PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 14 Jun 2019, 12:18 PM


PublicInvest Research Headlines - 14 May 2019

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US: Readies new tariffs as Trump says he'll meet China's Xi. The US prepared to hit China with new tariffs even as President Donald Trump said he’ll meet his Chinese counterpart, Xi Jinping, at next month’s G-20 summit. The US Trade Representative’s office Monday released a list of about USD300bn worth of Chinese goods including children’s clothing, toys, cell phones and laptops that Trump has threatened to hit with a 25% tariff. If Trump proceeds with the tariffs, it would see almost all imports from China covered by punitive import duties. It also would turn the president’s trade wars into a tangible reality for many Americans and their pocketbooks as he seeks re election. Under a process outlined by US officials, the new tariffs would not take effect until late June at the earliest. (Bloomberg)

EU: Ready to retaliate as Trump auto-tariff deadline nears. The EU is finalizing a list of American goods to target with retaliatory tariffs in the event that US President Donald Trump, who is expected to make a decision by May 18, imposes levies on car imports. “We are already preparing a list of possible items that would be on that list,” EU trade chief Cecilia Malmstrom said. US tariffs on European cars and auto parts would mark a significant escalation of transatlantic tensions because the value of EU automotive exports to the American market is about 10 times greater than that of the bloc’s steel and aluminum exports combined. (Bloomberg)

EU: Economy not yet on solid ground as business sweats. Europe has a long way to go if it’s to deliver on the hope sparked by recent economic numbers. While there are hints that the bloc’s sharp deceleration is ending, there’s no escaping fresh doubts over global trade, ongoing weakness in German manufacturing, uncertainty over China’s growth, and Brexit. Euro-area GDP growth topped expectations at 0.4% in 1Q, and a similar number is predicted on Wednesday from Germany, the region’s biggest economy. That would signal the outlook isn’t as bad as feared, but sustaining the upturn probably requires a clear improvement in confidence to help investment and demand. (Bloomberg)

UK: May seeks support for Brexit plan as cross-party talks falter . Prime Minister Theresa May will meet with her cabinet Tuesday as she comes under increasing pressure to pull out of Brexit talks with the opposition Labour Party and set a date for her departure. The latest in a series of cross-party meetings aimed at ending the parliamentary deadlock over leaving the European Union broke up without substantive progress on Monday evening. There is increasing anger among members of May’s Conservative Party at her continued talks with Labour and later in the week she will meet with rank-and-file members of Parliament who want a firm timetable for her to step down. (Bloomberg)

China: Raises tariffs on USD60bn worth of US goods. Shrugging off a warning from US President Donald Trump, China has announced plans to raise tariffs on USD60bn worth of US goods. The move by China comes in retaliation to Trump's recent decision to raise tariffs on approximately USD200bn worth of Chinese goods to 25% from 10%. China said increased tariffs on a total of 5,140 US products would take effect June 1st, with the tariffs ranging from 5% to 25%. Beijing is following through on its pledge to take "necessary countermeasures" in response to the US tariff increase even though Trump warned the situation "will only get worse" if China retaliates. (RTT)


TNB (Trading Buy, TP: RM14.12): Continues to play active role in renewable energy. Tenaga Nasional (TNB) is actively diversifying into energy sources that are able to meet the needs of the future in a sustainable, reliable and affordable manner. TNB explained that its priorities for future generation sources were focused on growing its renewable capacity, expansion of capacity into selected international strategic markets with strong growth prospects and improving the performance of the existing generation fleet. (StarBiz)

DRB-HICOM (Outperform, TP: RM2.10): Confirms MACC's remand of subsidiary's top execs in defence contract probe. DRB-HICOM confirmed that the Malaysian Anti-Corruption Commission (MACC) has remanded two top executives of its wholly owned subsidiary DRB-HICOM Defence Technologies SB (Deftech), in connection with a graft probe on an RM17m defence contract. (The Edge)

Daya Materials (Neutral, TP: Under Review): RHB rejects request for extension of time to pay RM2.09m in trade facilities. RHB Bank has declined a request from Daya Materials for more time to pay an outstanding sum of RM2.09m. However, Daya Maxflo and the company are still in discussion with RHB to regularize the outstanding payment of the trade facilities. (The Edge)

SD Plantation: Accuses land administrator of conspiring to help foreign-owned firm to acquire its land. Sime Darby Plantation (SDP) has accused the Jasin District Land Administrator of further facilitating the compulsory acquisition of its land in Merlimau by a foreign-owned company, just three days after SDP had applied for a judicial review of the acquisition. (The Edge)

FGV: Terminates paper pulp plant MoU with CMEC. FGV Holdings has terminated its memorandum of understanding (MoU) with Hong Kong-listed China Machinery Engineering Corp (CMEC) to jointly establish paper pulp production facilities using empty fruit bunch. The plantation group did not give any reason for the termination. The termination would not have any financial impact on the company and its subsidiaries. (StarBiz)

Scientex: Buys RM123m land in Gombak to boost property development landbank. Scientex is acquiring land in Gombak for a total of RM123.28m in order to boost its property development landbank, with a focus on building affordable homes. The group had signed two conditional sales and purchase agreements with the sellers Swan Lake City SB and Fair City SB for the proposed acquisition. (The Edge)

Hiap Teck: To offer RM140m financial assistance to 35%-owned unit. Hiap Teck Venture has proposed to lend RM140m to its 35%- owned associate, Eastern Steel SB, as part of a RM400m sum that Eastern Steel is looking to raise for its working capital retirements. The group may also be required to provide corporate guarantees and indemnities proportionate to its shareholding in Eastern Steel. (The Edge)

IPO: Leong Hup’s 1Q earnings up 15% to RM60.6m. Leong Hup International has posted a jump in its 1Q earnings ahead of its return to Bursa Malaysia. Its three-month to end March net profit rose 15% to RM60.58m compared with the RM52.68m made a year ago, on higher sales volume and an increase in the selling price of eggs in Malaysia and broiler chicks in Indonesia. (StarBiz)

Market Update

The FBM KLCI might drop today after global markets were in a spin overnight, with US equities tumbling more than 2% and Treasuries rallying, as the trade dispute between the world’s two biggest economies escalated. The S&P 500 ended 2.4% lower on Monday after China said it would retaliate against new US measures with its own set of tariffs on goods imported from the US. It was the index’s biggest one-day drop since January 3. Heaping additional pressure on the benchmark was a 5.8% drop for index heavyweight Apple, which was eyeing its biggest one-day drop since January 3 and among its biggest of the past five years. Tech stocks sank amid concerns they could be hit by the increased trade tensions, with many chipmakers also nursing declines of more than 3%. That weighed heavily upon the Nasdaq Composite, which was off 3.4% for its largest one-day drop since December 4. The Dow Jones Industrial Average fell 2.4% as heavyweight Boeing fell 4.9% after a Chinese media report that Beijing could reduce orders from the manufacturer. European markets also finished broadly lower with shares in Germany leading the region. The DAX was down 1.52% while France's CAC 40 was off 1.22% and London's FTSE 100 was lower by 0.55%.

Back home, the FBM KLCI index lost 9.18 points or 0.57% to 1,601.09 points on Monday. Trading volume increased to 2.48bn worth RM1.65bn. Market breadth was negative with 140 gainers as compared to 815 losers. The CSI 300 index of stocks listed in Shanghai and Shenzhen earlier fell 1.5%, adding to its decline of 4.5% over last week. The regional indices fell across the board. Among them, benchmarks dominated by exporters made up some of the biggest losses. Taiwan’s TWSE 50 fell 1.6%. South Korea’s Kospi lost 1.4%.

Source: PublicInvest Research - 14 May 2019

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