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Author: PublicInvest   |   Latest post: Thu, 14 Nov 2019, 9:44 AM

 

PublicInvest Research Headlines - 1 Jul 2019

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Economy

US: Personal income climbs 0.5% in May, more than expected. The Commerce Department released a report showing US personal income increased by more than expected in the month of May, while personal spending rose in line with estimates. Personal income climbed by 0.5% in May, matching the advance seen in April. Economists had expected income to rise by 0.3%. The disposable personal income, or personal income less personal current taxes, also increased by 0.5% for the second straight month. Meanwhile, the personal spending rose by 0.4% in May following an upwardly revised 0.6% increase in April. (RTT)

US: Moderate consumer spending, inflation support rate cut. US consumer spending increased moderately in May and prices rose slightly, pointing to slowing economic growth and benign inflation pressures, which could give the Fed ammunition to cut interest rates next month. The report from the Commerce Department came just a week after the Fed signaled it could ease monetary policy as early as July, citing low inflation as well as growing risks to the economy from an escalation in trade tensions between the US and China. Inflation has undershot the US central bank’s 2% target this year. (Reuters)

EU: Fresh inflation reading little comfort for ECB. Underlying inflation in the euro zone rebounded in June, offering some comfort to the European Central Bank but still falling short of the improvement policymakers are hoping for. With growth and price pressures easing throughout the year, ECB President Mario Draghi has already said that more policy easing will come in the near future unless inflation and growth prospects improve. Overall inflation held steady as expected at 1.2%, well short of the ECB’s target of almost 2%, but a closely watched ‘core’ figure, excluding volatile food and energy prices, jumped to 1.2% from 1% in May. (Reuters)

EU: April retail sales fall 2.7%, led by department stores, foods. Greek retail sales by volume declined 2.7% in April compared to the same month last year after an upwardly revised 5.0% rise in March, statistics service ELSTAT said on Friday. Retail sales were led lower by department stores, food and beverages, pharmaceuticals and cosmetics. Greece's economy expanded in the first three months of the year after shrinking slightly in last year's final quarter, driven by consumer spending and a pick-up in investments, although a slow-down in Europe made falling exports a drag. (RTT)

China: Factory activity shrinks as US tariffs, slowdown hit orders. China’s factory activity shrank more than expected in June highlighting the need for more economic stimulus as US tariffs and weaker domestic demand ramped up pressure on new orders for goods. The Purchasing Managers’ Index (PMI) stood at 49.4 in June unchanged from the previous month and below the 50-point mark that separates growth from contraction on a monthly basis. The weak manufacturing readings are likely to cast a shadow over the apparent progress US and Chinese leaders made at the G20 summit in Japan over the weekend in restarting their troubled talks over tariffs amid a costly trade war. They will also spark concerns about stalling growth in China and the risk of a global recession, despite slightly better-than-expected export and industrial profits data in May. (Reuters)

Japan: Housing starts fall for second month. Japan's housing starts declined for the second month in May, data from the Ministry of Land, Infrastructure, Transport and Tourism showed on Friday. Housing starts dropped by more-than-expected 8.7% YoY in May, following a 5.7% decline in April. Economists had forecast the housing starts to fall 4.2%. This was the second consecutive drop in housing starts. Annualized housing starts decreased to 900,000 in May from 931,000 in the previous month. The expected level was 948,000. In the same period last year, housing starts totaled 988,000. (RTT)

Markets

SunCon: Wins RM496m contracts. Sunway Construction (SunCon) has received three construction contracts totalling RM496m, pushing its total projects secured this year to RM1.53bn. It said the first project, worth RM310m, was awarded by Petronas Management Training SB for the construction and completion of the Petronas Leadership Centre in Bangi. Meanwhile, the second project award is from Sunway South Quay for a contract sum of RM119m for the earthworks, bored pile foundation with secant pile and diaphragm retaining wall works in Sunway South Quay at Sunway City Kuala Lumpur. The third project, worth RM67.8m, is from Oxley Rising SB and entails the supply, delivery, installation, testing and commissioning of the electrical and mechanical and electrical extralow voltage system. (StarBiz)

Perdana Petroleum: Gets two vessel work orders worth up to RM15.8m each. Perdana Petroleum has bagged two work awards by Petronas Carigali SB for the provision of accommodation work barge vessel. The contracts were received by the group’s wholly owned subsidiary, Perdana Nautika SB on May 17, the group said. The estimated contract value for the work orders are between RM9.6m and RM15.8m. It said the contracts are expected to contribute positively to the earnings and net assets of group for the FYE Dec 31, 2019. (The Edge)

Avillion: Proposes placement exercise to raise RM13.3m. Avillion has proposed a private placement exercise to raise funds for the repayment of bank borrowings, refurbishment and maintenance of hotels and resort as well as for a property development project. Based on an illustrative issue price of 15.5 sen per share, it expects to raise gross proceeds of up to RM13.3m. The group expects to complete the proposed placement in the 3Q of 2019, barring unforeseen circumstances. (The Edge)

Unisem: To close Batam plant due to losses. Unisem (M) is closing its facility in Batam, Indonesia due to persistent losses since 2011. "The management will be working in phases to scale back the operations ahead of closing the facility in PT Unisem effective Sept 30, 2019," it said. Unisem’s factory in Batam is a one stop shop facility, which provides wafer probe, wafer backgrinding, assembly packaging, final test, and drop shipment. The company assembles and tests leaded and array packages on a high volume basis in the 345,000 square feet facility in Batam. (StarBiz)

Supermax: Acquires Japanese coloured contact lens firm for RM3.85m. Supermax Corp is acquiring a Japanese coloured contact lens company for RM3.85m as it seeks to gain strategic access to the lucrative cosmetic lens market in Japan. Supermax said it is buying Clayton Dynamics Co Ltd, together with its wholly-owned subsidiary Plan A Co Ltd, from Fordham Precision Co Ltd. Supermax said the purchase consideration of RM3.85m will be paid by internallygenerated funds. (The Edge)

Hong Leong Capital: Unit buys Hong Leong Fund Management for RM2.55m. Hong Leong Capital (HLCB) said its wholly-owned subsidiary Hong Leong Asset Management (HLAM) has entered into an agreement with related party HL Management Co SB (HLMC) to acquire the entire equity interest in Hong Leong Fund Management SB (HLFM) for RM2.55m. HLCB said the acquisition is in line with its move to expand into the Islamic fund management business as the group sees growing demand for Islamic products and services. (The Edge) 

Market Update

The FBM KLCI might open stronger today after US stocks closed higher last Friday, led by banks after the Federal Reserve’s second round of stress test results late Thursday, but investors remain focused on the planned meeting on trade issues between President Donald Trump and Chinese President Xi Jinping at the G-20 meeting in Japan Friday night New York time. The Dow Jones Industrial Average finished up 73.38 points, or 0.3%, at 26,599.96, the S&P 500 index gained 16.84 points, or 0.6%, to end at 2,941.76, while the Nasdaq Composite Index finished the session up 38.49 points, or 0.5%, at 8,006.24. As for economic data Friday, the Commerce Department reported U.S. consumer spending rose 0.4% in May, while personal incomes rose 0.5% during the same period. The Federal Reserve’s most closely watched measure of inflation, the PCE index, showed yearly inflation falling from 1.6% in April to 1.5% in May, potentially supporting the argument for the Fed to lower interest rates in the coming months, as it attempts to bring inflation to its 2% annual goal. European markets finished broadly higher on Friday with shares in Germany leading the region. The DAX was up 1.04% while France's CAC 40 added 0.83% and London's FTSE 100 rose 0.31%.

Back home, the FBM KLCI index lost 0.57 of a point or 0.03% to 1,672.13 points on Friday. Trading volume increased to 2.22bn worth RM1.84bn. Market breadth was negative with 334 gainers as compared to 413 losers. The regional markets finished lower on Friday with shares in China leading the region. The Shanghai Composite was down 0.60% while Japan's Nikkei 225 was off 0.29% and Hong Kong's Hang Seng was lower by 0.28%.

Source: PublicInvest Research - 1 Jul 2019

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