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

 

PublicInvest Research Headlines - 25 Jun 2019

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Economy

Global: Lagarde sees 0.5% reduction in growth due to trade wars. Trade wars will not benefit any country in the long term, says IMF MD Christine Lagarde. She said a trade war, despite offering a seemingly "short-term fix" which looks like a great opportunity for certain countries, would not necessarily develop into a long-term benefit with regards to expenditure and foreign direct investments, among others. "We are concerned that trade tensions could actually have a significant impact on global growth, we fear a reduction of 0.5% of global growth in 2020 as the result of a 25% tariff increase on all the trade relating to the US and China. (Bernama)

US: Business borrowing for equipment rises 18% in May - ELFA. US companies’ borrowing to spend on capital investments rose 18% in May from a year earlier, the Equipment Leasing and Finance Association (ELFA) said. Companies signed up for USD9.1bn in new loans, leases and lines of credit last month, up from USD7.7bn a year earlier. Borrowings rose 3% from the previous month. “The continued low interest rate environment, coupled with solid fundamentals in the US economy, provide incentive for US businesses to expand and grow their operations,” ELFA Chief Executive Officer Ralph Petta said. (Reuters)

US, China: Tariffs on China-made consumer tech goods seen cutting sales, delaying upgrades. US consumers will delay or forgo technology upgrades if President Donald Trump imposes a new round of 25% tariffs on Chinese goods, slowing the US innovation engine, technology industry executives said on Monday. Trump’s administration is preparing to levy tariffs on an additional USD300bn worth of Chinese imports after a public comment period ends on July 2 if the US and Chinese presidents cannot relaunch talks to end their trade war. Consumer technology products, including cellphones, laptop and tablet computers, smart speakers and video gaming consoles, would make up USD167bn of that USD300bn total, or more than half the target list. (Reuters)

US, China: China says both should make compromises in trade talks. Both China and the US should make compromises in trade talks, Chinese Vice Commerce Minister Wang Shouwen said on Monday, ahead of a much anticipated meeting between the Chinese and US presidents at this week’s G20 summit in Japan. China and the US last week said they were reviving talks ahead of the meeting between presidents Donald Trump and Xi Jinping. Hopes that it will lead to a de escalation of a trade war that is damaging the global economy has cheered financial markets. Wang said talks between the two countries’ trade teams were underway, though he gave no details. (Reuters)

EU: Business confidence dives as economy wobbles. A slump in German business confidence deepened in June as trade tensions weighed on manufacturers. US-led protectionist threats have clouded the growth outlook in Europe’s largest economy for months, contributing to a manufacturing slump and boosting fears that domestic demand will be undermined. ECB president Mario Draghi last week said he’ll inject fresh monetary stimulus for the euro zone unless the economy improves. (Bloomberg)

Singapore: Inflation rises unexpectedly in May. Singapore's consumer price inflation accelerated unexpectedly in May on accommodation and private road transport costs, data from the Monetary Authority of Singapore and the Ministry of Trade and Industry showed on Monday. The consumer price index rose 0.9% YoY in May, while economists expected the rate to slow to 0.6% from April's 0.8%. Accommodation costs fell at a more moderate pace of 1% compared to the 1.4% drop in the previous month. On month, consumer prices rose 0.7% in May, reversing a 0.3% drop in April. MAS core inflation held steady at 1.3% in May, as higher retail and food inflation broadly offset a steeper decline in the cost of electricity and gas, data showed. (RTT)

Indonesia: Posts surprise trade surplus in May. Indonesia’s foreign trade surprisingly swung back to a surplus in May, against market expectations of a USD1.38bn deficit, spurring some hopes for improvement in the country’s trade outlook despite the Sino-US trade war. South-East Asia’s largest economy had a USD207.6m surplus for May, the statistics bureau said, as imports dropped near the end of the Muslim fasting month. This followed a trade gap in April that was the widest in Indonesia’s history, at USD2.4bn, partly due to rising demand for imported consumer goods ahead of Ramadan, the fasting month, which began in May and ended in early June. (Reuters)

Markets

Handal: JV bags RM360m seven-year contract from Petronas Carigali. Handal Resources’ JV bagged seven-year contract worth RM360m from Petronas Carigali SB. Handal said the JV, Borneo Seaoffshore-Handal JV, had received a LoA for the provision of water injection module supply on mobile offshore unit for mobile water injection facilities — package 4. The contract is to commence from March 2020, with an extension option of a further three years. (The Edge)

Fajarbaru Builder: Wins RM297m Malton contract. Fajarbaru bagged a RM297.5m contract from Malton to build two tower blocks of high-rise residential development named Duta Park Residences here. The project which is along Jalan Kuching, comprise of tower blocks of 49 levels and 30 levels each, encompass 572 and 268 units respectively. “Fajarbaru has additionally accepted to lock in RM108m for the construction of phase two, a tower block of 46 levels comprising 536 units. The award is subject to confirmation by Malton Development and the locked-in price shall remain valid for 12 months from the commencement of phase one,” it said. (StarBiz)

Scomi: Gets RM122m KL Monorail project. Scomi Group and Prasarana Malaysia Bhd (PMB) had signed an agreement involving the design, manufacture, completion and delivery of seven four-car vehicles for the KL Monorail for RM122m. Scomi Group said the completion agreement is conditional upon issuance of an acceptance certificate by PMB after the expiry of a monitoring period following completion of remedial works to put five four-car monorail trains into revenue service. (The Edge)

Cahya Mata Sarawak: Gets road maintenance contract extension. Cahya Mata Sarawak (CMS) has secured a six-month contract extension for the long-term management and maintenance of state roads in Sarawak, worth RM94m. The group said it received the extension letter from the Sarawak government. The extension period is from July 1 to Dec 31, based on the same terms of the contract, it said. (The Edge)

Econpile: Awarded RM67.77m in adjudication proceedings against ASM Development. Econpile Holdings has been awarded RM67.77m in the adjudication proceedings it initiated to recover progress claims for work done from ASM Development (KL) SB, under a RM280m contract for a mixed project here. Econpile had been awarded the sum, together with costs, in relation to the award in the adjudication proceedings under the Construction Industry Payment and Adjudication Act 2012. (The Edge)

Petronas Chemicals: Budgets USD6b for specialty portfolio deals. PetChem plans to spend roughly USD6b over the next 15- to 20 years, to expand its specialty chemicals portfolio through acquisitions and partnerships, the unit's CEO said. The budget is part of Petronas Chemicals’ efforts to make high-margin specialty chemicals a central part of its business. "By doing that we are going to diversify our portfolio and our dependency on crude and gas will be a lot less," he said. PetChem has been looking to grow rapidly in specialty chemicals, which are raw materials used to manufacture consumer products such as high-performance tyres, medical gloves and LED televisions. (The Edge)

Market Update

The FBM KLCI might open softer today after U.S. stocks ended mostly lower on Monday, with only the blue-chip Dow managing to hold onto slight gains, as geopolitical tensions in the Middle East weighed on the oil sector. The Dow Jones Industrial Average was up 9 points, or less than 0.1%, to around 26,728. The S&P 500 was down 0.2% to finish around 2,945. The Nasdaq Composite fell 0.3% to end around 8,006. President Donald Trump signed an executive order sanctioning Iran's leaders. The U.S. and Iran have been stuck in a simmering dispute over attacks on tankers near the Strait of Hormuz and the downing of a U.S. drone last week. Investors were mostly focused on the upcoming G-20 meeting at the end of the week, with many hoping President Donald Trump and Chinese counterpart Xi Jinping will reach a deal to prevent a further escalation in trade tensions. Across the Atlantic, European markets finished mixed. The FTSE 100 gained 0.12%, while the DAX led the CAC 40 lower. They fell 0.53% and 0.12% respectively.

Back home, the FBM KLCI index lost 6.10 points or 0.36% to 1,676.13 points on Monday. Trading volume decreased to 1.81bn worth RM1.68bn. Market breadth was negative with 294 gainers as compared to 518 losers. The regional markets finished higher with shares in China leading the region. The Shanghai Composite was up 0.21% while Hong Kong's Hang Seng added 0.14% and Japan's Nikkei 225 rose 0.13%.

Source: PublicInvest Research - 25 Jun 2019

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