PublicInvest Research

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


PublicInvest Research Headlines - 15 Oct 2019

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EU: German economy unlikely to see strong downturn. The German economy is unlikely to log a strong downturn, the economy ministry reported Monday. The ministry said the weak phase of the economy continues and the economic indicators are not suggesting any turnaround. Moreover, Germany's export oriented industries continue to face weak global trade, a stagnating global economy and weak demand for automobiles. However, the ministry does not expect any stronger downturn or even a pronounced recession. The largest euro area economy contracted 0.1% in the 2Q and the economist widely expect another contraction in the 3Q that will push the economy into recession. (RTT)

EU: ‘Needs more time’ over Boris Johnson’s Brexit deal. The EU Presidency said it’s unlikely to strike a deal with the UK this week, dimming UK Prime Minister Boris Johnson’s hopes of avoiding another delay to Brexit. Antti Rinne, premier of Finland, which currently has the rotating presidency of the EU, said the two sides need more time to reach an agreement before leaders meet in Brussels for a summit Thursday. “If there is a possibility to negotiate after the Council meeting, it would be so,” Rinne said. Johnson repeatedly pledged to “get Brexit done” by Oct 31. He’s refused to ask for a delay to Brexit, even though the Benn Act says he must do so if he hasn’t finalized a deal with both the EU and UK Parliament by Oct 19. (Bloomberg)

UK: Low rates may risk more severe downturns, BOE deputy governor says. A prolonged period of low interest rates risks making economic downturns more severe, according to BOE deputy governor Jon Cunliffe. Cunliffe said the drop in long-term market rates in developed economies partly reflected an over-pessimism about long term prospects, and was also part of a structural trend. One “challenge of low for longer for financial stability” is “the risk that in such an  environment, economic downturns will on average be more severe,” he said. Low for long makes demand management of the economy more difficult in downturns, reducing the space for monetary policy easing with conventional tools” Cunliffe said. (Bloomberg)

China: Sept exports, imports in deeper contraction as tariffs take toll. A slide in China’s exports picked up pace in Sept while imports contracted for a fifth straight month, pointing to further weakness in the economy and underlining the need for more stimulus as the Sino-US trade war drags on. Analysts say it could take time for Chinese exports to recover given slowing global growth, despite tentative signs of a thaw in tense trade relations between the world’s top two economies. Sept exports fell 3.2% from a year earlier, the biggest fall since Feb, customs data showed on Monday. Analysts in a Reuters poll had expected a 3% decline after Aug’s 1% drop. “The headline figures suggest that global demand softened last month, adding to the pressure from the US tariffs that went into effect in Sept,” said analysts at Capital Economics. Economists also attributed the export slowdown to a fading in the so called “front-loading” effect. (Reuters)

China: Will use counter-cyclical adjustments to manage economy - Premier Li. Downward pressure on China’s economy is increasing and the government will make good use of counter-cyclical adjustments to keep economic operations within reasonable range, premier Li Keqiang said. China will stabilize employment and prices and will expand effective investment, Li said. (Reuters)

China: Car sales drop for 15 months. China's car sales fell for the fifteenth consecutive month in Sept, figures from the China Association of Automobile Manufacturers, or CAAM, showed on Monday. Car sales decreased 5.2% YoY to 2.27m units. However, car sales grew 16% from the previous month. Production of cars decreased 6.2% YoY to 2.21m units, but rose 11% from Aug. In Sept, automobile exports rose 6.3% YoY to 90,000 vehicles. Thus, sales have remained lackluster in the "Golden Sept, Silver Oct" period when vehicles sales are traditionally seen picking up. (RTT)

India: Inflation rises in Sept. India's consumer price inflation increased moderately in Sept, data from the statistics ministry revealed Monday. Consumer prices advanced 3.99% YoY in Sept, faster than Aug's 3.28% rise. In the same period last year, inflation was 3.7%. Food price inflation accelerated to 5.11% from 2.99% in Aug. On a monthly basis, consumer prices gained 0.55% and food prices rose 0.9% in Sept. However, data released earlier in the day showed that wholesale price inflation slowed to 0.33% from 1.08% in Aug. (RTT)

India: World Bank downgrades growth outlook. The World Bank downgraded its India's growth outlook citing weak domestic demand and manufacturing sector. According to South Asia Economic Focus report, India will grow 6.0% in the current fiscal year, down from the previous estimate of 7.5%. Growth is then expected to gradually recover to 6.9% in fiscal year 2020/21 and to 7.2% in the following year. The outlook for both years were lowered from 7.5% projected in April. The lender observed that India's cyclical slowdown in severe. Manufacturing growth reached below 1% in the 2Q of 2019. Although this drop follows the global trend, it was more pronounced. Growth in South Asia was projected to slow to 5.9% in 2019, down 1.1 percentage points from April 2019 estimates. (RTT)


Axis REIT: To buy property in Johor for RM65m cash. Axis Real Estate Investment Trust (REIT) is planning to acquire a single-storey warehouse-cum-office building in Johor for RM65m cash, from Rancak Beta SB. Axis REIT said the proposed acquisition will be funded by its existing bank financing, and it will not assume any liability pursuant to the property. Thus, the proposed debt financing will increase Axis REIT’s gearing ratio to 38.7%, the REIT said. The property, together with ancillary buildings, is presently built upon a portion of leasehold land, with an unexpired 35 years and five months sub-lease term, the REIT said. (The Edge)

Enra: Unit buys oil tanker for RM39m. Enra Group said its unit is acquiring a 15 year-old oil and chemical tanker for USD9.3m or RM38.87m cash. The group announced that its unit has signed a MoA with Maersk Product Tankers A/S, for the purchase of the tanker known as Maersk Edgar. Enra group holds a 60% stake in the unit. The double hull oil and chemical tanker has a net tonnage of 10,216 tonnes, Enra said. Its purchase will be financed via a combination of internally-generated funds and bank borrowings. Enra group’s portion is USD5.58m or equivalent to RM23.32m, based on its effective shareholding in the subsidiary. Enra said the proposed acquisition is in line with its core business in the provision of cost-effective storage and offloading solutions to oil and gas fields. (The Edge)

G3 Global: Yet to get confirmation on tender for TPM land. G3 Global has clarified that it has yet to receive confirmation on its tender submitted to develop a piece of land in Technology Park Malaysia (TPM). G3 Global said it had on June 14, 2019 submitted a tender to Technology Park Malaysia Corp SB (TPM Corp), expressing its interest to develop a piece of land in TPM. “However, the company has, as of now, yet to receive any decision in writing from TPM Corp informing its decision on the said matter.” it said. (StarBiz)

Eco World: Set to hit RM6bn sales target. Eco World, which has seen its financial performance rebound in 3QFY19, expects to hit its sales target of RM6bn over the 2019 and 2020 financial years after sales picked up this year. President and CEO Datuk Chang Khim Wah said most of its sales so far for the current financial year have come in over the past six months and bolstered its sales over the 10 months FY19 that is reaching close to RM2bn. “Most of the sales came in over the last six months and based on the strong sales trajectory we have seen across all our projects, we believe we are on track to achieve our two-year sales target of RM6bn,” he said. Eco World Development set a two-year sales target of RM6bn for these financial years with the expectation that there would be a slight lull in the market until the Home Ownership Campaign was launched. (StarBiz)

Ni Hsin: To invest RM10m in expanding into marine, O&G sectors. Ni Hsin Resources will invest a total of RM10m in Satumarin SB in a bid to expand into the marine, oil and gas sector. The group said it has agreed to acquire a 49% stake in the oil and gas marine services provider for RM735,000 cash and will further invest RM9.27m in the company over a period of five years. "Ni Hsin is already familiar with the global market, and hence will further enhance Satumarin’s global aspirations," said Ni Hsin group chairman Sofiyan Yahya. He added that Satumarin is expanding into new specialised services and aims to be the leading marine specialist player in the region. (StarBiz)

Market Update

The FBM KLCI might open weaker today after US stocks finished lower on the back of Washington and Beijing agreeing to a limited trade deal. That followed gains for Asian equities, but declines for European shares — and the British pound — after two days of Brexit talks ended without a breakthrough. The S&P 500 ended 0.1% lower, having flicked between small gains and losses all day. The Nasdaq Composite dropped 0.1%. Europe’s benchmark Stoxx 600 dropped 0.5% and the FTSE 100 fell 0.5% on Monday.

Back home, the FBM KLCI index gained 10.75 points or 0.69% to 1,567.59 points on Monday. Trading volume increased to 2.99bn worth RM1.84bn. Market breadth was positive with 487 gainers as compared to 367 losers. In China, the CSI 300 of Shanghai- and Shenzhen-listed stocks rose 1.1% to a one-month high and Hong Kong’s Hang Seng was up 0.8%. South Korea’s Kospi strengthened 1.1% as Samsung Electronics jumped 1.7% to its highest in 16 months, over how a cool-down in trade tensions could support technology supply chains. Japanese markets were closed for a public holiday.

Source: PublicInvest Research - 15 Oct 2019

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