PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 6 Dec 2019, 9:18 AM


PublicInvest Research Headlines - 19 Jun 2019

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US: Homebuilder sentiment unexpectedly posts first drop in 2019. Sentiment among U.S. homebuilders unexpectedly posted the first decline this year, suggesting lower mortgage rates are failing to give the housing market a sustained boost amid property prices that remain out of reach for many buyers. The National Association of Home Builders/Wells Fargo Housing Market Index fell two points to 64 in June, according to a report that was below all estimates predicting a gain. All three components declined, with sales expectations hitting a four-month low. Homebuilders cited rising costs for development and construction, along with concern over trade issues and labor shortages. The figures contrast with some signs that the housing market is picking up, as a gauge of mortgage applications jumped earlier this month by the most in four years, while new-home construction advanced in March and April. (Bloomberg)

US: Housing starts unexpectedly slide 0.6% in May. A report released by the Commerce Department showed new residential construction in the US unexpectedly decreased from an upwardly revised level in the month of May. The Commerce Department said housing starts slid by 0.9% to an annual rate of 1.269m in May from an upwardly revised April estimate of 1.281m. Economists had expected housing starts to edge up to 1.239m from the 1.235m originally reported for April. Meanwhile, the report said building permits rose by 0.3% to an annual rate of 1.294m in May from a downwardly revised 1.290m in the previous month. Building permits, an indicator of future housing demand, had been expected to come in unchanged compared to the 1.296m originally reported for April. (RTT)

EU: German investor confidence sinks as ECB debates stimulus action. Investor confidence in Germany’s economic outlook worsened dramatically in June after the Bundesbank predicted the economy will shrink this quarter. An index measuring prospects for the next six months fell to -21.1 in June, worse than expected. The decline indicates increased pessimism after solid first-quarter growth, and comes as the ECB debates if it needs to ease policy further. The German economy has turned into a weak spot in the region with projected growth of just 0.6% this year. Manufacturing is shrinking, business sentiment plunged to the weakest in more than four years and persistent trade tensions are weighing heavily on momentum. (Bloomberg)

EU: Car sales rise marginally in May. EU’s passenger car sales rose marginally in May after falling for eight consecutive months, data from the European Automobile Manufacturers Association showed. EU car registrations gained 0.1% YoY in May, reversing a 0.4% fall in April. Spain's car sales declined 7.3% and by 4.6% in the UK. Italy's car sales decreased moderately by 1.2%. On the other hand, Germany's sales grew 9.1% and sales in France advanced 1.2%. During January to May, car registrations across the EU fell 2.1% from last year to 6.7m units. All five big EU markets, except Germany, showed slight declines so far this year. (RTT)

EU: May inflation unrevised. EU inflation slowed sharply in May to its lowest level in over a year and core price growth eased below 1%, as estimated earlier, latest data from confirmed. Inflation slowed to 1.2% in May from 1.7% in April. The latest inflation rate was the lowest since April last year, when it was at the same level. Core inflation, which excludes prices of energy, food, alcohol & tobacco, eased to 0.8% from 1.3%. Both inflation figures matched their flash estimates released on June 4. The ECB targets inflation "below, but close to 2%". Energy inflation remained the highest among main components, despite easing to 3.8% from 5.3%. Prices of food, alcohol and tobacco grew 1.5%, same as in April. Services costs rose 1.1% YoY following a 1.9% climb in the previous month. Prices of non-energy industrial goods increased 0.3% after a 0.2% rise in April. On a MoM basis, consumer prices edged up 0.1% in May. (RTT)

China: House prices rise slightly in May. China's house prices increased slightly in May, figures from the National Bureau of Statistics showed. House prices in the first-tier cities, namely Beijing, Shanghai, Shenzhen and Guangzhou, gained 0.3% MoM in May, but slower than the 0.6% increase posted in April. House prices in first-tier cities increased 4.7% YoY in May, the same rate as seen in April. Data showed that house prices in 31 second-tier cities and 35 third-tier cities rose 0.8% each from the previous month. Liu Jianwei, NBS senior statistician said local authorities implemented policies that helped the real estate market to stabilize. New house prices in 70 major cities grew 0.7%on month in May, the fastest growth since December, following a 0.6% rise in April, Reuters reported (RTT)

Japan: May exports fall 7.8% YoY – MoF. Japan’s exports fell 7.8% YoY in May, down for a sixth straight month, MOF data showed, underscoring persistent weakness in overseas demand. That compared with a 7.7% drop expected by economists and followed a 2.4% fall in April. Imports fell 1.5% in the year of May, versus the median estimate for a 0.2% increase. The trade balance came to a deficit JPY967.1 (USD8.91bn), versus the median estimate for a JPY979.2bn shortfall. (Reuters)

Malaysia: Sees trade diversion cushioning impact of tariff wars. Malaysia’s central bank, which has already downgraded its economic growth outlook for this year amid an escalating trade war, sees a partial offset as companies shift operations from China to sidestep higher US tariffs. Governor said the trade diversion could add about 10 bps to this year’s growth rate. That would be on top of BNM’s current forecast of 4.3% to 4.8% for 2019. “There’s a lot of uncertainty as to when the increased investments, the higher productive capacity that the firms would be making in order to take full advantage of the trade diversion will materialize”, Governor said. That was why the central bank included in its growth forecast only the anticipated losses from the trade war, including from the latest round of retaliatory measures between the world’s two largest economies, and not the benefits. Like Vietnam, Malaysia is emerging as one of the key beneficiaries from the trade conflict given its manufacturing capability and open economy. Approved foreign direct investment into the manufacturing industry surged 127% YoY in the first quarter recent data show. (Bloomberg) 


MAHB: Mavcom proposes 10.88% rate of return for MAHB. The Malaysian Aviation Commission (Mavcom) has revised upward slightly, the rate of return to 10.88% for Malaysia Airports Holdings (MAHB) on the airport operator's assets in its latest consultation paper released. This is higher than the 9%-11% rate of return proposed in the first consultation paper in Oct last year, but lower than the 12.7% to 14% range submitted by MAHB itself. Mavcom is also proposing to allow MAHB to introduce a transfer PSC to be applied for both domestic and international connections under all three scenarios. (The Edge)

Pantech: Resumes steel exports to US. Pantech Group Holdings Bhd said its steel products manufacturing unit will resume exports to the US after the company said it was not subjected to anti-dumping duty. Pantech, in a filing with Bursa Malaysia, said the resumption of exports is expected to have positive impact on group revenue, with contribution from Pantech Steel Industries SB (PSI) projected to normalise by fiscal quarter ending Nov 30, 2019. (The Star)

Fajarbaru: Fajarbaru, China Gezhouba Group to jointly bid for solar PV plants . Fajarbaru Builder Group is partnering a Chinese company to participate in the bidding on request for proposal (RFP) by the Energy Commission of Malaysia to develop and operate large scale solar photovoltaic plants (LSS3) for Peninsular Malaysia. It has entered into a MoU with China Gezhouba Group Overseas Investment Co Ltd (CGG) to bid for the LSS3 through a JV company with 55% ownership by Fajarbaru and 45% by CGG. (The Edge)

Yinson: Gets 4-year FPSO charter contract extension worth RM574m . Yinson Holdings has secured a four-year extension of its floating production storage and offloading (FPSO) charter contract worth USD137.5m (RM574.1m). Yinson said its indirect unit Adoon Pte Ltd has entered into an addendum with Addax Petroleum Development (Nigeria) Ltd to further extend the contract for the charter of FPSO Adoon with retrospective effect from Oct 17, 2018 to Oct 16, 2022. (The Edge)

I-Bhd: To bank on property investment, leisure sectors for growth. I-Bhd is banking on its property investment and leisure segments to contribute half of total group revenue in five years. The property development segment contributed an estimated 90% of total group revenue for the financial year 2018. There will still be considerable property investments in the coming five years as the target is to establish a RM1bil investment property portfolio. Currently, a second convention centre as well as the DoubleTree by Hilton hotel are under construction, both targeted to be opened by 2021. (The Star)

UEM Edgenta: Spends RM20m on mechanised vehicles. UEM Edgenta, through its expressway and roads maintenance division, Edgenta Infrastructure Services, has invested about RM20m in new mechanised vehicles to further advance its operational excellence, as well as modernise its service offerings and delivery. Managing director/chief executive officer Datuk Azmir Merican said the vehicles included a mechanised grass cutter, 10 units of mechanical road sweepers, an impact protection vehicle and an automated remote slope grass mower. "Each of these machinery is intended not only to provide efficiency to the work process, but also the safety of the expressway users," he told reporters here today. (The Edge) 

Market Update

The FBM KLCI might open with a positive bias today after the Dow and S&P 500 finished at their highest levels in about six weeks overnight ahead of a key Federal Reserve decision, as President Donald Trump tweeted that he had a productive conversation with Chinese counterpart Xi Jinping. The Dow Jones Industrial Average rose 353.01 points or 1.4% to 26,465.54. Meanwhile, the S&P 500 index advanced 28.08 points, or 1%, at 2,917.75 and the Nasdaq Composite Index climbed 108.86 points, or 1.4%, at 7,953.88. In Europe, the Stoxx Europe 600 rose 1.7% after ECB President Mario Draghi at an annual central bank conference in Sintra, Portugal said policy makers would consider “in the coming weeks” how to adapt its policy tools “commensurate to the severity of the risk” to the economic outlook, a signal that the central bank may be willing to lower rates.

Back home, the FBM KLCI index gained 14.36 points or 0.88% to 1,652.76 points on Tuesday. Trading volume increased to 2.03bn worth RM1.72bn. Market breadth was negative with 357 gainers as compared to 428 losers. Hong Kong’s Hang Seng Index rose 1% and China’s Shanghai Composite Index inching up less than 0.1%. Japan’s Nikkei 225 fell 0.7%.

Source: PublicInvest Research - 19 Jun 2019

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