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

 

PublicInvest Research Headlines - 22 Jul 2019

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Economy

US: Consumer sentiment shows slight improvement in July. Reflecting an uptick in expectations, the University of Michigan released a report on Friday showing a slight improvement in US consumer sentiment in the month of July. The preliminary report showed the consumer sentiment index inched up to 98.4 in July from the final June reading of 98.2. Economists had expected the index to edge up to 98.5. "Consumer sentiment remained largely unchanged in early July from June, remaining at quite favorable levels since the start of 2017," said Surveys of Consumers chief economist Richard Curtin. The uptick by the headline index came as the index of consumer expectations crept up to 90.1 in July from 89.3 in June. (RTT)

UK: May to lead emergency meeting on Persian Gulf security. Prime Minister Theresa May will lead a meeting of the UK government’s emergency committee on Monday to discuss the security of shipping in the Persian Gulf after Iran seized a British oil tanker in the Strait of Hormuz last week. May and the committee of top officials and ministers, dubbed Cobra, is to meet at 10:30 a.m. in London, her office said. The UK has demanded the immediate release of the Stena Impero and over the weekend summoned Iran’s charge d’affaires in London, Mohsen Omidzamani, following the incident in one of the world’s critical energy chokepoints. While the government threatened Iran with “serious consequences” and advised UK ships to avoid the area, ministers on Sunday sought to dial down the rhetoric. (Bloomberg)

UK: Budget logs biggest June deficit in 4 years. The UK budget deficit widened to the highest June level in four years on bigger government spending, the Office for National Statistics reported Friday. Public sector net borrowing excluding public sector banks rose by GBP3.8bn from the previous year to GBP7.2bn, the highest June borrowing since 2015 and well above the expectations of GBP3.9bn. Receipts grew only 1.5% annually, driven by higher income tax related revenue, while government expenditure increased 7.2% from last year. The current financial YTD borrowing increased by GBP4.5bn to GBP17.9bn. (RTT)

China: Rising household debt likely to weigh on growth - Fitch. Chinese households' rising debt servicing costs could weigh on the medium-term economic growth, Fitch Ratings said in a report released Friday. The rating agency noted that household debt had increased rapidly, to 85% of disposable income by the end of 2018. Although debt servicing costs do not pose near-term risks to financial stability, it will weigh on growth prospects in the medium-term. Fitch estimated that household debt rose to around 53% of GDP last year, driven by mortgage borrowing. China's household debt-to-disposable income ratio was lower than most developed markets. But the Fitch observed that the gap will narrow rapidly, with the ratio rising to close to 100% at the end of this decade if growth rates remain unchecked. (RTT)

China: Vows targeted measures as financial stability risks rise. China said it will take targeted measures to cope with rising risks and challenges facing the nation’s finance sector amid slowing economic growth and trade tensions with the US. The actions will be a combination of short-and long-term steps that will take into account both micro and macro factors to boost demand and create new growth drivers, the State Council said on Saturday. A meeting was chaired by Vice Premier Liu He on Friday. "Complicated” international and domestic issues are posing more challenges currently and for the near future. China released figures this week showing growth in the economy slowed to 6.2% in the 2Q, the weakest pace since at least 1992 when the country began collecting the data. (Bloomberg)

Japan: All industry activity growth slows in May. Japan's all industrial activity rose for the second month in May but the pace of expansion slowed from April, figures from the Ministry of Economy, Trade and Industry showed on Friday. The all industry activity index rose 0.3% MoM in May, slower than 0.8% rise in April. This was in line with economists' expectations and the second straight month of growth. Among components, the industrial production index rose 2.1% in May. The construction activity index grew 1.4%. While, the tertiary industrial activity fell 0.2% in May. (RTT)

Thailand: New government to pursue junta's policies. Thailand’s new government said it plans to pursue a number of economic policies championed by the previous military administration as officials strive to revive growth. Initiatives such as the USD55bn Eastern Economic Corridor project, which seeks to add infrastructure and spur high technology industries, are among the priorities laid out in a policy statement published Sunday in Bangkok. (Bloomberg) 

Markets

T7 Global: Secure contracts worth RM100m. T7 Global has secured three contracts worth RM100m in total. T7 Global had inked an agreement with VME Process Asia Pacific Pte Ltd for the provision of engineering, fabrication, procurement and supply of modular process packages in India. It had also received a service order from FPSO Ventures SB for the provision of remotely operated vehicles, diving support vessel, manpower and equipment for subsea services for FPSO BUNGA Kertas. Meanwhile, the Group had also received a LoA from PTS Resources SB for the supply, delivery, installation, testing and commissioning of battery system including its associate engineering services and accessories. (The Edge)

Fajarbaru: Wins RM27m job in SPE highway. Fajarbaru Builder Group has bagged a RM27.17m contract from Knusford linked to the Setiawangsa–Pantai Expressway (SPE) project. The project is also known as Duta-Ulu Kelang Expressway (DUKE) Phase-3. Fajarbaru has accepted a LoA from Kn Knusford. The job involves the construction of bridge structure works for the Setiawangsa to Melati stretch of the highway. Fajarbaru said the tenure of the contract is seven months, ending on Feb 21, 2020. (The Edge)

Green Packet: Teams up with Bank Islam to provide e-wallet services. Green Packet is collaborating with Bank Islam Malaysia to provide electronic wallet services. Green Packet said its subsidiary KiplePay has signed a MoU with Bank Islam. The MoU will be effective for two years from the signing date. KiplePay is an e-money issuer approved by Bank Negara Malaysia. (The Edge)

Metronic Global: Withdraws suit against shareholders for conspiracy blackmail . Metronic Global has withdrawn its suit against the 11 defendants it accused of conspiring to injure and blackmail the company for RM20m. Metronic said the suit was withdrawn since the collective shareholding of the defendants has dropped below the percentage as claimed in the company’s civil suit. "It was therefore of no necessity for the company to proceed with the suit," it said. On May 9, Metronic launched legal action against its shareholders who collectively held a 39% stake, alleging they had conspired to injure and had blackmailed the company for RM20m and to withdraw a police report against Tan Ew Chew. (The Edge)

Property (Neutral): Strengthen MM2H programme to ease property glut – MIPEAC. The Malaysian Institute of Professional Estate Agents and Consultants (MIPEAC) is of the view that encouraging more foreigners to take up the MM2H (Malaysia My Second Home) programme and to invest in Malaysian properties could help ease the glut in the property sector. MIPEAC said it would be a waste not to strengthen the promotion of MM2H and encourage more foreign investments in the country’s property sector. “With RM20bn worth of residential overhang, we should be more open to foreign buyers with higher spending power to enter the market,” it said. (Bernama)

Consumer (Neutral): Malaysia retail sales growth rises 3.8% in 1Q. The Malaysian retail industry achieved a better-than-expected growth rate of 3.8% in retail sales for 1Q19 as compared to 1Q2018, said the Domestic Trade & Consumer Affairs Ministry. Deputy Minister Chong Chieng Jen said as of 1Q19, the services sector contributed 57% to GDP and the wholesale and retail sub-sector was the main growth momentum for the services sector. “At the same time, the sales of wholesale and retail trade in May 2019 contributed an amount of RM110.8bn to national GDP and accounted for approximately 1.8m in manpower as a whole,” he said. (Bernama) 

Market Update

The FBM KLCI might open weaker today after U.S. stocks closed lower Friday, giving up earlier gains following a report that said Federal Reserve officials would cut interest rates by a quarter percentage point rate cut at the end of the month, rather than a half-point move, and after Iran said it seized a British-flagged oil tanker in the Strait of Hormuz. The Dow Jones Industrial Average ended down 68 points 27,154 and the S&P 500 index was off 18 points at 2,976 while the Nasdaq Composite Index lost 60 points to 8,146. Stocks lost altitude after The Wall Street Journal reported that Fed officials, based on recent public statements and interviews, signaled they were ready to cut rates by a quarter percentage point at their July 30-31 meeting, but weren’t prepared to make a half-point reduction. Expectations for a half-point lowering had been on the rise but fell back after the report. Fed funds futures traders now see a 22.5% chance of a half-point move, down from a more than 40% probability earlier in the day, according to CME Group data. In Europe, stocks were slightly higher, with the Stoxx Europe 600 up 0.2%.

Back home, the FBM KLCI index gained 9.26 points or 0.6% to 1,658.19 points on Friday. Trading volume decreased to 2.49bn worth RM1.61bn. Market breadth was positive with 506 gainers as compared to 311 losers. In the region, stocks closed mostly higher, with the China CSI 300 rising 1.1%, Japan’s Nikkei 225 jumping 2%, while Hong Kong’s Hang Seng Index added 1.1%.

Source: PublicInvest Research - 22 Jul 2019

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