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Author: PublicInvest   |   Latest post: Mon, 18 Nov 2019, 9:59 AM

 

PublicInvest Research Headlines - 13 May 2019

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Economy

US: Consumer prices rise 0.3% in April, slightly less than expected. Consumer prices in the U.S. increased by slightly less than anticipated in April. The consumer price index rose by 0.3% in April after climbing by 0.4% in March. Energy prices showed another substantial increase during the month, surging up by 2.9% in April after jumping by 3.5% in March. A 5.7% spike in gasoline prices account for over two-thirds of the increase by the headline index. Excluding food and energy prices, core consumer prices inched up by 0.1 percent for third consecutive month compared to economist estimates for a 0.2% uptick. Higher prices for shelter, medical care, education, and new vehicles more than offset significant decreases in prices for used cars and trucks and apparel. Consumer prices in April were up by 2.0% YoY, reflecting a modest acceleration from the 1.9 YoY growth in March. (RTT)

US: Trump says US will purchase crops to offset China losses. President Donald Trump said that the US will boost its purchases of domestic farm products for humanitarian aid in an effort to offset lost demand from China as trade tensions flare between the nations. Trump said that the US will use its money from the tariffs to buy American agricultural products “in larger amounts than China ever did” and send it to “poor & starving countries” for humanitarian aid. The president indicated potential purchases of USD15bn from farmers. (The Edge)

EU: German exports rebound unexpectedly in March. German exports rose unexpectedly in March, raising hopes that a slowdown in Europe’s largest economy will not significantly dent growth in the 1Q despite headwinds from unresolved trade disputes. Seasonally adjusted exports rose by 1.5% in March, while imports were up 0.4%. That meant the trade surplus edged up to EUR 20.0bn (USD 22.45bn) from EUR 18.7bn in Feb. The government has slashed its 2019 growth forecast to 0.5%. (Reuters)

Japan: Japanese wages suffer worst first-quarter drop in a decade. Japanese wages fell for a third straight month in March, marking the worst 1Q in a decade and casting fresh doubt on whether the tight labor market will push up pay significantly. Household spending topped expectations. Labor cash earnings fell 1.9% YoY, compared with a 0.5% decline estimated. Economists have treated recent wage data with caution after sampling problems led to a string of revisions. Household spending rose 2.1%, compared with a 1.6% estimate. Japan needs solid household spending to support the economy amid recent weakness in exports. Slower overseas demand is weighing on factory output and capital investment, but improved consumption could help keep 1Q economic growth positive. (Bloomberg)

India: Industrial production unexpectedly falls. India's industrial production decreased unexpectedly in March. The index of industrial production fell 0.1% YoY, erasing a similar size gain in Feb. Economists had forecast a 1.2% rise for the month. In March, manufacturing output decreased 0.4%, while output in the mining and electricity sectors grew 0.8% and 2.2%, respectively. Further, twelve out of the twenty three industry groups in the manufacturing sector logged negative annual growth in March. The cumulative annual growth for the April-March 2018-19 period was 3.9%. (RTT)

Singapore: Singapore retail sales decline slows in March. Singapore's retail sales declined at a slower pace in March, after falling sharply in Feb. Retail sales fell 0.5% YoY in March, following a 9.9% decline in Feb. Economists had expected a 0.6% fall. Sales of optical goods and books and computer and telecommunications equipment industries declined 6.4% and 4.9%, respectively. Sales at shops selling food, watches and jewellery, and department stores decreased. Excluding motor vehicles, total retail sales fell 1.1% annually in March, following a 10.1% decline in Feb. Retail sales rose a seasonally adjusted 1.5% MoM in March, reversing a 1.4% fall in Feb. Excluding automobile sales, retail sales increased 0.7%. (RTT)

Markets

CIMB (Outperform, TP: RM6.50): To lower rates from May 15. CIMB Bank and CIMB Islamic Bank will decrease their base rate, fixed deposit/fixed return income account-i board rates, base lending rate and base financing rate by 0.25% effective May 15, following Bank Negara recent decision to lower the OPR by 25bp. The 0.25% reduction across the board is to help achieve the corresponding effect of monetary policy transmission intent by BNM’s Monetary Policy Committee. (StarBiz)

Media Prima (Neutral, TP: RM0.43): Targets 20% digital revenue contribution this year. Media Prima is targeting to increase digital revenue contribution to the group to 20% this year by capitalising on its wide digital audience across the board. The company is in a transformation journey which focuses on revenue diversification. FY18 results were a good indication that they are on the right path through our transformation strategies. (The Edge)

Lotte Chemical Titan: Expands presence in US with shale gas project. Lotte Chemical Titan Holding (LCT) has expanded its presence in the US with the debut of a new shale gas project in Louisiana. The project, by Lotte Chemical USA Corporation (LC USA), is a 60:40 JV investment project worth USD3.1bn between LCT and Lotte Chemical Corporation (LCC), Korea. (The Edge)

Advance Synergy: To sell factory, warehouse for RM124m. Advance Synergy has agreed to sell its factory and warehouse in Shah Alam, Selangor to a unit of Mapletree Dextra Pte Ltd for RM124m cash. Proceeds from the proposed disposal will be utilised to repay loans and refurbish the group’s hotels and a newly acquired commercial building. The proposed disposal is expected to be completed by 4Q of 2019. (StarBiz)

HSS Engineers: Accepts lower fees for MRT2 job. HSS Engineers said it has agreed to reduce its consultancy fees for the Mass Rapid Transit 2 (MRT2) project. The RM29.6m reduction to RM158.68m was in line with revised scope of work for the project. The revised contract is expected to continue to contribute positively to the revenue, earnings and net assets of HSS Engineers group for FYE Dec 2019 to Dec 2022. (StarBiz)

Tasco: To buy Port Klang land to scale up cold chain warehousing ops. Tasco is buying seven parcels of leasehold industrial land measuring a combined 16.3 acres in Port Klang, Selangor for RM25.83m. The proposed acquisition provides the group with the opportunity to acquire a sizeable landbank with existing warehousing facilities strategically located in Port Klang, which is the country’s busiest container port. (The Edge)

Khee San: To raise up to RM5m via private placement. Khee San has proposed to raise up to RM4.78m via a private placement to third-party investors to be identified later. The proposed private placement entails the issuance of up to 10.4m new shares, representing not more than 10% of its total issued shares. On 8 May, Khee San has 104m issued shares and 14.74m options under the Employees’ Share Option Scheme. (The Edge)

Construction (Neutral): ECRL pre-Q exercise to be held at endMay. Malaysia Rail Link (MRL) said it will hold a pre-qualification (pre-Q) exercise at the end of the month for local contractors seeking to participate in the 640km East Coast Rail Link (ECRL) project. The pre-Q exercise is to tap eligible Malaysian contractors to participate in 40% of the project’s civil works. (StarBiz)

Market Update

The FBM KLCI might open higher today as Wall Street rebounded sharply on Friday, erasing its early losses, after President Donald Trump said the latest round of trade talks between the US and China were “candid and constructive”. But the late rally wasn’t enough to spare US stocks from marking their worst week of the year, as Mr Trump’s threat over the past weekend to raise tariffs on Chinese imports caused investors to fret that trade talks between the world’s two most important economies have stalled. The S&P 500, which had been down by as much as 1.6% this morning, bounced back to close 0.4% higher. The Dow Jones Industrial Average also turned positive, up 0.7%, after falling as much as 1.4%. The Nasdaq Composite rose 0.4%, wiping away a 1.8% intraday loss. US stocks initially began mounting a comeback after upbeat comments from US and Chinese officials at the conclusion of their Friday meetings, fuelling hopes that a trade pact could still be salvaged. European stocks fared better, with Frankfurt’s Xetra Dax up 0.7% and the region-wide Stoxx 600 finishing 0.3% higher. The London’s FTSE 100 gave up a 0.4% advance to close 0.1% lower.

Back home, the FBM KLCI index lost 8.26 points or 0.51% to 1,610.27 points on Friday. Trading volume increased to 2.29bn worth RM1.84bn. Market breadth was negative with 335 gainers as compared to 465 losers. In the region, the CSI 300 rose 3.6%, returning to positive territory after a bout of selling failed to hold. Nonetheless, even after the rebound, the index remained down 4% for the week. The move was mirrored by Hong Kong’s Hang Seng index, which closed up 0.8% after a similarly brief fall in the afternoon.

Source: PublicInvest Research - 13 May 2019

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