the day. The Dow Jones Industrial Average meanwhile, was roughly flat at 26,554. Sentiment was boosted after US consumer spending in March rose by the most since August 2009. However, price pressure remained benign, with the Fed’s preferred inflation indicator — the core personal consumption expenditures price index — up 1.6% YoY in March. The reading is slightly softer than forecasts of 1.7%, and remains well under the central bank’s 2% target, playing into the existing dovish outlook for US monetary policy. The gains on Wall Street bucked a more muted performance in Europe, where the continent-wide Stoxx 600 index ended the day up less than 0.1%. Frankfurt’s Xetra Dax 30 finished 0.1% higher, while London’s FTSE 100 inched up by 0.2%.

Back home, the FBM KLCI index lost 0.98 of a point or 0.06% to 1,637.40 points on Monday. Trading volume decreased to 2.53bn worth RM1.64bn. Market breadth was negative with 256 gainers as compared to 623 losers. Meanwhile, in the region, China’s CSI 300 was up 1.2% after posting its biggest weekly decline in six months last week, falling 5.6%. Figures released over the weekend showed Chinese industrial profits returned to growth in March, rising 13.9% YoY, following four consecutive months of falls. Further clues on the impact of Chinese stimulus programs will come on Tuesday with the official manufacturing purchasing managers’ index.

Source: PublicInvest Research - 30 Apr 2019

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