PublicInvest Research

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


PublicInvest Research Headlines - 16 Jul 2019

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EU: Germany economic trends to remain weak in 2Q. Germany's industrial activity is set to remain sluggish amid moderating foreign demand, and the service sector growth is likely to lose steam, suggesting that economic trends in the biggest euro area economy will be weak in the 2Q. "After a surprisingly strong development of the German economy in the 1Q, the current economic indicators signal a subdued development in the 2Q," the country's Economy Ministry said. In the 1Q, the German economy grew 0.4% quarterly, which was the first such increase in three quarters. The Bundesbank said in its June monthly report that the economy would contract slightly in the 2Q as exports remain weak and the industrial downturn is likely to continue. The bank downgraded its growth outlook for 2019 to 0.6% from 1.6% and that for next year to 1.2% from 1.6%. (RTT)

China: GDP climbs 1.6% QoQ in 2Q. China's GDP expended a seasonally adjusted 1.6% QoQ in the 2Q2019, the National Bureau of Statistics said - beating expectations for an increase of 1.5% and was up from 1.4% in Q1. On an annualized yearly basis, GDP climbed 6.2% - matching forecasts and down from 6.4% in the three months prior. The bureau also said that industrial production jumped 6.3% YoY in June, topping expectations for 5.2% and up from 5.0% in May. Retail sales advanced an annual 9.8% in June, exceeding forecasts for 8.5% and up from 8.6% in the previous month. Fixed asset investment advanced 5.8% YoY, topping forecasts for 5.5% and up from 5.6% a month earlier. The jobless rate came in at 5.1% in June, up from 5.0% in May. (RTT) 

China: June industrial output up 6.3% YoY, beats forecast, retail sales up 9.8%. China’s industrial output grew 6.3% YoY in June, official data showed, picking up from May’s 17-year low and handily beating market expectations. Poll by Reuters had tipped a 5.2% rise, compared with 5.0% growth seen in May.Fixed-asset investments for the 1H2019 rose 5.8% YoY, according to data published by the National Bureau of Statistics, compared with a 5.5% rise forecast. Private sector investment in fixed assets, which make up 60% of the country’s total investments, rose 5.7% in January-June, compared with a 5.3% rise in January-May. Retail sales for June rose 9.8% in annual terms. (Reuters)

China: Home price growth cools in June, but investment quickens. Growth in China’s new home prices cooled in June as sales shrank for a second month, but building starts and investment quickened, providing a cushion for the slowing economy while Beijing claims some wins in reducing market froth. Average new home prices in China’s 70 major cities grew 0.6% MoM in June, easing from a 0.7% gain in May, according to Reuters calculations based on National Bureau of Statistics (NBS) data. That marked the 50th straight month of price gains. Most of the cities still reported higher prices. Despite cooling sales and prices, real estate investment, a major growth driver for China’s economy, quickened in June. It rose 10.1% YoY, accelerating from a 9.5% gain in May but still slower than in April. New construction starts measured by floor area also rose 8.9% YoY in June, versus a 4% increase the previous month, reflecting still robust demand. (Reuters)

India: Wholesale price inflation slows in June. India's wholesale price inflation slowed at a faster-than-expected rate in June, data from the Ministry of Commerce & Industry showed. The wholesale price index climbed 2.02% YoY in June, after a 2.45% increase in May. The buildup inflation rate in the financial year was 1.33% in June compared to 2.41% in the corresponding period last year. The wholesale prices for food articles grew by 1.1% in June and that of non-food articles rose 0.7%. The fuel and power prices declined by 1.3% in June and the manufacturing products remained unchanged. (RTT)

India: Business sentiment joint-lowest record. India's business confidence fell to its joint-lowest on record as companies were concerned about the cooling economy and government policies, survey data from IHS Markit showed. The net balance of firms expecting output growth in coming twelve months fell to +15% in June from +18% in Feb. A similar score was last reported in June 2016 and was the joint-lowest since October 2009. The survey showed that water shortages, public policies and weak sales weighed on sentiment in June. They were also worried about potential rupee depreciation lifting import prices, lack of skilled labor and possible tax hikes. However, hopes of pro-business government policies and a better financial flow continue to underpin optimism towards output and profitability growth in the year ahead, IHS Markit said. Companies plan to increase their capacity by hiring additional workers. Service providers are more likely to create jobs than manufacturers. (RTT)


Berjaya Land: Seeks entry into Iceland's hotel market via acquisition. Berjaya Land (BLand) is buying a 75% stake in Icelandair Hotels ehf in a RM222.03m deal that would allow the group to enter the luxury hotel segment in Iceland. It said the proposed acquisition is in line with the group’s geographical diversification and revenue expansion. (The Edge)

Axis REIT: Leases PDC land for FedEx courier facility . Axis Real Estate Investment Trust (REIT) is leasing 2.4975 acres of industrial land at Batu Kawan Industrial Park, Penang from Penang Development Corp (PDC) and developing it into a single-storey warehouse facility with a built-up area of 44,000 sq ft for use by Federal Express Services (M) SB (FedEx). Axis REIT Managers had entered into a lease agreement with PDC for the proposed land lease, as well as a build and lease arrangement with FedEx for the proposed development and the proposed 10-year sub-lease. Under the deal, PDC will lease the land at RM36 per sq ft or a total of RM3.92m for a period of 30 years. (The Edge)

Multi Sports: Plan to get white knight falls through . Multi Sports Holdings and construction firm Southern Score SB have aborted plans to form a new company to take over and assume Multi Sports' listing status. It said the MoU it had signed with Southern Score has lapsed on July 5 and no further extension was sought. (The Edge)

Pegasus Heights: Sees impact from cancelled RM24m project. Pegasus Heights, said its contract as a project management consultant for a 30-storey mixed commercial development at Teluk Likas, Sabah, has been terminated. It said the company and GE Properties SB both mutually agreed to cease the letter of award for the job. Based on the preliminary gross development cost of RM480m, the value of the award was estimated at RM24m. (The Edge)

George Kent: Partners Honeywell in metering business. George Kent has entered into a long-term licence agreement with Honeywell to manufacture high-precision water meter measuring components for the V100 and V110 C-Class volumetric water meters. Under this agreement, the group will manufacture the measuring components, the brass housings and assemble the parts into complete water meters. This will enable the group to control its component supply to meet increasing demand and reduce production costs. (The Star)

Tex Cycle: Partners private firm to enter into biochar production business . Tex Cycle Technology is teaming up with privately-held Pakar Go Green SB to embark into the biochar production business. Tex Cycle has entered into a MoU with Pakar Go Green on how they will collaborate and conduct their respective and collective organisations’ business for the success of their entry into new and global markets. (The Edge)

Bina Puri: Gets RM303m job. Bina Puri Holdings has received a RM303m job for a road project in Iraq. The company said it had accepted a letter of award dated June 11 from Thi Qar Governate, Republic of Iraq in respect of the proposed dual lane road from Al Islah Junction to Al-Jabayish at Nasirya City, in the Province of Thi Qar, Southern Iraq. The contract period is for 36 months from the date of commencement. (The Star) 

Market Update

The FBM KLCI might open higher today after U.S. stocks eked out another round of records Monday, after closing at all-time highs last week, as investors digested second-quarter results from Citigroup and awaited a wave of second-quarter earnings. The Dow Jones Industrial Average gained 27.13 points, or 0.1%, to set a new closing record of 27,359.16, the S&P 500 index added 0.53 point, or less than 0.1%, to end at 3,014.30. The Nasdaq Composite Index rose 14.04 points to reach 8,258.19, a 0.2% increase. All three major indexes scored intraday records in early activity, turned lower and then edged back into positive territory in late trade. In Asia, Chinese stocks edged higher on a mixed bag of data that showed that the world’s second-largest economy expanded at the slowest pace in 27 years, though measures of industrial production and retail sales came in better than expected, suggesting that government efforts to stimulate growth are finding some success. China’s gross domestic product, or GDP, in the second quarter slowed to 6.2%, marking its slowest pace since 1992 — though mostly matching expectations — from a reading of 6.4% in the first quarter. Industrial production in the country accelerated to 6.3% from 5.0% in June, ahead of the 5.2% consensus, while retail sales growth accelerated in June to 9.8%, above the 8.5% consensus. European shares were marginally higher, with the Stoxx Europe 600 edging 0.4% higher.

Back home, the FBM KLCI index gained 2.92 points or 0.17% to 1,672.37 points on Monday. Trading volume increased to 3.01bn worth RM1.65bn. Market breadth was negative with 375 gainers as compared to 469 losers. In the region, stocks finished higher, with the China CSI 300 adding 0.4% and Hong Kong’s Hang Seng Index advancing 0.2%.

Source: PublicInvest Research - 16 Jul 2019

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