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Author: PublicInvest   |   Latest post: Fri, 23 Aug 2019, 10:55 AM

 

PublicInvest Research Headlines - 19 Jul 2019

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Economy

US: Weekly jobless claims rise in line with estimates. Report released by the Labor Department showed first-time claims for US unemployment benefits increased in line with economist estimates in the week ended July 13th. The report said initial jobless claims inched up to 216,000, an increase of 8,000 from the previous week's revised level of 208,000. Economists had expected jobless claims to creep up to 216,000 from the 209,000 originally reported for the previous week. The uptick came after the drop seen in the previous week pulled jobless claims down to their lowest level since hitting a nearly 50-year low in the week ended April 13th. Meanwhile, the Labor Department said the less volatile four-week moving average edged down to 218,750, a decrease of 250 from the previous week's revised average of 219,000. (RTT)

UK: Retail sales recovered unexpectedly In June. UK retail sales recovered unexpectedly in June suggesting that wage growth boosted household spending at the end of the 2Q, data from the Office for National Statistics revealed. After falling for two straight months, retail sales volume increased 1% MoM in June, largely driven by non-food product sales. Sales were forecast to fall 0.3% after easing 0.6% in May. Non-food product sales advanced 1.7%, while food product sales grew only 0.2%. Likewise, sales excluding auto fuel, expanded 0.9% after falling 0.4% each in May and April. Economists had forecast a 0.2% drop for June. On a yearly basis, growth in retail sales accelerated to 3.8% from 2.2% in May. The rate also exceeded the expected rate of 2.6%. (RTT) 

UK: BOE – Demand for secured lending rises in Q2. Demand for secured lending for house purchases rose significantly in 2Q, signaling an improvement in the housing market, a survey showed. According to the credit conditions survey, published by the BoE, British lenders expect demand for secured lending to remain unchanged in the 3Q. Nonetheless, the survey showed a decrease in demand for unsecured lending due to a fall in credit card lending in the 2Q. Lenders expect an increase in demand for credit card lending in the 3Q, but a decrease in demand for other unsecured lending. (RTT)

Japan: Has JPY589.5bn trade surplus in June. Japan posted a merchandise trade surplus of JPY589.5bn in June, the Ministry of Finance said. That exceeded expectations for a surplus of JPY403.5bn following the JPY968.3bn deficit of May. Exports were down 6.7% YoY, missing forecasts for a drop of 5.4% following the 7.4% drop in the previous month. Imports were down an annual 5.2% versus forecasts for a drop of 0.2% following the 1.5% decline a month earlier. (RTT)

Japan: Exports continue to slide as global slowdown tightens. Japanese exports fell for a seventh straight month in June as a slowdown in global growth and uncertainty over trade continued to buffet Japan’s economy. The value of shipments abroad dropped 6.7% YoY in June, according to the finance ministry, with falling exports of semiconductor components and auto parts among the biggest drags. Economists surveyed by Bloomberg had estimated a 5.4% decline. Exports to China continued to fall as a slowing economy and trade tensions crimp demand there. Electronic components and chip-making equipment shipments to China dropped well over 20% each, offering an indication of slumping tech demand.. (Bloomberg)

Japan: Inflation hits 2-year low as BoJ faces pressure to act. Japan’s key inflation gauge fell again in June, adding to pressure on the BoJ to join its global peers in increasing monetary stimulus. Consumer prices excluding fresh food rose by 0.6% YoY in June, which matched economists’ median estimate, data from the internal affairs ministry showed. That was the lowest reading since July 2017. Slowing inflation adds pressure on the BoJ to step up its stimulus, especially with the Federal Reserve widely expected to start cutting rates later this month. Lower mobile phone service charges and free preschool education are among factors expected to drag inflation lower in coming months. A sales tax increase slated for October is also a worry for policy makers. (Bloomberg)

Hong Kong: Jobless rate steady in June. Hong Kong jobless rate remained stable during the April to June period, data from the Census and Statistics Department showed. The unemployment rate remained steady at 2.8% during the April to June period, same as in the previous three months. The number of unemployed persons was 114,300 during the April to June period, same as seen in the previous three months. The unemployment situation was broadly steady in most economic sectors. “The labor market is expected to remain largely stable in the near term," the official added. (RTT)

Indonesia: Central bank makes first rate cut in almost 2 years. Indonesia's central bank cut its benchmark interest rate for the first time since Sept 2017, ahead of an anticipated Federal Reserve cut late this month, as it tries to help lift economic growth. Bank Indonesia (BI) trimmed the 7-day reverse repo rate by 25 bps to 5.75%, as predicted most of the economists in a poll. BI's two other main rates, for overnight deposit and lending facilities, were lowered by the same amount to 5.00% and 6.50%, respectively. (Reuters) 

Markets

AirAsia (Neutral, TP: RM2.33): To pay at least RM40.6m in uncollected PSC to MAHB unit . AirAsia will have to pay at least RM40.6m to Malaysia Airports Holdings Bhd (MAHB), over unpaid passenger service charges (PSC) from July to December last year. This follows the High Court dismissing the carrier's strike-out application and allowing summary judgments by MAHB be entered on AirAsia in the three suits against the company. (The Edge)

Sapura Energy (Outperform, TP: RM0.43): Expects to be profitable in 12 months. Sapura Energy (SEB) expects its operations -- drilling, engineering and construction (E&C) and exploration and production (E&P) -- to be profitable in 12 months. The company aims to return to the black when the utilisation of its drilling and E&C business crosses the 70 per cent mark. Currently, its drilling division's rig utilisation is at 50 per cent and is expected to hit 70 per cent over the next 12 months. (Bernama)

Sarawak Cable: Sells property in Klang to Supermax for RM65m . Sarawak Cable is selling a piece of freehold land together with industrial premises in Klang to Supermax Corp for RM65m. The industrial premises comprises a single-storey detached factory attached with a four-storey extra high voltage tower, a three-storey detached office building, a single-storey canteen and other ancillary buildings. (The Edge)

Revenue: Partners Hong Leong Bank to offer payment acceptance services to NETS cardholders. Revenue Group is collaborating with Hong Leong Bank to offer payment acceptance and services to Singapore's NETS cardholders to shop in retail outlets under GCH Retail (Malaysia) SB and Guardian Health And Beauty SB. GCH and Guardian Health and Beauty are among the largest retail operators in Malaysia, operating Giant, Cold Storage, Mercato, TMC, Jasons Food Hall, G Express, Shop Smart Retail and Guardian. (The Edge)

KNM: Bags RM17.48m job in Vietnam. KNM Group has bagged a RM17.48m contract to supply shop-assembled large drums for the Petrochemical Complex in southern Vietnam. KNM has accepted and signed the purchase order (PO) dated July 8, 2019 for the Package A1 – Olefins Plant from TPSK Consortium. (The Edge)

Carimin: Bags two-year maintenance services contract from Hibiscus. Carimin Petroleum has been awarded a contract by SEA Hibiscus SB for the provision of mechanical and piping maintenance services for the Labuan Crude Oil Terminal. SEA Hibiscus operates the North Sabah Enhanced Oil Recovery Production Sharing Contract (PSC). The PSC encompasses the Labuan Crude Oil Terminal, and the fields of St Joseph, South Furious, SF30 and Barton, all located offshore Sabah. In an exchange filing, Carimin said the contract will be undertaken at an agreed fixed schedule of rates. (The Edge)

Scomi: Two new shareholders to inject RM42 mil into Scomi Group . Tan Sri Wan Azmi Wan Hamzah and Gelombang Global SB (GGSB), a private vehicle of former Renong MD Datuk Mohd Zakhir Siddiqy, have committed to invest RM42m collectively in ailing Scomi Group. The fresh capital will be injected into Scomi Group by underwriting the proposed rights issue which is fixed at 18 sen per share. Should the cash call be fully subscribed, the two investors will take part in the proposed restricted rights issue. (The Edge)

Market Update

The FBM KLCI might add a few points today as U.S. stocks closed higher Thursday, recovering from early losses, after New York Federal Reserve President John Williams said the central bank’s wisest strategy is to cut interest rates at the first sign of economic distress when interest rates are already low. The Dow Jones Industrial Average ended up 3.12 points at 27,222.97, the S&P 500 rose 10.69 points, or 0.4%, to finish at 2,995.11 and the Nasdaq Composite Index ended 22.04 points, or 0.3%, lower at 8,207.24. All three benchmarks halted a two-session skid. Thursday is the last day for Fed policy makers’ speeches before the so-called blackout period for comment by officials ahead of the FOMC meeting July 30-31. In economic data, a survey of manufacturers in Pennsylvania, New Jersey and Delaware came in much stronger than expected at 21.8 in July, versus 0.3 in June and above expectations of 4.5. New applications for jobless benefits rose 8,000 to 216,000 in the week ended July 13, but remain at historic lows. In Europe, stocks closed mostly lower, with the Stoxx Europe 600 down 0.1%.

Back home, the FBM KLCI index lost 8.60 points or 0.52% to 1,648.93 points on Thursday. Trading volume decreased to 2.83bn worth RM1.84bn. Market breadth was negative with 270 gainers as compared to 575 losers. In the region, stocks also closed lower, with the China CSI 300 shedding 1%, Japan’s Nikkei 225 tumbling 2% and Hong Kong’s Hang Seng Index retreating 0.5%.

Source: PublicInvest Research - 19 Jul 2019

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