PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 13 Nov 2019, 10:04 AM


PublicInvest Research Headlines - 18 Jun 2019

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US: Fed likely to resist pressure to cut rates this week. The US Federal Reserve, facing fresh demands by President Donald Trump to cut interest rates, is expected to leave borrowing costs unchanged at a policy meeting this week but possibly lay the groundwork for a rate cut later this year. New economic projections that will accompany the US central bank’s policy statement on Wednesday will provide the most direct insight yet into how deeply policymakers have been influenced by the US-China trade war, Trump’s insistence on lower interest rates, and recent weaker economic data. (Reuters)

US: Homebuilder confidence unexpectedly pulls back in June. After reporting a substantial improvement in US homebuilder confidence in the previous month, the National Association of Home Builders released a report on Monday showing an unexpected pullback in confidence in the month of June. The report said the NAHB/Wells Fargo Housing Market Index dropped to 64 in June after jumping to 66 in May. The decrease surprised economists, who had expected the index to inch up to 67. The unexpected pullback by the housing market index reflected decreases, with the gauging expectations in the next six months dipping to 70 in June from 72 in May. (RTT)

US, China: Trump's plan for more China tariffs to hit festive shoppers. This year’s holiday season could be tighter for many Americans if the US government imposes tariffs on another USD300bn worth of Chinese imports - because that will include tech products, game consoles, toys, cribs, ornaments and Santa hats. The tariffs would add 25% to the import cost of these and many other consumer items just as retail outlets throughout the world’s largest economy begin to gear up for the peak end-of-year shopping season. Consumers have been largely shielded until now from the direct impact of the trade war between China and the US. (Reuters)

EU: Eurozone labor costs growth improves in 1Q. Eurozone labor costs increased at a slightly faster pace in the 1Q, Eurostat reported Monday. Hourly labor costs grew 2.4% YoY, slightly faster than the 2.3% increase seen in the 4Q. The two main components of labor costs are wages and salaries, and non-wage costs. In the euro area, the cost of wages and salaries per hour worked grew by 2.5% annually versus 2.3% a quarter ago. At the same time, the non-wage component gained 2.2% after 2.4% increase in the previous quarter. Labor cost growth is more likely to be stable in the coming quarters, given the loss of momentum in the economy and the evidence from business surveys that the labor market is no longer tightening. (RTT)

EU: Germany GDP to contract in 2Q - Bundesbank. Germany's economy is set to contract slightly in the 2Q, Bundesbank said in its monthly report on Monday. Driven by investment and household spending, the economy expanded 0.4% in the 1Q after staying flat a quarter ago. The central bank said temporary factors played an important role in boosting 1Q growth. Favorable weather underpinned construction investment. Exports remain weak and the downturn in the industry is likely to continue, the bank noted. Earlier this month, Bundesbank downgraded its growth outlook for 2019 to 0.6% from 1.6% and that for next year to 1.2% from 1.6%. (RTT)

UK: Labor costs growth lowest since mid-2017. UK labor costs increased at the joint-lowest rate since mid-2017, the Office for National Statistics reported Monday. Labor cost per hour grew 2.1% annually in the 1Q, before adjusting inflation. At 2%, growth was lower in the private sector than the public sector, where labor cost advanced 3.6%. Further, data showed that wage costs per hour increased 2.1% on year and non wage costs grew 1.3%. Wage costs include wages and salaries including bonuses and arrears, and benefits in kind. Non-wage costs include sickness, maternity and paternity pay, National Insurance contributions and pension contributions. (RTT) 


Star Media (Neutral, TP: RM0.74): Embraces AI in personalised brand campaign push. Star Media Group news website The Star Online has partnered India-based marketing technology company Netcore Solutions, which will help the Malaysian media entity embrace artificial intelligence (AI) marketing by delivering personalised brand campaigns to improve user experience. Star Media digital product and analytics senior general manager Freddy Loo said in the statement that the group's intent is to improve communication with its readers. "The idea is to listen to them, understand their behaviour and then deliver based on these needs and behaviours. We want to create a seamless journey for our readers where they receive news articles on their preferred channel and time. We are optimistic that Netcore Smartech will take us one step closer to creating that experience for our consumers," Loo said. (The Edge)

Pestech: Bags first contract in Middle East worth RM30m . Pestech International has secured a USD7.16m (RM29.9m) contract to supply mobile substations to Iraq’s electricity ministry. Pestech said the contract — awarded to its wholly-owned unit Pestech SB (PSB) — marks a significant milestone for the group, as this is the first time it is venturing into the Middle East region. This reflects Pestech’s strong engineering know-how and expertise in modular design and fully prefabricated solution. Pestech said the contract involves the supply of four new 132/33 kilovolt (kV), 31.5 megavoltampere (MVA) mobile stations and two new 132/11 k, 25 MVA mobile substations. (The Edge)

ARB: Ventures into Cambodia with RM83.5m ERP project. ARB Bhd has teamed up with a Cambodian firm to implement the enterprise resource planning (ERP) system and solutions in that country. The group’s wholly-owned subsidiary ARB Development SB (ARBD) signed a MoU with East Insurance PLC for the project valued at no less than USD20m (RM83.5 m). The MoU is valid for six months and is expected to contribute positively to the group’s future earnings. Under the terms of the MoU, ARBD and East Insurance will collaborate in developing and implementing the ERP system in the insurance operation platform for East Insurance in Cambodia. (The Edge)

Damansara Realty: Damansara Realty, Negeri Sembilan govt in RM771m project . Damansara Realty Bhd and the Negeri Sembilan government will jointly undertake a mixed development property project in Bandar Sri Sendayan, Seremban with a gross development value of RM771m. Damansara Realty announced to Bursa Malaysia that it had accepted the letter of award from the Menteri Besar, Negeri Sembilan Incorporation (MBSNI) to undertake the mixed development comprising commercial podiums, shop lots and residential units. “The development profit payable to MBNSI is approximately RM100.79m over eight tranches,” it said. (The Star)

Kimlun: Sees margin compression in anticipation of cement price hike. Kimlun Corp expects a 2% profit margin compression in anticipation of a RM90 or 45% hike in bulk cement prices. "The cement producer will increase the price for bulk cement by RM90 per tonne to RM290 per tonne, from RM200 per tonne," Sim Tian Liang, CEO at Kimlun told at a press conference, after Kimlun's AGM. He then urged cement producers to give the construction industry a grace period of three to six months, before implementing the price hike. (The Edge)

Market Update

The FBM KLCI might open stronger after U.S. stocks closed higher Monday on the back of strong gains in social media and entertainment shares such as Facebook Inc. and Netflix Inc., as investors await the Federal Reserve’s policy-setting meeting due to start Tuesday. The Dow Jones Industrial Average rose 22.92 points to 26,112.53 while the S&P 500 index climbed 2.69 points to 2,889.67 as social media, entertainment and real estate stocks rallied. The Nasdaq Composite Index added 48.37 points, or 0.6%, to 7,845.02. The Federal Reserve will be the focus this week with markets pricing in more than two interest rate cuts this year on fears of the fallout from global trade tensions and a slowdown in the economy. In Europe, the Stoxx Europe 600 edged lower by 0.1%.

Back home, the FBM KLCI index lost 0.23 of a point or 0.01% to 1,638.40 points on Monday. Trading volume decreased to 1.62bn worth RM1.43bn. Market breadth was negative with 255 gainers as compared to 537 losers. The regional markets closed mostly higher, with Hong Kong’s Hang Seng Index rising 0.4% and China’s Shanghai Composite Index inching up 0.2%. Japan’s Nikkei 225 was flat.

Source: PublicInvest Research - 18 Jun 2019

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