PublicInvest Research

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


PublicInvest Research Headlines - 28 Jun 2019

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US: Economy grew by unrevised 3.1% in the 1Q. A report released by the Commerce Department on Thursday showed the pace of US economic growth in the 1Q was unrevised from the previous estimate. The Commerce Department said real GDP increased at an annual rate of 3.1% in the 1Q, unrevised from the estimate released last month and in line with economist expectations. The unrevised rate of GDP growth in the 1Q still reflects a significant acceleration from the 2.2% increase seen in the 4Q of 2018. The report showed upward revisions to non residential fixed investment, exports, state and local government spending, and residential fixed investment. However, the upward revisions were offset by downward revisions to consumer spending and inventory investment and an upward revision to imports, which are a subtraction in the calculation of GDP. (RTT)

US: Pending home sales rebound more than expected in May . Pending home sales in the US jumped by slightly more than anticipated in the month of May, according to a report released by the National Association of Realtors on Thursday, with pending sales rebounding after showing a steep drop in the previous month. NAR said its pending home sales index surged up by 1.1% to 105.4 in May after tumbling by 1.5% to 104.3 in April. Economists had expected the index to increase by 1.0%. Despite the monthly increase, pending home sales in May were down by 0.7% compared to the same month a year ago, reflecting the 17th straight month of annual decreases. (RTT)

US: Weekly jobless claims rise more than expected to 227,000. The Labor Department released a report on Thursday showing first-time claims for US unemployment benefits increased by more than expected in the week ended June 22nd. The report said initial jobless claims rose to 227,000, an increase of 10,000 from the previous week's revised level of 217,000. Economists had expected jobless claims to inch up to 220,000 from the 216,000 originally reported for the previous week. The Labor Department also said the less volatile four-week moving average crept up to 221,250, an increase of 2,250 from the previous week's revised average of 219,000. Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also climbed by 22,000 to 1.688 million in the week ended June 15th. (RTT)

EU: Eurozone economic confidence at 34-month low . Eurozone economic sentiment deteriorated more-than-expected to the lowest level in nearly three years in June, strengthening calls for further monetary easing, survey data from the European Commission showed Thursday. The economic sentiment index dropped to 103.3 in June from 105.2 in May. This was the lowest since Aug 2016, when the reading was 103.2. The score was forecast to fall moderately to 104.7.(RTT)

EU: ECB seen cutting rates in Sept as Draghi reloads stimulus . The ECB will flag next month that it’s ready to reduce interest rates and then deliver a cut in Sept as policy makers step up their efforts to revive the euro-zone economy, economists predict. The push for additional support was set in motion by President Mario Draghi last week when he said more stimulus will be needed if the outlook doesn’t improve. He said prolonged uncertainty, largely driven by trade tensions, means the downside risks to growth and inflation have now materialized. Economists expect the ECB's deposit rate will be lowered to -0.5% in Sept. (Bloomberg)

EU: Germany inflation accelerates in June. Germany's consumer price inflation increased unexpectedly in June, preliminary data from Destatis showed Thursday. Consumer prices climbed 1.6% YoY in June, faster than the 1.4% increase in May. The annual growth rate was expected to remain at 1.4%. On a monthly basis, consumer prices gained 0.3% after rising 0.2% in May. Prices were expected to rise again by 0.2%. The harmonized index of consumer prices advanced 1.3% YoY in June, in line with expectations and the same rate as seen in May. Final data is due on July 11. (RTT)

UK: Consumers turn gloomier as economy, finance worries grow - GfK. British consumers have turned gloomier about the economy and the outlook for their personal finances, according to a survey by market researchers GfK that adds to signs of a lacklustre 2Q for the economy. The GfK consumer sentiment index - which has been negative since shortly before the June 2016 Brexit referendum - fell to -13 in June from May’s seven-month high of -10. The reading was below the median forecast in a Reuters poll of economists of -11. A measure of consumers’ willingness to make major purchases was its weakest since Nov. (Reuters)

Singapore: GDP likely to expand less than estimate, says MAS Chief. Singapore's economic growth forecast for this year is likely to be revised down as downside risks to growth clearly increased, Monetary Authority of Singapore's MD Ravi Menon said Thursday. Growth in the 1H of the year is looking to be quite weak, particularly in the trade related sectors, he said at the MAS' annual report media conference. The full-year growth forecast of 1.5%-2.5% is premised on the economy stabilizing in the 3Q, with a moderate pickup thereafter, Menon noted. However, the given the softer global environment and ongoing trade conflict, the strength of the pickup is unlikely to offset the weakness in the 1H, the banker observed. Moreover, "downside risks have clearly increased," Menon said. Inflation for this year is projected to be between 0.5% and 1.5%. (RTT)


Salcon: Unit bags RM26m job from Gamuda Land. Salcon has bagged a RM25.67m contract from Gamuda Land (Botanic) SB to undertake remedial works of existing vacuum sewerage system at KXG 708 & KXG 722 catchments in Bandar Botanic, Klang, Selangor. Salcon has accepted the letter of award from Gamuda Land (Botanic) for the proposed project. (The Edge)

KIP Reit: Sets up RM2b mid-term note programme. KIP REIT has set up a medium-term notes programme of RM2b in nominal value and lodged the programme with the Securities Commission. KIP REIT announced that the MTN programme shall have a perpetual tenure. "Issuance of MTNs from time to time under the MTN programme may be rated and/or unrated, which will be determined prior to each issuance," it said. It added that proceeds from the issuance under the programme may be used by the issuer to, among others, advance to KIP REIT to finance or part finance its investment activities, refinance borrowings, and/or for the REIT's working capital. (The Edge)

PUC: To boost FinTech and eCommerce businesses through strategic partnerships. PUC aims to grow its FinTech and e Commerce business segments through strategic partnerships. While the media and advertising business will remain the major revenue contributor, PUC’s strengthened FinTech and eCommerce businesses are expected to grow and contribute positively to its overall business. Key growth initiative for PUC this year is the introduction of its micro-financing service under the FinTech space through its proposed collaboration with Yayasan Pekerja Malaysia (YAPEM). PUC had earlier entered into a MoU with YAPEM to offer micro loans to YAPEM members. It has also inked seven other partnerships previously as part of its strategic plan. (The Edge)

Berjaya Corp: Posts RM244.5m pre-tax profit in Q4. Berjaya Corp (BCorp) recorded a pre-tax profit of RM244.52m in 4QFY19, due to higher investment related income arising from the gain on disposal of a JV amounting to RM191.99m. The group said that the hotels and resorts segment reported higher earnings on the back of higher average room rates despite an overall lower occupancy rate while the local gaming operations recorded higher profit from lower prize payout and operating expenses during the quarter. Revenue for the quarter rose 5.1% YoY to RM2.22b, thanks to higher revenue reported by the marketing of consumer products and services segment as well as the hotels and resorts segment. (The Sun)

Property (Neutral): Govt preparing tax incentives for green property developer. To promote the usage of green building materials in the country, the government is in the midst of dishing out goodies - tax incentives - to developers of green building, according to the Ministry of Housing and Local Government. Although the goodies may not be announced in the upcoming 2020 Budget, it nevertheless, would be implemented as soon as possible, said its deputy minister Datuk Raja Kamarul Bahrin Shah. “We have been talking about this for the past few years, but no follow up have been done (under the previous government)” “Surprisingly our percentage of green building in the country only stood at 1% compared with our neighbour, Singapore which is 40%.” (The Edge) 

Market Update

US markets ended mostly higher overnight with banking shares leading the gainers as investors wait on further direction from the upcoming meeting between Presidents Trump and Xi. Banking stocks also rose ahead of the US Federal Reserve’s stress test results release which was due out late yesterday. On the data front, the Commerce Department said the US economy grew at a solid rate of 3.1% in the first quarter, though some components like consumer spending and business investments grew at a slower pace than previously estimated. On the day, the S&P 500 and Nasdaq Composite rose 0.4% and 0.7% though the Dow Jones Industrial Average slipped 10pts (-0.04%). European markets were mixed as data showed Germany and Italy driving euro zone economic sentiment to its lowest point in three years in June with confidence falling markedly in the bloc’s largest economies. Germany’s DAX inched 0.2% higher regardless, as UK’s FTSE 100 and France’s CAC 40 fell 0.2% and 0.1% respectively. Asian markets were mostly higher as investors wait on the upcoming G20 meeting and the planned presidential meeting in a fresh attempt to defuse the ongoing trade tensions. The Chinese Ministry of Commerce maintained a firm stance against the US during a weekly press conference yesterday, calling on Washington to cancel its pressure and sanction measures on Huawei and other Chinese companies. Xi Jinping is also reportedly planning to present the terms China expects the US to meet in order to settle the trade war, including the lifting of its Huawei ban, a removal of all tariffs and the cessation of efforts to force China into buying more US exports. The Shanghai Composite and Hang Seng indices rose 0.7% and 1.4%, with Japan’s Nikkei 225 also up 1.2%.

Gamuda has said its Board is in favor of accepting the Federal Government's offer to take over all four toll concessionaires linked to the group for a combined RM6.2bn at enterprise value. UAE based Aabar Investments PJS has ceased to be a substantial shareholder of RHB Bank after disposing of 231m shares. Icon Offshore has been slapped with a lawsuit claiming for RM13.9m in damages for breach of contract in relation to the construction of a platform supply vessel (PSV).

Source: PublicInvest Research - 28 Jun 2019

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