PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 15 Nov 2019, 9:19 AM


PublicInvest Research Headlines - 21 Oct 2019

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US: Leading economic index unexpectedly edges lower in Sept. Partly reflecting weakness in the manufacturing sector, the Conference Board released a report on Friday showing an unexpected drop in its reading on leading US economic indicators in the month of Sept. The Conference Board said its leading economic index edged down by 0.1% in Sept after dipping by a revised 0.2% in Aug. Economists had expected the index to rise by 0.2% compared to the unchanged reading originally reported for the previous month. Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board, said the drop by the index reflected weaknesses in the manufacturing sector and the interest rate spread, which were only partially offset by rising stock prices and a positive contribution from the Leading Credit Index. (Reuters)

EU: European council confirms Christine Lagarde as next ECB chief. European leaders on Friday confirmed the appointment of Christine Lagarde as the next president of the ECB. Lagarde, who is the  former MD of the IMF, will take office on Nov 1, after the incumbent Mario Draghi steps down on Oct 31. She is the first woman to become the ECB chief. The former French finance minister is set to inherit a fractured Governing Council as several hawkish policymakers, especially those from Germany, have voiced opposition to the latest round of stimulus measures announced in Sept. (RTT)

EU: Incoming economy chief calls for less restrictive budget policies. The EU needs looser budgetary policies and an overhaul of its fiscal rulebook, the bloc’s designated economics commissioner said. Paolo Gentiloni said that while the EU’s deficit and debt rules must not be ignored, they needed to be “reviewed and updated”. “It’s time for countries which have fiscal space to use it, in an overall context of less restrictive budgetary policies,” Gentiloni, due to replace Pierre Moscovici as economic and financial affairs commissioner on Nov 1, said. The former Italian prime minister warned that with the EU economy slowing, “the risks of a prolonged period of low growth must not be overlooked” and the task of stimulating the economy “cannot be left to monetary policy alone”. (Reuters)

EU: Current account surplus rises in Aug. The euro area current account surplus increased in Aug reflecting higher primary income and trade in services, the European Central Bank reported Friday. The current account surplus increased to EUR27bn from EUR22bn in July. The surplus on trade in goods remained unchanged at EUR28bn and the surplus on services rose to EUR5bn from EUR2bn a month ago. Primary income totaled EUR7bn versus EUR5bn in Aug. At the same time, the deficit on secondary income held steady at EUR14bn. In the 12-month period to August, the current account registered a surplus of EUR312bn or 2.7% of euro area GDP. (RTT)

China: Central banker says yuan level 'appropriate', trade tensions risk to global economy. China’s top central banker said on Saturday that potential escalation of trade tensions and policy uncertainty were the major risk factors facing the world economy, and market forces were keeping China’s yuan at an appropriate level. Yi Gang, the governor of the PBOC said that Beijing is “deeply disappointed” in the IMF’s failure to realign its shareholding structure to recognize the rising influence of China and other fast-growing economies. His statement said that the depreciation in the yuan since the beginning of Aug has been driven by market forces. (Reuters)

Hong Kong: Jobless rate steady in Sept. Hong Kong's jobless rate remained stable during the July to Sept period, data from the Census and Statistics Department showed. The unemployment rate was 2.9% during the July to Sept period, the same rate as seen during the June to Aug period. The number of unemployed persons was 120,300 during the July to Sept period, broadly the same as seen in the previous three months. Employment decreased by around 8,200 persons to 3.85m. Weak local consumption and plunging visitor arrivals caused by local social incidents continued to weigh on the labor market. The unemployment rate of the consumption- and tourism-related segment increased further to 4.9% the highest in more than two years. (RTT)

Japan: BOJ's Kuroda calls for mix of steps to boost economic growth. BOJ Governor Haruhiko Kuroda said on Sunday a mix of monetary easing, flexible fiscal spending and structural reforms to raise the country’s long-term growth potential could be effective in stimulating the economy. Kuroda said central banks of advanced nations still have sufficient tools to boost growth, countering the view that years of low growth, low-inflation environment have left them with little ammunition to fight an economic downturn. But he said fiscal spending and structural reforms to boost an economy’s potential growth will help enhance the effect of monetary easing. (Reuters)


Econpile: Bags RM44m contract for Tropicana Gardens. Econpile Holdings has been awarded a RM44m contract for demolition, earthworks, piling and substructure works for the Tropicana Gardens mixed development. The overall duration of the contract is estimated to be 16 months, and is expected to contribute positively to the group in the FYE June 30, 2020 till FY2021. (The Edge)

MMAG: Buys Penang land from Dynaciate for RM41m to expand logistics business. MMAG Holdings is buying a piece of land together with buildings in Penang from Dynaciate Group, formerly known as Tatt Giap Group, for RM41m to expand its logistics business. MMAG said its wholly-owned unit Line Clear Express and Logistics SB will re-develop the land as part of plans to set up a regional hub and warehouse in Penang. “Currently, Line Clear only has two branches/depots in Penang which are located in rented shoplots in Bayan Lepas and Bukit Mertajam. (The Edge)

PetChem: Associate executes final phase of RM1bn project financing. Petronas Chemicals Group (PetChem) said that its 50%- owned associate Pengerang Petrochemical Co SB (PPC) had executed the second and final phase of its RM1bn project financing to repay PPC’s bridge loan. PetChem said PPC had obtained the first phase of the project financing amounting to USD400m on April 1, 2019, followed by the execution of the second and final phase involving USD600m, from various export credit agencies (ECA) and commercial banks. (The Edge)

KNM: Unit gets USD12.3m purchase order from Petrofac Emirates. KNM Group (KNM)’s indirect unit has accepted a USD12.31m (RM51.5m) purchase order from Petrofac Emirates LLC to supply pressure vessels and columns. The unit, FBM-KNM FZCO (FZCO), will supply the vessels and columns for the Ain Tsila development project in the southeast of Algiers, Algeria. The purchase order is expected to contribute positively to KNM’s earnings for the FYE Dec 31, 2019 (FY19) and Dec 31, 2020 (FY20). (The Edge)

MMC: Northport, POIC seal sister port relationship. Northport (Malaysia) and POIC Sabah SB have signed a strategic collaboration agreement (SCA) for the establishment of a sister port relationship with the aim of boosting trade links and increasing the cargo flow through their respective ports. The signing of the agreement sealed both parties’ commitment to cooperate in port management and facilitate trade between West Malaysia and East Malaysia as well as the neighboring region with special focus on the BIMP-EAGA (Brunei Indonesia Malaysia Philippines East Asean Growth Area) trade route. (SunBiz)

Auto (Neutral): Sept vehicle sales 43% higher. Vehicle sales in Sept 2019 increased 43% to 44,666 units from 31,240 units a year ago, according to the Malaysian Automotive Association (MAA). For the first nine months period, vehicle sales fell 3% to 442,991 units from 454,855 units in the previous year’s corresponding period. On a MoM basis, vehicle sales in Sept was 13% or 6,482 units lower than Aug 2019 due to a shorter working month, and people adopting a “wait-and-see” attitude ahead of the Budget 2020 announcement. Looking ahead, MAA expects vehicle sales for Oct to be better compared with Sept, due to a longer working month. (SunBiz)

Market Update

US markets tumbled last Friday as weakness in some industry bellwethers weighed on the overall market. Boeing’s shares fell 6.8% on revelation it may have misled regulators on the safety systems of the 737 Max. Johnson & Johnson fell 6.2% after the company recalled some of its baby powder products upon finding traces of asbestos. The Dow Jones Industrial Average slumped 1.0% as a result, as both stocks are key component members. The S&P 500 fell 0.4% while the Nasdaq Composite ended 0.8% lower. Sentiment was also not helped by China’s 3Q GDP growth unexpectedly weakening to 6.0%, its slowest since 1992. European markets ended lower as investors looked toward the weekend where U.K. lawmakers were supposed to vote on the draft Brexit deal agreed between the government and the European Union. Prime Minister Boris Johnson was however forced to ask for another deadline extension, one which he grudgingly acceded to. France’s CAC 40 led major markets lower with a 0.7% decline. UK’s FTSE 100 and Germany’s DAX fell 0.4% and 0.2% meanwhile. Asian markets were mostly lower following China’s release of worse-than-expected gross domestic product figures, impacted by Beijing's protracted trade conflict with the US. Saudi Aramco is said to be delaying its planned listing, as it wants to update investors with its latest earnings following the Sept. 14 attacks which knocked out half its crude output, according to a Reuters report. The Shanghai Composite and Hang Seng indices fell 1.3% and 0.5% while the Straits Times Index and FBM KLCI slipped 0.4% and 0.2%.

KNM Group has accepted a USD12.3m (RM51.5m) purchase order from Petrofac Emirates LLC to supply pressure vessels and columns for the development project in the southeast of Algeria. Econpile Holdings has inked an RM44m contract to undertake demolition, earthworks, piling and substructure works for the Tropicana Gardens mixed development in Kota Damansara. Digi.Com’s net profit for 9MFY19 fell 6.2% YoY to RM1.1bn on account of lower revenue.

Source: PublicInvest Research - 21 Oct 2019

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