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Author: PublicInvest   |   Latest post: Thu, 21 Nov 2019, 11:24 AM

 

PublicInvest Research Headlines - 13 Aug 2019

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Economy

Global: Trade war escalation hurting economy significantly - Ifo. An intensification of trade tensions, especially between the US and China, is having considerable adverse effects on the world economy, the German think tank ifo said on Monday. Elsewhere, economists at Goldman Sachs warned that the trade war is having a larger-than expected impact on the US economy. The ifo World Economic Climate indicator dropped to -10.1 in the 3Q from -2.4 in the previous three months, the ifo report showed. In the 1Q, the reading was -13.1. The current situation index of the survey fell to -5.4 from 1.4 in the previous quarter. The reading was the weakest since Jan 2017, when it was in negative territory last time. (RTT)

US: Budget deficit widens; spending up on health, military. The US government’s deficit widened to USD120bn in July, fueled by increases in spending on health care and the military, according to data released on Monday by the Treasury Department. The Treasury Department said federal spending in July was USD371bn, up 23% from the same month in 2018, while receipts were USD251bn, up 12% compared with July 2018. The fiscal YTD deficit was USD867bn, compared with USD684bn in the comparable year-earlier period. The US government’s fiscal position has deteriorated since 2016, hit by an aging of the population that has led to more people drawing on Medicare, a federal health insurance program for the elderly. (Reuters)

US: Consumer inflation outlook declined as Fed weighed rate cuts - survey. Consumers in the US kept their expectations of inflation restrained in July, data showed on Monday, validating concerns that prompted the Federal Reserve to start cutting interest rates. The Federal Reserve Bank of New York’s survey of consumer expectations showed that people’s average outlooks for inflation declined by 0.1 percentage point to 2.6% over both one- and three-year time horizons. Uncertainty about inflation also fell. Overall, consumers report a reasonably cheery view of their own financial situation, with a largely stable view of the price hikes they expect to see in medical care and rent even though they see even higher gasoline and college education prices than they did the last time the survey was taken. (Reuters)

US: Producer prices rise in line with estimates, core prices unexpectedly dip. Largely reflecting a rebound in energy prices, the Labor Department released a report on Friday showing a modest increase in US producer prices in the month of July. The Labor Department said its producer price index for final demand rose by 0.2% in July after inching up by 0.1% in both May and June. The uptick in prices matched economist estimates. The modest increase in producer prices was largely due to a spike in energy prices, which surged up by 2.3% in July after plunging by 3.1% in June.. (RTT)

EU: German exports slump most in three years on trade conflicts. German exports registered their steepest annual decline in three years in June, underscoring the plight of the manufacturing sector as global trade tensions escalate. Shipments abroad were down 8% from the previous year, the most since July 2016. Imports, a gauge for the strength of the domestic economy, fell an annual 4.4%. Strains are also showing in France, where industrial production plunged in June. The data add to evidence that export-reliant businesses are hurting badly, threatening to bring Europe’s largest economy to a halt. (Bloomberg)

UK: Economy contracts for first time since 2012. The UK economy unexpectedly contracted for the first time in more than six years in the 2Q, fueling fears of a recession even ahead of Brexit due for Oct 31. GDP fell 0.2% sequentially, partly reversing the 1Q's 0.5% growth, a first estimate from the Office for National Statistics showed Friday. GDP was forecast to remain unchanged. The BOE had also projected a flat growth for the 2Q. On an annual basis, the economy grew at a slower pace of 1.2% after rising 1.8% in the 1Q. The production-side breakdown showed that the services sector output provided the only positive contribution to GDP growth. (RTT)

China: July new bank loans fall to CNY1.06trn, below forecast. Chinese banks extended CNY1.06trn (USD150.06bn) in new yuan loans in July, down from June and falling short of analysts’ expectations. Analysts polled by Reuters had predicted new yuan loans would fall to CNY1.25trn in July, from CNY1.66trn in the previous month and compared with CNY1.45trn a year earlier. Broad M2 money supply in July grew 8.1% from a year earlier, central bank data showed on Monday, below estimates of 8.4%. (Reuters)

Malaysia: Unemployment rate in 2Q of 2019 unchanged at 3.3%. Malaysia’s unemployment rate remained unchanged at 3.3% in the 2Q of this year, according to the Statistics Department. Its chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the number of labour force increased 2.1% compared to the 2Q last year to 15.6m persons, while employed persons also increased 2.1% to 15.1m persons. He said the labour force participation rate (KPTB) in the 1Q of this year rose 0.1 percentage point to 68.8%. (Bernama)

Malaysia: Consumer confidence dipped in 2Q. Consumer confidence of Malaysians dipped in the 2Q19 but they are still the tenth most confident globally, according to the Conference Board Global Consumer Confidence Survey. The survey has ranked Malaysia 10th globally on the Consumer Confidence Index (CCI), with an index score of 110 points in 2Q19. (StarBiz)

Markets

GSB Group: Controlling shareholder Tee family sells RM714m worth of real estate assets to GSB Group . GSB Group’s controlling shareholder, the Tee family, is selling RM714m worth of real estate assets to the company for RM714.53 million. Upon completion of the asset divestment to GSB, the Tee family’s shareholding will be enlarged to 67.33%% from 40.82%, plus it will receive RM100m cash. The asset injection by the Tee family, which is deemed to be a related party transaction, will be settled by a combination of cash, redeemable convertible preference shares and share subscription deals. (The Edge)

TDM: Inks agreements for development of two biogas plants in Terengganu . TDM has entered into agreements with two companies pertaining to the development of biogas plants with power generation facilities in two palm oil mills in Terengganu. The two mills are the Kemaman Palm Oil Mill (KPOM) and Sg Tong Palm Oil Mill (STPOM), said TDM, which is 61.49% owned by the Terengganu State Government. (The Edge)

Leong Hup: Sees lower profits in Q219 with lower ASP . Leong Hup International expects the group to record significantly lower profits after taxation for the second quarter ended June 30, 2019 (2QFY19) in comparison with 2QFY18 due to a significant decline in the average selling prices (ASP) in most of the products sold by the group, particularly in Malaysia. Executive director and group CEO Tan Sri Lau Tuang Nguang (Francis Lau) said its sales volume is still growing well despite the lower ASP in 2QFY19. (SunBiz)

Lotte Chemical Titan: To divest 49% of stake in Indonesian unit. Lotte Chemical Titan Holding (LCT) is proposing to divest 49% of its equity interest in PT Lotte Chemical Indonesia (LCI) to its major shareholder, Lotte Chemical Corporation, Korea (LCC). The move would enable LCC to jointly fund the company’s integrated petrochemical facility (IPF), said LCT in a statement. As a direct shareholder of LCI, LCC is expected to contribute about RM3.6bn as capital injection for the construction of the IPF. (Bernama)

Press Metal: Raises RM5bn. Press Metal Aluminium Holdings has proposed an Islamic medium term notes (IMTN) programme of up to RM5bn to raise funds for its Shariah-compliant general corporate purposes. The proceeds from the sukuk issuance shall be utilised for the group’s general corporate purposes including capital expenditure, working capital requirements, investments and refinancing of existing financing/borrowings. (The Edge)

Maxwell International: Will be the third China-based company to be de-listed. Maxwell International Holdings, which marks its eighth year of listing, will be de-listed in two weeks' time on Aug 22. The China-based sport shoes maker has failed to comply with its obligation to regularise its financial health within the stipulated time frame. (The Edge)

XOX: XOX, Thailand's TOT to explore Thai MVNO market . XOX is teaming up with Thai state-owned telecommunications firm TOT PCL to explore the mobile virtual network operator market in Thailand, connecting in technicality and testing the mobile telecommunication systems, as well as other commercial operations. (The Edge) 

Market Update

US markets fell overnight as fears over global growth took a grip on sentiment which was also hampered by a worsening situation in Hong Kong and a surprise election result in Argentina that saw the country’s center-right leader President Mauricio Macri perform poorly in primary elections. On the latter, the country’s benchmark slumped 38% on the day as the Peso was thumped 25% lower as a result. On trade, President Trump said last Friday that the US would continue to hold trade talks with Beijing, but that Washington was not prepared to make a deal for now. The Dow Jones Industrial Average fell 1.5% while both the S&P 500 and Nasdaq Composite closed 1.2% lower. European equities also ended lower on an escalation in geopolitical concerns. Trump’s national security advisor John Bolton arrived in London for talks where he is expected to urge Britain to take a tougher stance on Iran and Chinese telecommunications firm Huawei. Eyes are also on Italy after Deputy Prime Minister Matteo Salvini’s Lega party filed a no confidence motion to bring down the government late last week. France’s CAC 40 and Germany’s DAX slipped 0.3% and 0.1% as UK’s FTSE 100 fell 0.4%. Italy’s FTSE MIB declined 0.3%. Major Asian markets were higher yesterday, though trade-related concerns kept advances in check. Mainland Chinese markets bounced back from the previous week’s losses to close 1.5% higher, with Korea’s KOSPI 0.2% higher. Hong Kong’s Hang Seng index slipped 0.4% however as unrest in the country continued into its 10th week. Markets in Japan, India Singapore and Malaysia were closed for public holidays.

GSB Group’s controlling shareholder, the Tee family, is selling RM714mn worth of real estate assets to the company. Upon completion of the asset divestment to GSB, the family’s shareholding will be enlarged to 67.3%% from 40.8% currently while also receiving RM100m in cash. Leong Hup International has issued a profit guidance warning of a “significantly lower profits after taxation for the second quarter ended June 30, 2019 (2Q2019) compared with 2Q2018”. Lotte Chemical Titan Holdings is planning to trim its equity stake in PT Lotte Chemical Indonesia by selling a 49% stake in the subsidiary to its parent Lotte Chemical Corp (LCC) for US$65.4m (RM273.5m) cash.

Source: PublicInvest Research - 13 Aug 2019

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