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

 

PublicInvest Research Headlines - 1 Aug 2019

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Economy

US: Federal Reserve lowers interest rates by a quarter points. Members of the Federal Reserve's Federal Open Market Committee voted to lower interest rates by a quarter points. It decided to lower the target range for the federal funds rate to 2% to 2-1/4%, down 25bp from the previous range of 2-1/4% to 2-1/2%. This marks the first rate cut by the Fed since Dec of 2008. The implications of global developments for the economic outlook as well as muted inflation pressures were cited as reasons for the rate cut. (RTT)

US: Mortgage applications drop in latest week. US mortgage applications declined last week as potential home buyers scaled back on demand for home loans due to tight housing supply, the Mortgage Bankers Association said. The Washington-based group’s seasonally adjusted index on loan requests, both to buy a home and refinance one, fell 1.4% to 484.0 from 490.8 in the week ended July 26. While purchase activity was still up 6% from a year ago, the index has now decreased for three straight weeks and reached its lowest point since March. (Reuters)

US: Private sector employment climbs slightly more than expected in July. A report released by payroll processor ADP showed private sector employment in the US increased by slightly more than anticipated in the month of July. Private sector employment climbed 156,000 jobs in July after rising by an upwardly revised 112,000 jobs in June. Economists had expected employment to increase by 150,000 jobs compared to the addition of 102,000 jobs originally reported for the previous month. The employment in the service-providing sector jumped 146,000 jobs, while employment in the goods-producing sector inched up by 9,000 jobs. (RTT)

US: Wage inflation moderate, Midwest manufacturing slumps. US labor costs rose at their slowest pace in 1-1/2 years in the 2Q, the latest sign of benign inflation that enabled the Federal Reserve to cut interest rates for the first time since 2008. Other data suggested a further slowdown in economic growth at the start of the 3Q. Manufacturing activity in the Midwest contracted for a second straight month in July, declining to its lowest level in more than 3-1/2 years. While private payrolls rebounded this month, the pace of growth remained moderate. (Reuters)

EU: Q2 growth halves, inflation slows despite jobless at 11-yr low. Euro zone economic growth halved in the April-June period and inflation slowed sharply in July even though the unemployment rate fell to its lowest in 11 years, data from the European Union’s statistics office showed. Eurostat’s preliminary flash estimate of GDP growth in the 19 countries sharing the euro showed the economy expanding 0.2% QoQ, down from 0.4% in the previous three months. Growth in the euro area therefore returned to the anaemic rates seen in the third and fourth quarters of last year. YoY, euro zone GDP growth was 1.1%, slowing from 1.2% in the Jan-March period. (Reuters)

EU: German unemployment rises less than expected in July. German unemployment increased less than expected in July, data showed, suggesting that the labour market in Europe’s largest economy so far remains relatively immune to an economic downturn which is driven by a manufacturing crisis. Data from the Federal Labour Office showed the number of people out of work rose by 1,000 to 2.283m in seasonally adjusted terms. That compared with the Reuters consensus forecast for a rise of 2,000. The jobless rate held steady at 5.0% - slightly above the record-low of 4.9% reached earlier this year. Unemployment and underemployment increased in July. (Reuters)

UK: Car investment tumbles but consumers resilient. Investment in Britain’s car industry has slumped due to fears about a disorderly no deal Brexit, adding to signs of a manufacturing downturn even as consumers stay relatively resilient, surveys and company comments showed. Car makers see no deal as the worst possible option while in the wider manufacturing segment a survey from the Confederation of British Industry said optimism among smaller British companies had tumbled to a three-year low in July. Yet an indicator of consumer confidence from market researcher GfK rose unexpectedly in July, while top executives from fashion retailer Next and banking group Lloyds both said they had seen no negative Brexit impact on consumers so far. (Reuters)

China: July factory activity shrinks for 3rd month. China’s factory activity shrank for the third straight month in July, an official survey showed, underlining the need for more stimulus to support an economy hit hard by the bruising trade war with the US. The official Purchasing Managers’ Index (PMI) was at 49.7 in July, slightly higher than 49.4 in June, the survey from the statistics bureau showed. (Reuters)

Japan: Consumer confidence lowest in nearly 5-1/2 years. Japan's consumer confidence weakened to the lowest level in five-and-a-half years in June, data from the Cabinet Office showed. The consumer confidence index for households with two or more persons fell to a seasonally adjusted 37.8 in July from 38.7 in June. The latest reading was the lowest since March 2014, when the confidence index was at 37.5. Among the four sub-indexes of the consumer confidence index, the index reflecting households' inclination to buy durable consumer goods declined in July. (RTT) 

Markets

RHB Bank: Gets Bank Negara nod for talks to sell general insurance. RHB Bank has received the approval from Bank Negara Malaysia to start negotiations for the proposed sale of its general insurance business to Tokio Marine Asia Pte Ltd. It said the central bank stated that “it has no objection for the company to commence negotiations with Tokio Marine in relation to the proposed disposal of up to 94.7% of its equity interest in RHB Insurance”. The approval is valid for six months from the date of BNM’s letter dated July 29. (StarBiz)

Advancecon: Awarded RM84m earthworks job. Advancecon Holdings has secured a 34-month contract valued at RM83.8m to carry out earthworks and civil engineering works for Setia Alamsari (South) in Bangi, Selangor, via its subsidiary, Advancecon Infra SB. Its group CEO Datuk Phum Ang Kia said that the group’s earthworks and civil engineering works for Setia Alamsari in Bangi will bring its outstanding order book value to over RM790m, with revenue visibility for at least 24 months. The contract is set to contribute positively to the group in the FYE Dec 31, 2019 till 2022. (SunBiz)

Press Metal: Secures more power for expansion. Press Metal Aluminium Holdings has secured a long-term electricity supply contract with Sarawak Energy. It said it had signed a power purchase agreement with SEB’s wholly-owned Syarikat SESCO (Sesco) to provide up to 500MW of electricity for 15 years. The first drawdown of 300MW is scheduled by Oct 2020 and the balance 200MW to be made available on a reasonable endeavour basis by Sesco, it said. With this, it plans to build a third aluminium smelter in Samalaju Industrial Park, Sarawak. This will potentially increase its total smelting capacity up to 1.08m tonnes per annum upon full power drawdown. (Business Times)

Pintaras Jaya: Clinches Singapore contracts. Pintaras Jaya has secured nine new piling contracts with a total value of SGD51m (c.RM156m) in Singapore. The nine new projects will commence in July and Aug this year, with contract periods varying from two to six months. (SunBiz)

Zelan: Arbitration court awards RM299.8m. Zelan has been awarded RM299.85m from the International Court of Arbitration for its legal proceeding against Meena Holdings LLC in relation to the Meena Plaza mixed use development project in Abu Dhabi, the United Arab Emirates. The group said that the court has decided in favour of its wholly owned subsidiary Zelan Holdings (M) SB (ZHSB) in the dispute and ruled that ZHSB’s termination of contract is valid. (SunBiz)

Barakah Offshore: Aborts debt settlement schemes due to suspension of unit's licence. Barakah Offshore Petroleum says it will not proceed with the proposed debt settlement schemes of both the group and its wholly-owned subsidiary PBJV Group SB following the recent suspension of PBJV's licence by Petroliam Nasional (Petronas). (The Edge)

Trive Property: Aborts solar JV with Chinese firm. Trive Property Group has aborted its plan to undertake R&D; assembly and production; as well as distribution and marketing of photovoltaic products such as solar cells, solar panels or solar modules in a JV with China-based Jiangxi Fujing New Energy Technology Co Ltd (JFNET). Trive said the company and JFNET have mutually terminated the JV entered into on Nov 10, 2017. However, no reason was given for the move. (The Edge) 

Market Update

The FBM KLCI might open weaker today as U.S. stocks closed sharply lower Wednesday with investors disappointed that the Federal Reserve cut interest rates in order to cushion the economy from the effects of President Trump’s trade war with China, but refrained from suggesting further rate cuts were on the way. The Dow Jones Industrial Average sank to a triple-digit loss, its biggest one day fall since May 31. The Dow Jones Industrial Average closed down 334 points, or 1.2%, at 26,864 while the S&P 500 shed 32 points, or 1.1% to 2,980. Meanwhile, the Nasdaq Composite lost 98 points, or 1.2% to 8,175. Investors were widely expecting a 0.25% cut in the federal funds rate but some were disappointed the Fed didn’t lower interest rates by more than a quarter point, or clearly signal that further rate cuts were on the way. In Europe, stocks ended 0.2% higher, as measured by the Stoxx Europe 600 index.

Back home, the FBM KLCI index lost 7.82 points or 0.48% to 1,634.87 points on Wednesday. Trading volume increased to 2.75bn worth RM2.75bn. Market breadth was negative with 259 gainers as compared to 603 losers. In the region, China’s CSI 300 index fell 0.9%, Japan’s Nikkei 225 lost 0.9% and Hong Kong’s Hang Seng fell 1.3%.

Source: PublicInvest Research - 1 Aug 2019

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