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PublicInvest Research

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

 

PublicInvest Research Headlines - 23 Oct 2019

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Economy

US: Existing home sales drop more than expected in Sept. US home sales fell more than expected in Sept as the market continues to struggle with a dearth of properties for sale, especially for cheaper homes. The National Association of Realtors said that existing home sales fell 2.2% to a seasonally adjusted annual rate of 5.38m units last month, reversing two straight months of gains. Aug’s sales pace was upwardly revised to 5.50m units. Economists had forecast existing home sales declining 0.7% to 5.45m units. The US Federal Reserve has cut interest rates twice this year, which has bolstered the housing market by lowering mortgage rates. (Reuters)

US: Business borrowing for equipment rises 18% in Sept - ELFA. US companies’ borrowing to spend on capital investments rose 18% in Sept from a year earlier, the Equipment Leasing and Finance Association (ELFA) said. The companies signed up for USD10bn in new loans, leases and lines of credit last month, up from USD8.5bn a year earlier. Borrowings rose 9% from the previous month. Consumer spending continues to fuel the economy, notwithstanding signs of caution and concern raised by some over the impact of trade frictions  with China, a pull-back in the US manufacturing sector and recent geopolitical events in Syria, Hong Kong and elsewhere. Washington based ELFA. (Reuters)

EU: Eurozone banks unexpectedly eased credit standards for businesses in Q3 - ECB. Euro area banks slightly eased the credit standards for loans to enterprises and those to households for house purchase in the 3Q, data from the 3Q euro area bank lending survey from the European Central Bank showed. Banks had expected them to remain broadly unchanged in the previous survey. The slight easing in credit standards on loans to enterprises was largely driven by the impact of competition, mainly from other banks, except in Germany. Meanwhile, risk perceptions, related to deterioration in the general economic and firm-specific situation, continued to exert pressure in the opposite direction. (RTT)

EU: German budget surplus at 1.7% of GDP in 2Q - Eurostat. Germany’s seasonally adjusted budget surplus was 1.7% of the country’s GDP in the 2Q, down from 2.0% in the previous three months, data from the European Union’s statistics office Eurostat showed on Tuesday. Germany has been running large budget surpluses for years and is now under pressure from other euro zone countries, the European Central Bank and the International Monetary Fund to spend more on long-overdue investment to help prevent an economic slowdown in the euro zone’s biggest economy. Unadjusted for seasonal swings, the budget surplus was even higher at 3.2% of GDP, in the 2Q, up from 2.2% in the first three months. (RTT)

UK: Budget deficit widens in first half of FY20. UK budget deficit widened in the first half of the fiscal year raising the possibility of the government overshooting the target in 2019-20, after a decade-long austerity. During the April to Sept period, the budget deficit climbed 21.6% on a yearly basis to GBP40.3bn, data from the Office for National Statistics showed. The budget deficit figure suggests that the government is on the course to miss its target of keeping the deficit below 2% of GDP this fiscal year. The chancellor would have to tighten fiscal policy to meet the rule that borrowing should be no more than 2% of cyclically adjusted GDP in 2020/21. (RTT)

Hong Kong: Inflation lowest in 4 months. Hong Kong's consumer price inflation eased to the lowest level in four months in Sept, data from the Census and Statistics Department showed. The consumer price index rose 3.2% YoY in Sept, slower than 3.5% increase in August. The latest inflation rate was the lowest since May, when it was 2.8%. Excluding the effects of all government's one-off relief measures, inflation was 3.2% in Sept versus 3.4% in the previous month. The smaller increase in inflation in Sept was mainly due to dissipation of the effect of upward adjustment in public housing rentals in Sept 2018 and decreases in prices of fresh vegetables. Prices for food grew 6.0% annually in Sept and those of housing rose 3.2%. (RTT)

Hong Kong: Announces additional stimulus measures. Hong Kong Financial Secretary Paul Chan announced a new round of measures to support the economy hit by domestic anti-government protests. Chan's new package worth HKD2bn is intended to support enterprises and safeguard jobs, particularly in hard-hit sectors. This was in addition to the HKD19.1bn stimulus unveiled in Aug and early Sept. In the face of the economic downturn, both enterprises and residents alike are in need of support. Measures announced by Chan include a one-off survey fee subsidy for local commercial marine vessels costing HKD16.5m to support around 6,300 vessels. He also unveiled a 50% reduction in rental fees for public car parks, catering establishments and retail stores in government land. (RTT)

Markets

CIMB (Outperform, TP: RM5.80): CIMB Thai 9MFY19 net profit rises 35.5% YoY. CIMB Thai Bank PCL, which is 94.83%-owned by CIMB Group Holdings, saw its net profit for the 9MFY19 rise 35.5% YoY to THB728.1m (about RM100.52m), on the back of a 2.3% growth in operating income and a 32.7% decline in provisions, partially offset by a 17.4% increase in operating expenses. On a YoY basis, operating income rose by THB236.4m or 2.3% to THB10.4bn from a 3.1% increase in net interest income. (The Edge)

Petron, Hengyuan: Confirm Port Dickson pipeline breakdown. Petron Malaysia Refining & Marketing addressed which claimed a facility in Port Dickson that carries crude oil from the ships to refineries had broken down. Petron confirmed that its refinery at Port Dickson was unable to receive crude oil for purposes of producing finished products, due to a technical problem with the single buoy mooring facility. Petron clarifies that its finished products, are made up of imported finished products and that produced by its refinery in Port Dickson. (SunBiz)

IFCA: In MoU with Huawei to explore AI, big data. IFCA MSC has entered into a non-legally binding memorandum of understanding (MoU) with Huawei Services (HK) Co Ltd to jointly explore DevOps, cloud artificial intelligence (AI), big data and innovative technology knowledge sharing projects. The MoU aims to record its and Huawei's initial intent and that it is their intention to enter into definitive agreements on the planned cooperation. (The Edge)

T7 Global: Inks contract with Petronas Carigali for provision of well services. T7 Global has received an umbrella contract from Petronas Carigali SB for the provision of integrated well services for petroleum arrangement contractors. The tenure of the contract is for five years from Sept 20, 2019, to Sept 19, 2024. The contract will have no effect on the issued and paid-up share capital of the Company and it is expected to contribute positively towards the earnings and net assets per share for the FYE 2019. (StarBiz)

TDM: Indonesian ops face sanction, 900ha to halt activities for 3 years. TDM announced that its subsidiary PT Rafi Kamajaya Abadi (PT RKA) has been sanctioned by the Indonesian government and ordered to stop all plantation activities at some 900 hectares (ha) of its plantation area in Kalimantan, which has been burnt recently. The sanction will last for three years. Under the decree, PT RKA is also ordered to complete fire prevention facilities and infrastructure within 12 months from Oct 4. (The Edge)

Revenue Group: Proposes two-for-three bonus issue. Revenue Group has proposed a two-for-three bonus issue. It will issue up to 230.04m bonus shares. It decided on the bonus issue after due consideration of its financial performance and position. The issue will enable shareholders to have greater participation, while maintaining the percentage of equity interest. (The Edge)

Parkson: Gets RM2bn loan facility for refinancing, working capital needs. Parkson Holdings’ 54.97%-owned Hong Kong-listed subsidiary has secured loans totalling HKD3.9bn (RM2.08bn) for refinancing and general working capital needs. Parkson Retail Group Ltd (PRGL) secured the loans from a syndicate of banks for a threeyear term. The loan facility is for refinancing existing loans and ultimately for general corporate and working capital needs of PRGL. (The Edge)

Market Update

The FBM KLCI might open softer today after U.S. stocks closed lower Tuesday as investors digested a torrent of corporate earnings reports and a new bill to make it easier for social media users to migrate away from industry heavyweights Facebook, Snap and Twitter to rival platforms. The S&P 500 index fell 10.73 points, or 0.36%, to 2,995.99. The Nasdaq Composite Index shed 58.69 points, or 0.72%, to 8,104.30. The Dow Jones Industrial Average lost 39.54 points, or 0.15%, to 26,788.10, on the back of worse-than-expected third-quarter results from McDonald’s and Traveler. In economic data, investors received an update on the health of the U.S. housing market with existing-home sales for September falling by 2.2% to an annualized pace of 5.38 million. Brexit also was back in the spotlight, after U.K. lawmakers voted Tuesday to let Prime Minister Boris Johnson’s Brexit plan to proceed to the next step in Parliament, but rejected his rapid timetable for approval, saying that more time was needed to scrutinize the bill. The Stoxx Europe 600 rose 0.1%.

Back home, the FBM KLCI index gained 3.16 points or 0.20% to 1,574.09 points on Tuesday. Trading volume increased to 3.29bn worth RM2.10bn. Market breadth was negative with 411 gainers as compared to 452 losers. In the region, China’s CSI 300 index finished up 0.4% and the Shanghai Composite Index gained 0.5%, while Hong Kong’s Hang Seng Index advanced 0.2%.

Source: PublicInvest Research - 23 Oct 2019

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