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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 13 Dec 2019, 10:07 AM

 

PublicInvest Research Headlines - 5 Nov 2019

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Economy

Global: Manufacturing contracts for a sixth straight month. Global manufacturing shrank for a sixth straight month in October, as new export orders extended their longest downturn since 2002. At the same time, output and orders firmed in a sign factory activity is stabilizing. The Global Manufacturing Index stood at 49.8, after the prior month’s 49.7 the third consecutive monthly improvement after bottoming in July. The new orders gauge reached a neutral point, after shrinking the previous five months. The production index edged up to a six-month high. In June and July, it stood at an almost seven-year low. Still, sluggish global demand and the effects of tariffs are limiting trade. (Bloomberg)

UK: Construction sector downturn continues in October. The UK construction sector continued to contract in October but the pace of weakness slowed amid the prolonged Brexit uncertainty, survey data from IHS Markit showed. The IHS Markit/Chartered Institute of Procurement & Supply construction PMI rose to 44.2 in October from 43.3 in September. The score was forecast to climb to 44.1. All three broad categories of activity namely civil engineering, house building and  commercial construction logged lower volumes of work. Civil engineering was the worst performing section, with business activity falling at the sharpest pace since October 2009. House building also decreased at a faster rate. At the same time, commercial construction deteriorated for the tenth straight month, but at the slowest pace since May. The latest survey revealed a sharp reduction in new work in response to domestic political uncertainty and the economic backdrop. Respondents also cited unusually wet weather as an additional headwind to construction output. (RTT)

EU: Investor confidence highest in 5 months. Euro area investor confidence rebounded strongly in November to its best level in five months as expectations were the highest since May, survey data from Sentix showed. The investor confidence index for Eurozone climbed to - 4.5 from -16.8 in October, the think tank said. Economists had forecast a score of -13.8. The latest reading was the highest since June, when it was at -3.3. The current situation index rose sharply to -5.5 from -15.5 in the previous month. The expectations measure also climbed strongly to -3.5 from -18 in October. "On the one hand, the turnaround in the ECB's monetary policy has been well received by investors," Sentix said. "In the meantime, we are measuring a stronger rise in the money supply aggregates again, which, with a slight delay, usually also has a stimulating effect on the economy. (RTT)

EU: Manufacturing sector contracts less than estimated. The euro area manufacturing sector shrank slightly less than initially estimated in October, data from IHS Markit showed. The factory PMI rose to 45.9 from 45.7 in September. According to flash estimate, the indicator held steady at 45.7 in October. The survey showed sustained weakness in output, new orders and purchasing. Job cuts were reported for the sixth straight month with the latest pace of job shedding the sharpest since the start of 2013. IHS Markit said, "The severity of the downturn, alongside poor trends in employment and prices is especially disappointing given the ECB's recent stimulus measures, underscoring how new ECB head Christine Lagarde is taking over the reins at a particularly difficult juncture for the eurozone economy." (RTT)

China: Says no promise ‘fatigue’ on opening its economy. There is no promise "fatigue" about China's efforts to open its economy to foreign businesses, the government said, after the European Union said China needed to make rapid and substantial improvements. The EU, China's largest trading partner, said last week that there was a risk of "promise fatigue", urging China to show "more ambition and genuine effort towards rebalancing and a level playing field". China has long been dogged by allegations of unfair trade practices, from forced tech transfers to protectionist market entry policies. The country has been criticised for making promises to open its market and not delivering on them. When it comes to China's commitment to reform and opening up, China has always stuck to its word, Chinese Foreign Ministry spokesman, Geng Shuang said. (Reuters)

Philippines: Manufacturing growth improves in October. The Philippine manufacturing sector grew at a faster rate in October, amid a rise in output and new orders, data from IHS Markit showed. The manufacturing PMI rose to 52.1 in October from 51.8 in September. Production growth remained at a modest rate in October, supported by an upturn in new orders. The rate of output expansion was weaker than the trend for the series that started in January 2016. The rate of new order growth increased slightly, amid an increase in client numbers and in export conditions. Exports demand rose for the first time in five months though modestly. Input prices continued to grow in October, due to higher prices for raw materials and reduced supply of inputs. The rate of increase was weaker than its survey average (RTT)

Markets

DRB-Hicom (Neutral, TP: RM2.80): To raise RM3.5bn under sukuk wakalah programme. DRB-Hicom has made a lodgement with the Securities Commission Malaysia (SC) for the establishment of a 30-year Islamic medium term notes programme of up to RM3.5bn in nominal value (sukuk wakalah programme). The sukuk wakalah programme has been assigned a preliminary rating of A+IS with a positive outlook by Malaysian Rating Corp (MARC). This outlook revision to positive considers DRB-Hicom's improved consolidated credit profile. (The Edge)

MMAG: To sell vacant industrial land in Klang for RM13m. MMAG Holdings is planning to dispose of a piece of freehold vacant industrial land in Klang for RM13m in cash to Acter Carton Enterprise SB. The proposed disposal is via a sale and purchase agreement entered between its unit Active Trio Deluxe SB (ATDSB) and Acter Carton Enterprise. The land, measuring about 18,381 sqm or 197,853.08 sqft, has a net book value of RM13.04m based on audited financial statements of ATDSB for the FY19. The original cost of the land stood at RM12.67m, on June 18 last year. (The Edge)

Cuscapi: Collaborates with Zando Technologies to provide F&B solutions in Myanmar. Cuscapi has signed a memorandum of understanding (MoU) with Zando Technologies Co Ltd to collaborate in offering competitive solutions to end-customers in Myanmar’s food and beverage (F&B) industry. The signing of the MoU with Zando will enable Cuscapi to explore business opportunities and expansion into Myanmar’s F&B market, to offer new C360 Engage Point of Sales and restaurant management solutions. The MoU is effective for an initial period of one year and may be renewed by mutual agreement between the parties. (The Edge)

Mesiniaga: Bags RM16m contract from EPF for computer, IT job. Mesiniaga has bagged a contract worth RM16.05m from the Employees Provident Fund (EPF) for the supply of computer hardware, software, maintenance and IT related services. The contract shall commence on Nov 11 and the delivery of the computer hardware and software is expected to be completed within five months. The warranty period shall be for a duration of three years with an option to extend the warranty period for the fourth and fifth year at a fixed price of RM250,000 per year. (The Edge)

ARB: 3Q net profit spikes on IT amid temporary timber ops cessation. ARB reported today a 4,263% spike in net profit at RM8.29m in its 3QFY19 from RM186,000 a year earlier, helped by a substantial revenue rise on IT-based income. IT-based income rose as the group's timber segment temporarily ceased operations during 3QFY19, ahead of an expected resumption in Dec 2019. Total group revenue during the quarter increased to RM33.94m, from RM3.8m a year before. This was mainly due to the IT segment which has contributed RM33.852m or 99.7% of the total revenue and consequently contributed profit for the group. (The Edge)

IPO: Spring Art posts RM3.05m profit in Q3. Spring Art Holdings recorded a net profit of RM3.05m for the 3Q ended Sept 30, 2019 on the back of RM16.45m in revenue. The company’s revenue was derived from the design and development, manufacturing as well as marketing and sales of office furniture, bedroom furniture, living room furniture as well as other types of furniture. Middle East was the largest market contributing to the group’s revenue, accounting for 56.3% of the total revenue in Q3. (SunBiz)

Market Update

The FBM KLCI might open higher today after the Dow Jones Industrial Average joined other major indices in record territory Monday, with stocks propelled higher as optimism about a near term US-China trade resolution and a third-quarter earnings season that has been better than feared buoyed sentiment on Wall Street. The Dow Jones Industrial Average advanced 114.75 points, or 0.4%, to finish at 27,462.11, surpassing its previous record close of 27,359.26, set on July 15. The Nasdaq Composite gained 46.80 points, or 0.6%, to close at 8,432.20, while the S&P 500 index rose 11.36 points, or 0.4%, to end at 3,078.27. The Nasdaq and S&P 500 ended at record highs for the second consecutive session. In Europe, stocks closed mostly higher, as reflected in the Stoxx Europe 600’s 1% gain.

Back home, the FBM KLCI index gained 10.22 points or 0.64% to 1,603.56 points on Monday. Trading volume decreased to 2.56bn worth RM1.86bn. Market breadth was positive with 452 gainers as compared to 360 losers. In the region, the China CSI 300 added 0.7%, Hong Kong’s Hang Seng Index advanced 1.7%.

Source: PublicInvest Research - 5 Nov 2019

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