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Author: PublicInvest   |   Latest post: Mon, 9 Dec 2019, 9:31 AM

 

PublicInvest Research Headlines - 3 May 2019

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Economy

US: Tweak payment to banks may bolster Fed's credibility. A small cut to an interest rate little known beyond Wall Street could lead to a big payoff for the Federal Reserve’s most important asset: its credibility. The Fed did not deliver the big-bang interest rate cut that President Donald Trump was demanding, holding firm to its view that the US economy appears to be performing just fine. Instead it made what Chair Jerome Powell insisted was nothing more than a minor technical adjustment to “interest on excess reserves,” that could nudge borrowing rates lower by a few hundredths of a percentage point. (Reuters)

US: 1Q productivity strongest since 2014, labor costs subdued. US worker productivity increased at its fastest pace in more than four years in the 1Q, depressing labor costs and suggesting inflation could remain benign for a while. The report from the Labor Department on Thursday came on the heels of data this week showing moderate wage growth in the 1Q and a key inflation measure posting its smallest annual gain in 14 months in March. “The rebound in productivity is restraining labor costs and keeping inflation in check,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.(Reuters)

US: Weekly jobless claims unexpectedly unchanged at 230,000. A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report on Thursday showing first-time claims for US unemployment benefits were unchanged in the week ended April 27th. The report said initial jobless claims came in at 230,000, unchanged from the previous week's unrevised level of 230,000. Economists had expected jobless claims to dip to 215,000. (RTT)

US: Factory orders rebound more than expected in March. A report released by the Commerce Department on Thursday showed new orders for US manufactured goods jumped by more than expected in the month of March amid a substantial rebound in orders for transportation equipment. The Commerce Department said factory orders spiked by 1.9% in March after falling by a revised 0.3% in Feb. Economists had expected orders to surge up by 1.5% compared to the 0.5% drop originally reported for the previous month. (RTT)

US, China: Talks show progress on cloud computing, US Chamber official said. American negotiators locked in trade talks with China are likely to win more access to the country’s cloud computing market than initially expected, but Chinese commitments to curb industrial subsidies will probably fall short of US demands, a US Chamber of Commerce official said on Thursday. “We expect greater market access opening than was initially provided by the Chinese in these negotiations, which was through a pilot zone,” Myron Brilliant, executive vice president and head of international affairs at the US Chamber of Commerce said. (Reuters)

EU: Eurozone manufacturing contraction slows in April. Eurozone's manufacturing sector shrunk at a slower pace in April, survey data from IHS Markit showed on Thursday. The Manufacturing PMI rose to 47.9 in April from 47.5 in March. The flash reading was 47.8 in April. However, any reading below 50 indicates a contraction in the sector. The manufacturing sector has contracted for the three successive months. "The survey's output index is indicative of factory production falling at a quarterly rate of approximately 1%, setting the scene for the goods producing sector to act as a major drag on the economy in the 2Q," Chris Williamson, Chief Business Economist at IHS Markit, said. (RTT)

EU: ECB officials express confidence in stabilizing economy. ECB officials expressed confidence over the euro area’s brightening economic outlook, while hinting at differing preferences for the speed at which monetary policy should respond to recent improvements. Bundesbank President Jens Weidmann said Germany’s excellent labor market situation and rising incomes should help boost private consumption, with a strong increase in retail sales in the 1Q providing an early indication of the trend. Finnish central-bank Governor Olli Rehn noted this week’s stronger-than-expected growth reading for the region as evidence of a recovery, but warned against overreacting to the data. “Some very recent indicators hint at stabilization,” he said. (Bloomberg)

UK: BOE holds key interest rate steady, raises growth outlook. BOE policymakers unanimously decided to hold the key interest rate and asset purchases unchanged on Thursday and raised the growth outlook, while reiterating that policymakers would always aim to achieve the 2% inflation target. The nine-member Monetary Policy Committee, led by Governor Mark Carney, held the bank rate unchanged at 0.75%, in line with economists' expectations. The previous change in the bank rate was a quarter-point hike in Aug 2018 and the rate is now at its highest level since 2009. The stock of corporate bond purchases was kept at GBP10bn and that of government bond purchases at GBP435bn. (RTT)

Markets

Icon Offshore: Lands RM12.7m job from Carigali Hess. Icon Offshore has secured a contract worth RM12.7m from Carigali Hess Operating Company SB. Icon Offshore had been awarded a contract for the provision of one anchor handling tug supply. It said the charter period for the first service order shall be for 180 days. (The Edge)

YTL Corp, Lafarge: YTL Corp buys 51% stake in Lafarge for RM1.6bn, extends mandatory offer. YTL Corp has proposed the acquisition of a 51% stake in Lafarge Malaysia for RM1.63bn or RM3.75 per share. The group plans to buy the stake of 433.24m shares, from Associated International Cement Ltd. YTL Corp will be obliged to extend a mandatory offer (MO) to acquire the remaining shares in Lafarge. YTL Corp intends to maintain the listing status of Lafarge on Bursa Malaysia. (The Edge)

Matrix Concept: Inks JVA on mixed development project in Kluang with Kopketa. Matrix Concepts Holdings has signed a JVA with Koperasi Kemajuan Tanah Negeri Johor (Kopketa) to develop Bandar Seri Impian 2 in Kluang, Johor. Matrix Concepts said the 125.25ha development would comprise 3,300 residential and commercial units with a GDV of RM1.2bn. “The development of Bandar Seri Impian 2 is a continuation of the 364.22 ha Bandar Seri Impian 1, which has been in development since 2005. (The Edge)

Destini: Sets up JV to bid for rail projects. Destini is working together with two railway contractor companies to collectively bid for rail projects in Malaysia and the region. Destini had entered into a JV and shareholders agreement with Lion Pacific SB and SVPR Consulting Services SB to transfer shares in its subsidiary DLP Rail SB. "The purpose of the proposed JV is to formalise a collaboration between the shareholders and to draw upon the skills and capabilities of each other for the benefit of the JV company, in undertaking the business of rail related projects in Malaysia and the region." (The Edge)

YFG: Terminates Kuantan PR1MA homes contract. YFG said it has terminated a RM127m contract to build PR1MA homes in Kuantan, Pahang. "The notice of termination was served to the developer Seri Ceka SB as the required contract was not formalised within the stipulated three-month time period, owing to the project funding issue on the part of SCSB," it said. The termination notice was issued by YFG. (Star Biz)

GHL: Adds GrabPay to its merchant payment touch-points. GHL Systems is adding GrabPay's payment channel to its existing credit and debit cards schemes, local e-Wallets, as well as crossborder e Wallets for its merchant base in Malaysia. GHL said it has enabled GrabPay at its merchant payment touch-points to accept Grab’s mobile QR payment. Through this tie-up, Grab will have a quicker access to GHL’s 70,000 transaction payment acquisition merchant payment touch-points throughout Malaysia. GHL group CEO said this is part of its strategy to enable its merchant base with a wide range of payment solutions, which currently stands at more than 15 types of payment schemes. (The Edge)

Market Update

The FBM KLCI might ease at opening today after global stocks took a knock and the dollar held near its recent highs after the Federal Reserve stopped short of opening the way for a rate cut to stoke inflation. After speculation that the US central bank could point towards such a move, its chairman’s words were supportive of the dollar. Wall Street’s S&P 500 slipped 0.2%. Over the previous session it recorded its worst day since March in the wake of the Fed comments, falling 0.8% and moving away from its run of record highs touched in April. Falling energy shares added to pressure on US stocks. The S&P energy sector was the worst performer in the index, falling 1.7% as oil prices retreated on signs of robust stockpiles. The Dow Jones Industrial Average slipped 122 points, or 0.4%, to end around 26,308. The Nasdaq Composite fell 0.2% to finish around 8,037. European bourses also eased. The FTSE 100 fell 0.5%, hit by the firm pound. Frankfurt’s Xetra Dax 30 ticked up fractionally and the region-wide Stoxx 600 fell 0.6%.

Back home, the FBM KLCI index lost 10.05 points or 0.61% to 1,632.24 points on Thursday. Trading volume increased to 2.68bn worth RM1.95bn. Market breadth was negative with 225 gainers as compared to 669 losers. There were gains in the region, where Hong Kong’s Hang Seng rose 0.8% and Seoul's Kospi added 0.4%. Chinese and Japanese markets remain closed for public holidays.

Source: PublicInvest Research - 3 May 2019

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