PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 21 Nov 2019, 11:24 AM


PublicInvest Research Headlines - 12 Jun 2019

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Global: Central banks boost holdings of equities beyond USD1trn. Central banks increased their holdings of equities beyond USD 1trn last year, as they sought to diversify their reserves away from low-yielding bonds, according to a survey. Monetary authorities boosted their allocation of equities to 10% of their reserves despite recent market volatility and a quarter of them said they plan to purchase more stocks in the next two years, research group OMFIF said. Behind the buying is the need for central banks to find ways to keep their reserves growing after their own easy monetary policies suppressed bond yields worldwide. Central banks are still wary of taking on too much risk no matter the returns on offer. Their holdings are minuscule when compared to the USD77trn of outstanding equities. (Bloomberg)

US: Producer prices inch up 0.1% in May. Producer prices in the US showed a modest increase in the month of May, according to a report by the Labor Department. The producer price index for final demand inched up by 0.2% in May after rising by 0.2% in April. The uptick in matched economist estimates. The slight increase in producer prices came as higher prices for services were partly offset by a sharp pullback in energy prices. The report said energy prices tumbled by 1.0% in May after surging up by 1.8% in April, with gasoline prices leading the way lower. Excluding food and energy prices, core producer prices rose by 0.2% in May after edging up by 0.1% in April. The increase in core prices also met expectations. Core prices edged higher as prices for services climbed by 0.3% in May following a 0.1% uptick in the previous month. Prices for trade services fell by 0.5%, prices for transportation and warehousing and other services increased by 0.7% and 0.5% respectively. (RTT)

US: Small business optimism climbs to highest in seven months. Optimism among small US businesses rose to a seven-month high in May, as companies increased capital spending plans, suggesting firms remain confident economic growth will continue. The National Federation of Independent Business optimism index increased 1.5 points to 105 on more upbeat views of the economy, employment, capital outlays and sales. Analysts had forecast a 1.5-point decline in the gauge. The fourth straight improvement in optimism, the longest streak in two years, is the latest sign of brighter assessments by small business owners despite trade-policy uncertainty. (Bloomberg)

EU: Investor confidence weakens sharply on trade dispute escalation. Eurozone investor confidence eroded sharply in June as a renewed escalation in trade tensions between the US and China hurt sentiment in the single currency bloc, survey data showed. The investor confidence index for the euro area fell by 8 points to -3.3 from +5.3 in May. Economists had expected a score of +2.5. "The renewed escalation in the US-China trade dispute is also having a considerable impact on the EU economy," survey said. Investor confidence in Germany also fell sharply in June to reach negative territory for the first time since March 2020. Among the surveyed countries, investor confidence improved only in Switzerland. (RTT).

UK: Unemployment rate stable at 3.8%. The UK unemployment rate remained stable in April at the lowest since 1974 and employment hit a record, data from the Office for National Statistics showed. In three months to April, the ILO jobless rate came in at 3.8%, the lowest since end 1974. The rate came in line with expectations. At 76.1%, the employment rate was the joint-highest on record. The number of people in employment increased 32,000 to a record high of 32.75m. Average earnings, including bonuses, grew 3.1% YoY in three months to April, slightly faster than the expected 3%. Excluding bonuses, weekly earnings advanced 3.4% versus expected growth of 3.1%. (RTT)

Japan: M2 money stock jumps 2.7% YoY in May. The M2 money stock in Japan was up 2.7% YoY in May, the BOJ said - coming in at JPY1,029.8trn. That follows the downwardly revised 2.5% increase in April (originally 2.6%). The M3 money stock advanced an annual 2.3% to JPY1,361.7trn following the 2.2% gain in the previous month. The L money stock rose 1.9% YoY to JPY1,803.2trn, slowing from 2.0% a month earlier. (RTT)


E.A Technique (Outperform, TP: RM0.78): Receives RM25.4m payment claim from MHHE. E.A. Technique (M) has received a payment claim of USD6.10m (RM25.4m) from Malaysia Marine Heavy Engineering (MMHE), over disputes of an alleged non payment of additional works done by the latter. The company plans to contest the matter and noted that the payment claim is expected to have a financial impact of approximately RM25.48m to the company, by reducing its future profit and cash flow position. (The Edge)

Bioalpha: To boost exports of health supplements, eyes personal care business. Bioalpha Holdings unveiled its three pronged strategy to boost its exports of health supplements, venture in personal care segment and also open more retail pharmacy outlets. The manufacturing division planned to boost exports of its health supplements to China, Indonesia and Thailand following the strong performance in Malaysia. The domestic market was the primary growth driver during the year on the back of increased demand for original design manufacturing products from existing and new customers, while our house brand products gained traction through retail pharmacy outlets. (StarBiz)

Ikhmas Jaya: Bags RM405m sub-contract. Ikhmas Jaya Group landed a sub-contract valued at RM405m, bring its total contracts secured so far in 2019 to RM875m. Ikhmas Jaya had accepted a letter of award from Pembinaan Jaya Zira SB for sub-contract works for the construction and completion of Light Rail Transit Line 3. The duration of sub-contract is 26 months. The sub-contract is expected to contribute positively to its earnings for the FYE Dec 31, 2019 till Dec 31, 2021. (The Edge)

MBSB: In midst of restructuring for banking unit to be holding company. Malaysia Building Society (MBSB) is undertaking an internal restructuring that will result in its wholly-owned banking subsidiary — MBSB Bank, formerly known as Asian Finance Bank — being the group's holding company within the next two years. For that to happen, MBSB still has to convert its conventional assets worth about RM1bn to Islamic assets, which make up about 10% to 12% of its asset portfolio. Once the group completes this internal restructuring, MBSB Bank will then have a full shariah-compliant certification or endorsement. (The Edge)

Xin Hwa: Investigation reveals funds taken for personal use. The external auditors investigating financial irregularities at Xin Hwa Holdings revealed that the company’s funds were used to take care of personal expenses over the past two years. According to KPMG, three out of the eight allegations had some basis or were substantiated. Findings of the review revealed dividend payment of a subsidiary of Xin Hwa was paid to a third party, instead of the registered shareholder. But the arrangement was meant to settle a personal debt, and with instruction from the registered shareholder. (The Edge)

Seacera: Issues delayed quarterly report with net loss of RM102.15m, narrowly avoids trading suspension. Seacera Group has submitted its unaudited quarterly financial report in which it posted a net loss of RM102.15m for the 1QFY19 just in time to avoid suspension of its shares. Recall that Bursa Malaysia had just on June 4, threatened to suspend trading of the tile manufacturer’s shares, if the regulator was not furnished with the report. Seacera's quarterly report showed net loss of RM102.15m for the 5QFY19 due to impairments (RM66m) and the recognition of liability (RM31m) on a corporate guarantee for an associate company. (The Edge)


The FBM KLCI might open flat today after US stocks came off intraday highs to close lower Tuesday, with the Dow snapping a six-day win streak, as investors digested a new round of posturing on the US-China trade standoff even amid more signs of global economic stimulus. The Dow Jones Industrial Average fell 14.17 points to 26,048.51, coming off its longest string of gains since May 2018. The S&P 500 index lost 1.01 points to 2,885.72 and the Nasdaq Composite Index shed 0.60 point to 7,822.57. Wall Street got a bump early in the session after Chinese authorities backed special-purpose bond issuances by local governments. The move is an effort to accelerate financing of major projects through the bond issuances, which are used largely for infrastructure investment, the People’s Bank of China said in a joint statement with other government agencies. European markets also gained on the hope of Chinese stimulus. The DAX was up 0.92% while France's CAC 40 added 0.48% and London's FTSE 100 rose 0.31%.

Back home, the FBM KLCI index lost 4.27 points or 0.26% to 1,651.20 points on Tuesday. Trading volume decreased to 2.24bn worth RM2.03bn. Market breadth was positive with 455 gainers as compared to 348 losers. Stocks in the region were in rally mode, with China’s Shanghai Composite Index surging 2.6%, Hong Kong’s Hang Seng Index adding 0.8% and Japan’s Nikkei 225 rising 0.3%.

Source: PublicInvest Research - 12 Jun 2019

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