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PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 23 Oct 2019, 9:39 AM

 

PublicInvest Research Headlines - 3 Sept 2019

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Economy

EU: Manufacturing sector contracts as estimated in August. Eurozone manufacturing sector continued to contract for the seventh straight month in August but the pace of decline slowed from previous month, final data from IHS Markit showed. The PMI rose to 47.0 in August from 46.5 in July. This was the second lowest reading since April 2013 and in line with the flash estimate published on August 22. The improvement in the headline index was replicated in the main across the Euro area, with only Ireland recording a fall in its PMI during August. (RTT)

UK: Manufacturing shrinks most in 7 years. The UK manufacturing sector contracted at the fastest pace for seven years in August as high economic and political uncertainty weighed on new work and output volumes, survey results revealed. The headline IHS Markit/Chartered Institute of Procurement & Supply PMI fell to 47.4 in August from 48.0 in July. This was the lowest score since July 2012. The new work contracted at the fastest pace in 85 months, reflecting weaker domestic and global economic conditions, low market confidence, Brexit concerns and business uncertainty. (RTT)

China: Manufacturing sector expands on production. China’s manufacturing sector recovered in August largely driven by the fastest growth in production in five months, survey data from IHS Markit showed. The Caixin factory PMI rose to 50.4 in August from 49.9 in July. The official manufacturing PMI dropped to 49.5 in August from 49.7 in July. Meanwhile, the non-manufacturing PMI improved to 53.8 from 53.7, data released showed. Markit showed that production grew at the fastest pace in five months but total new orders received was broadly stable. (RTT)

Hong Kong: Retail sales drop by steepest in 3.5 years amid protests. Hong Kong's July retail sales sank by the most since Feb 2016 amid anti-government protests that have gripped the Chinese ruled city for months. Retail sales in July fell 11.4% YoY, government data showed, as social unrest hurt consumer sentiment and visitor arrivals started to fall. Retail sales fell to HKD34.4bn (USD4.4bn) in July, a sixth consecutive month of declines. June's decline was 6.7%. In volume terms, retail sales in July fell 13%, compared with a 7.6% fall in June. (Reuters)

India: Manufacturing growth at 15-month low . India’s manufacturing growth slowed in August to its weakest level in over a year, amid weaker increases in sales, output and employment, survey data from IHS Markit showed. The headline IHS Markit manufacturing PMI fell to 51.4 in August from 52.5 in July. The reading was the lowest since May 2018. New business expansion eased to the lowest level in fifteen months in August and new orders growth was the weakest seen since April 2018. Employment level rose marginally in August and backlogs of work remained unchanged. Input buying fell for the first time in fifteen months and at the fastest pace since mid-2017. (RTT)

India: Economic growth slows in June quarter. India’s economy grew at a slower-than-expected pace in the three months to June, preliminary figures from the National Statistics Office showed. GDP grew 5% YoY, which was much slower than the 5.7% expansion economists had forecast. The pace of growth was reportedly the slowest in over six years. In the same quarter last year, the economy grew 8%. In the January to March quarter, the economy expanded 5.8%, which was the weakest since 2014-15. (RTT)

Markets

Guan Chong: Plans RM278m new cocoa bean processing plant in Africa. Guan Chong has set aside up to EUR60m (about RM278m) to build a new cocoa bean processing plant in Africa over the next 18 months. The plant will be located in Côte d'Ivoire and is expected to be commissioned and operational by the 1Q2021, which is expected to raise its production capacity by 60,000 tonnes per annum and allow Guan Chong to expand its market presence and strengthen its competitive advantage in the European market. (The Edge)

Hai-O: Expecting a challenging year ahead. Hai-O Enterprise is expecting FY2020 to be challenging on the back of a high cost of living that is hampering consumers’ spending in Malaysia. The group’s export-oriented sectors would also be affected by the US China trade spat that has intensified by the slowing global economic activity. In general, the market expected the group’s earning for FY2020 to come in marginally lower about 3%. The group’s balance sheet remained strong due to its good working capital management. (StarBiz)

Mah Sing: To review Southbay masterplan. Mah Sing Group is reviewing the masterplan of its RM2.5bn Southbay mixed development project in Batu Maung, Penang to accommodate more medium-pricing units. The decision is to meet the needs of buyers who intend to reside in the properties. The revision of Southbay’s masterplan was expected to help improve the sales contribution from Penang to the group. This year the sales from Penang are targeted to be 11%, which is more or less the same as a year ago. (StarBiz)

Berjaya Land: To build smart affordable homes in Myanmar. Berjaya Land is making a foray into building smart affordable homes here with a GDV of USD624m. The project is expected to take off in 2020, is located about 40 minutes from downtown Yangon on a 74.05 hectare piece of land, and will comprise about 14 parcels to be built over three phases. It will take maybe about six years to complete. Apart from 10,000 residential units, the company will also have a commercial segment with about 1.2m sf of retail space. (The Edge)

Datasonic: Downsizes its board to eight members from 14. As part of its restructuring plan, Datasonic Group announced that it is downsizing its board to eight members from 14. Consequently, the e government service provider announced the resignations of six directors. The board members who have stepped down are Handrianov Putra Abu Hanifah, Md Diah Ramli, Mohamed Zulkhornain Ab Ranee, Raghbir Singh Hari Singh, Talya Zholeikha Abu Hanifah and Safia Zuleira Abu Hanifah. (The Edge)

MBSB: 2Q profit up 24% on lower expected credit losses. Malaysia Building Society registered a 24% YoY increase in the 2Q profit of its FY19, as the group recorded lower than expected credit losses during the quarter under review. Hence, net profit climbed to RM106.23m from RM85.69m a year ago. Revenue grew 3% to RM817.66m from RM794.14m. (The Edge)

Ahmad Zaki: 2Q net profit falls amid lower revenue, higher income tax expenses. Ahmad Zaki Resources (AZRB)'s 2Q net profit fell 12% to RM4.65m from RM5.31m a year ago, as it saw lower revenue and higher income tax expenses. Revenue came in 28% lower at RM243.31m versus RM339.7m previously, as higher contributions from its property and oil and gas divisions were outweighed by lower revenues from other divisions in the group. (The Edge)

Market Update

The FBM KLCI might open higher today as UK shares gained momentum to extend a recent winning streak as the pound was hit amid a volatile political scene in London, while European equities kicked September off with slight gains. London’s FTSE 100 index accelerated its early morning advance with a 1% gain, adding about 3% since the close on August 27. The European Stoxx 600 climbed 0.3% in the session while Frankfurt’s Dax rose 0.1%. Sterling shed about 0.7 percent against the dollar to touch a two week low, drawing out a losing streak that brings its decline against the US currency to 1.7 percent over the past four trading days. Many of the UK’s biggest companies are multinationals that have benefited from a weaker sterling. Government bonds rallied as concern mounted that Britain is heading for a potentially damaging no-deal Brexit. Politics maintained centre stage in London on Monday as Boris Johnson, Prime Minister, was accused of “goading” Conservative rebels into voting down his Brexit strategy so he can purge them from the party and hold a snap general election. The UK economy meanwhile revealed the strain of the turmoil at Westminster. Figures out on Monday showed that factory activity in the UK had shrunk in August for a fourth consecutive month and at the fastest pace in seven years, the IHS Markit purchasing managers’ index for manufacturing revealed.

In the region, Asian equities slid back following August’s turbulence, as Japan’s Topix fell 0.4%, while Hong Kong’s Hang Seng also dropped 0.4%. In mainland China, the CSI 300 gained 1.3% after surveys showed a varied picture for the country’s manufacturing sector. On the trade front, Washington introduced tariffs of 15 percent on $112bn of Chinese imports and China retaliated by bringing in additional levies on US goods, including crude oil. Bursa Malaysia and US equity markets are closed for a holiday on Monday. In a bright spot, China’s Caixin-Markit manufacturing PMI, a private survey tracking smaller firms, edged up in August and showed the sector grew for the first time since March as production picked up, boosted by domestic demand.

Source: PublicInvest Research - 3 Sept 2019

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