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PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 10 Dec 2019, 9:35 AM

 

PublicInvest Research Headlines - 9 Jul 2019

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Economy

US: Consumer credit jumps more than expected in May. A report released by the Federal Reserve showed consumer credit in the US increased by more than expected in May. The Fed said consumer credit surged up by USD17.1bn in May after jumping by USD17.5 bn in April. Economists had expected consumer credit to climb by USD16.7bn. The bigger than expected increase in consumer credit reflected notable growth in both revolving and non-revolving credit. Revolving credit, which largely reflects credit card debt, rose by USD7.2bn, while non revolving credit, such as student loans and car loans, climbed by USD9.9bn. Consumer credit in May was up by 5% YoY, as revolving credit spiked by 8.2% YoY and non-revolving credit rose by 3.9% YoY. (RTT)

EU: Investor morale falls further in July, German recession looms. Investor morale in the EU deteriorated yet further in July, confounding expectations for a rise, with positive signals from the equity markets failing to soothe investors who do expect an agreement in the trade conflict soon, a survey showed. The Sentix research group said its investor sentiment index for the EU fell to -5.8 in July, down from -3.3 the month before, and well short of the 0.1 analysts had forecast. That was the lowest reading since November 2014. A sub-index for Germany plunged to -4.8 from last month’s -0.7, its lowest in almost a decade. (Reuters) 

EU: Germany industrial production rises in May. Germany's industrial production recovered in May, figures from Destatis showed. Industrial output grew 0.3% MoM in May, reversing a revised 2% fall in April. The rate of growth came in line with expectations. On a yearly basis, industrial output decreased 3.7% after easing 2.3% a month ago. Output was forecast to drop 3.2%. Excluding energy and construction, industrial production gained 0.9% in May. Production of intermediate goods dropped 0.5%, while that of capital goods showed an increase by 2%. Consumer goods production advanced 1.1%. Energy production slid 2.2% and construction output fell 2.4% in May. (RTT)

EU: Germany exports rebound in May. Germany exports rebounded in May, while imports continued to fall, data from Destatis revealed. Exports advanced 1.1% MoM in May, in contrast to a 3.4% decrease in April. Shipments were forecast to advance 0.8%. Meanwhile, imports dropped unexpectedly by 0.5%, following a 0.9% drop in April. Economists had forecast a 0.4% increase. As a result, the trade surplus increased to EUR18.7bn from EUR16.9bn in the previous month. Exports advanced 4.5% YoY versus a 0.2% drop in April. At the same time, growth in imports climbed to 4.9% from 2.5%. The current account surplus totaled EUR16.5bn in May compared to EUR13bn last year. (RTT)

China: Forex reserves increase in June. China's foreign exchange reserves increased marginally in June, data from the People's Bank of China showed. Foreign exchange reserves rose by USD18.2bn to USD3.119trn at the end of June from USD3.101trn at the end of May. The forex reserves stayed slightly above the expected level of USD3.110trn. The increase was driven by currency conversion rates and higher international financial asset prices in June, the State Administration of Foreign Exchange said. (RTT)

Japan: Overall bank lending rises 2.3% in June. Overall bank lending in Japan was up 2.3% YoY on year in June, the BoJ said - coming in at JPY536.641trn. That was in line with expectations and down from 2.6% in May. Excluding trusts, bank lending rose an annual 2.4% to JPY467.387trn - again matching forecasts and down from 2.8% in the previous month. Lending from trusts rose 1.3% YoY to JPY69.253trn, while lending from foreign banks soared an annual 15.5% to JPY2.943trn. (RTT)

Japan: Core machine orders sink 7.8% in May. Core machine orders in Japan were down 7.8% MoM in May, the Cabinet Office said - worth JPY842.9bn. That missed expectations for a decline of 3.7% following the 5.2% increase in April. On a yearly basis, core machine orders fell 3.7% versus expectations for a drop of 3.6% following the 2.5% gain in the previous month. For the 2Q19, core machine orders are forecast to have risen 15.7% QoQ and 5.0% YoY. (RTT)

Japan: Has JPY1,594.8bn current account surplus. Japan posted a current account surplus of JPY1,594.8bn in May, the Ministry of Finance said - down 15.8% YoY. That exceeded expectations for a surplus of JPY1,380.9bn yen following the JPY1,707.4bn surplus in April. The trade balance reflected a deficit of JPY650.9bn versus forecasts for a shortfall of JPY758.9bn following the JPY98.2bn deficit in the previous month. Exports were down 6.3% YoY to JPY5,918.0bn, while imports eased an annual 0.9% to JPY6,569.0bn. (RTT) 

Markets

TDM: Clinches CPO supply deal with RM189m upfront payment. TDM has secured a deal to supply 107,500 tonnes of crude palm oil (CPO) over a period of 43 months that comes with an upfront RM189m payment. TDM Plantation SB inked the medium-term supply agreement today with Ikhasas CPO SB for the supply of 2,500 tonnes of CPO and/or Roundtable on Sustainable Palm Oil (RSPO)- certified CPO per month. The contract sum shall be paid up front in three tranches at the start of the supply period subject to deduction for the provision of a sinking fund as required under the agreement. (The Edge)

Mestron: Teams up with Platinum Core to provide BBU system. Mestron Holding is teaming up with Platinum Core Solutions SB (PCS) to provide a centralised base band unit (BBU) system to mobile network operators. PCS Centralised developed the BBU system as a network solution to boost internet speed. The system is a carrier neutral network solution for all mobile network operators and is managed centrally at a centralised facility hosted by PCS. Apart from boosting Internet speed in a limited radius, the smart poles that are required for the implementation of the centralised BBU systems have features including broadband transmission. (StarBiz)

APFT: Signs business collaboration agreement with aircraft maintenance academy. APFT will be pooling resources with aircraft maintenance academy Malaysian Aviation Training Academy SB (MATA) to form the largest training centre for aviation professionals in Malaysia. A memorandum of business collaboration agreement was signed, where APFT and MATA will be sharing their resources and knowledge to facilitate the application of various licenses. The licenses include Approved Flying Training Organisation (AFTO), Maintenance, Repair And Overhaul (MRO) and Air Operator Certificate (AOC). (The Edge)

Barakah Offshore: Has found a white knight to aid its financial health. Barakah Offshore Petroleum has found a white knight, Singapore’s Lecca Group Ptd Ltd, to revive its financial health. The firm has proposed a regularization plan that includes disposal of a pipelay barge to Lecca Group, as well as a share capital reduction, share placements, plus debt settlements through the issue of redeemable unsecured loan stocks (RULS), after a total waiver of RM153.99m owed. (The Edge)

IPO: Kim Hin Joo has ambitious plan to diversify into toy sector. Kim Hin Joo (M) is looking to diversify into the toy sector with an ambitious plan to open up to four The Entertainer toy outlets in Malaysia in the next three years. The Entertainer UK is a privately owned company that runs a chain of toy shops in the UK with a total of 148 stores. The company plans to open up the first outlet of The Entertainer in the 1Q2020 in the Klang Valley, pending approval from the franchise authority of Malaysia. The company also plans to expand The Entertainer toy outlets in Singapore in the next three years. (StarBiz)

Banking (Neutral): Loan approvals in May soar 13% after OPR cut. Bank Negara’s decision to cut the overnight policy rate (OPR) by 25 basis points had pushed loan approvals by 13% in May compared with the previous month. Deputy Finance Minister Datuk Amiruddin Hamzah said April’s loan approvals, a month before the OPR cut, recorded a decrease by one per cent compared with March. At the same time, loan approvals for motorcycles and passenger cars also soared by 7.8% and 23.3% respectively. (StarBiz) 

Market Update

US markets fell overnight, led lower by the technology sector after Apple shares registered losses on the day. The sector which is up almost 28% for the year is now starting to be weighed by concerns of sky-high valuations and a deteriorating earnings picture. Investors are also waiting on FED Chair Jerome Powell who is due to speak on Wednesday, for indications on interest rate direction. The Dow Jones Industrial Average and S&P 500 fell 0.4% and 0.5% while the Nasdaq Composite was 0.8% lower. European markets were also lower, with Deutsche Bank in focus following its announcement of exiting the global equities sales and trading business, costing it €7.4bn as it slashes 18,000 jobs globally as part of a massive restructuring effort to improve profitability. The bank’s 5.0% share price decline dragged Germany’s DAX 0.2% lower. UK’s FTSE 100 and France’s CAC 40 both slipped 0.1% meanwhile. Asian markets were mostly lower as hopes of a US rate cut faded somewhat following the US jobs numbers released last Friday. Sentiment was also weighed by rising tensions between South Korea and Japan after the latter imposed export controls on certain Korean semiconductor materials. Hong Kong was rocked by another street protest over the weekend. The Shanghai Composite Index and Hang Seng Index tumbled 2.6% and 1.5% respectively as the Nikkei 225 and Straits Times Index both fell 1.0%.

TDM has secured a deal to supply 107,500 tonnes of crude palm oil over a period of 43 months, one that comes with an upfront RM189m payment. Barakah Offshore Petroleum has found a white knight in Singapore firm Lecca Group Pte Ltd to aid its financial health, after which the latter will end up with a 44.9% equity stake in the company.

Source: PublicInvest Research - 9 Jul 2019

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