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PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 12 Dec 2019, 9:19 AM

 

PublicInvest Research Headlines - 21 Nov 2019

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Economy

US: Fed minutes reinforce expectations of interest rates on hold. Minutes from the Federal Reserve's monetary policy meeting held in late Oct were released but did not provide much further insight into the outlook for interest rates. Interest rates are already widely expected to remain unchanged in the near future after the Fed's statement and congressional testimony by Fed Chairman Jerome Powell. The decision to remove the act as appropriate language from the statement was seen as consistent with the view that the current stance of monetary policy was likely to remain appropriate as long as the economy performed broadly in line with the Fed's expectations. (RTT)

EU: ECB's lane dismisses eurozone recession talk, sees recovery next year or two. Eurozone's economy is growing more slowly than expected, but is unlikely to enter a recession, European Central Bank Executive Board member Philip Lane said in an interview. The 19- nation economy is likely to recover in the next year or two, the policymakers said in the interview, the transcript of which was published on the ECB website. The ECB has always stressed that the outlook faces downside risks. The euro area economy grew 0.2% sequentially in the third quarter, same as in the previous three months. The European economy has been growing more slowly than hoped. Inflation slowed to 0.7% in Oct to its lowest level in nearly 3 years. (RTT)

EU: ECB says non-banks raised exposure to credit, exchange rate risks. The euro area financial stability environment remains challenging and non-banks have increased their exposure to riskier assets to address profitability challenges, the European Central Bank said in its Financial Stability Review released. The bank noted that investment funds and insurers increased their investment in high yield securities. The search for yield led them to assets of emerging market economies. The central bank said signs of excessive risk-taking in some sectors require monitoring and targeted macro-prudential action in some countries. Although banks increased their resilience, they have made limited progress in improving profitability. (RTT)

EU: Greek September current account surplus widens, tourism revenue grow. Greece’s current account balance showed a larger surplus in September compared to the same month last year, thanks to higher tourism revenues, the Bank of Greece said. Central bank data showed the surplus at EUR0.887bn (USD3.15bn) compared to a surplus of EUR0.548bn in September last year. Tourism revenues rose 16% to EUR2.847bn from EUR2.454bn in the same month last year. Last year Greece’s current account showed a deficit of EUR5.3bn, up by EUR2.1bn YoY as the trade gap widened (Reuters)

EU: Germany producer prices fall for second month. Germany producer prices declined for the second straight month in Oct largely driven by energy prices, data from Destatis showed. Producer prices fell by 0.6% YoY in Oct, bigger than the 0.1% drop in Sept. This was the second straight decrease. On a monthly basis, producer prices dropped 0.2%, in contrast to a 0.1% increase in Sept. Prices were forecast to rise 0.1%. Excluding energy, producer prices gained 0.3% on month but declined 0.2% from the same period last year. Energy prices decreased  3.1% annually. Among other components, prices of capital goods grew 1.5%. Durable consumer goods and non-durable consumer goods prices advanced 1.4% and 2.3% respectively. (RTT)

China: Cuts loan prime rate to support credit growth. China reduced its new benchmark lending rates, as widely expected, to reduce lending costs and underpin credit growth. The one-year loan prime rate was lowered to 4.15% from 4.20%. Likewise, the five-year loan prime rate was cut to 4.80% from 4.85%, which was the first reduction since the new rate was introduced. The loan prime rate is fixed monthly based on the submission of 18 banks, though Beijing has influence over the rate-setting. This new lending rate replaced central bank's traditional benchmark lending rate in Aug. Earlier on Monday, the People's Bank of China had lowered the seven-day repurchase rate to 2.50% from 2.55%. (RTT)

China: Moody's says China's current account position to pose risk to stability. China current account deficit is likely to move into structural deficit over the next decade, posing risks to financial stability and credit quality, Moody's Investors Service said. The credit implications will depend on the size of the deficit and how it is financed. According to Moody's assessment, the current account will move into deficit of around 1.5% of GDP by 2030 from a surplus of about 10% of GDP in 2007. The overall risk to financial stability remains low. However, over the medium to long term, the agency forecasts that China's rapidly ageing population and persistent trade barriers will impair the country's capacity to generate savings. (RTT)

Japan: Exports post worst fall in 3 years as shipments to US, China drop. Japan’s exports tumbled at their quickest pace in three years in Oct, threatening to tip the trade-reliant economy into recession as weakening demand from US and China darkened the outlook. Official data showed Japan’s exports fell 9.2% YoY in Oct, a bigger decline than the 7.6% drop expected by economists. The feeble results, driven by plummeting shipments of cars and aircraft engines to the US and plastic materials to China, marked the longest run of declines in exports since a 14-month stretch from Oct 2015 to Nov 2016. The data comes after a preliminary reading of GDP last week showed Japan’s economy post the worst growth in a year in the 3Q. (Reuters)

Taiwan: Export orders falls In Oct. Taiwan's export orders fell at a less-than-expected rate in Oct, figures from the Ministry of Economic Affairs showed. Export orders declined 3.5% YoY in Oct. Economists had expected a 3.8% fall. Orders for chemicals dropped 24.2% annually in Oct and those of basic metals and articles, and plastics and articles, and rubber and articles fell by 14.8% and 13.4%, respectively. Bookings for minerals, optical, photographic, cinematographic equipment, machinery, mineral products, information and communication products, textiles also declined. Orders for electronic products grew 1.7%and those for electrical machinery rose 5.8%. Demand for transport equipment increased 10.3%. Compared to the previous month, export orders rose 3.9% in Oct. (RTT)

Singapore: Wholesale trade rises in Q3. Singapore wholesale trade rose in the 3Q, figures from the Department of Statistics showed. At current prices, domestic wholesale sales grew a seasonally adjusted 2.1% QoQ, after a 1.6% fall in the previous quarter. Excluding petroleum, domestic wholesale sales fell 2.9% in the 3Q from the previous three months. After adjustments in the price effect, domestic wholesale sales increased 2.4% compared to the previous quarter. On an annual basis, wholesale trade dropped 10.4% in the 3Q, following a 5.1% fall in the previous quarter. Foreign wholesale trade declined 10.2% annually and by 2.6% quarterly in the 3Q. (RTT)

Markets

Oriental Interest: Buys RM46.8m Selangor land to complement Sepang development. Oriental Interest is buying a plot of land in Sepang, Selangor, for RM46.8m for a development to complement its existing project in Sepang. The 4.7ha plot (505,688.51 sq feet) is being acquired at the price of RM92.50 per square foot, OIB said. The purchase will be satisfied by a mix of internal funds and bank borrowings (The Edge)

MyEG: Partners Land Bank to launch online service in the Philippines. MyEG Philippines Inc has launched an online service in partnership with Land Bank of the Philippines, the latest offering from the company entailing the implementation and integration of MyEG Philippines’ electronic payment and collection system by Land Bank. The commencement of the new service marks the latest offering by MyEG Philippines, complementing its other existing online services, and also allowing easy access to a broad range of commercial products and services. (SunBiz)

AE Multi: Plans second cash call this year, this time to raise funds for new business. AE Multi Holdings is now planning to raise up to RM9.88m for the palm oil mill construction job in Sabah project via a private placement. This marks its second cash call this year. This latest placement to fund its construction business will involve up to 98.8m new shares, to be placed to third party investors to be identified, with the issue price is yet to be fixed. (The Edge)

Nova MSC: Aborts 30% private placement plan. Nova MSC has decided not to proceed with its private placement exercise, which would have seen the issuing up to 30% of its share capital to investors to raise RM35.2m. The decision to abort the fundraising exercise was made after taking into account the current market conditions, Nova MSC said. (The Edge)

DNeX: Partners Thai telecom firm to offer cargo system in Thailand. DNeX is teaming up with Thailand's state-owned CAT Telecom Plc to provide a comprehensive cargo and trade management system in that country. 1Trade Thailand, which is 49% owned by DNeX, has inked a MoU with CAT Telecom, for both companies to implement a Trade Facilitation Platform and Air Community System for the trade and logistics community in Thailand. (The Edge)

MSM: In the red for 3Q. MSM Malaysia swung into the red registering a net loss of RM185.1m for the 3QFY19 against a net profit of RM15.9m in the previous corresponding period, due to lower ASP, higher refining cost, higher finance cost and provision of RM137.3 for the impairment of plant and machinery. MSM said that the average selling price dropped 3% and 4% for domestic and industry segments respectively, as a result of disruptions in the domestic market and a 40% cutback in export volumes due to stiff competition in the export market. (SunBiz)

MBSB: Net profit climbs to RM170m in 3Q. Malaysia Building Society (MBSB)’s net profit for the 3QFY19 increased to RM170.1m from RM121.9m recorded in the same quarter last year. It said the higher profit was due to lower operating cost while better revenue was driven by the subsidiary, MBSB Bank’s corporate financing income, treasury income and retail financing income. MBSB’S wholly owned subsidiary, MBSB Bank is establishing a sukuk programme of up to RM10bn in nominal value under the Shariah principle of Wakalah Bi Al-Istithmar for the issuance of Senior sukuk wakalah and/or Tier-2 sukuk wakalah and/or Additional Tier-1 capital sukuk wakalah. (StarBiz)

Market Update

US markets eased off following reports of the “phase one” trade deal possibly being concluded only in early 2020. The Senate’s passing of a bill supporting Hong Kong protestors complicated matters, with China accusing the US of interfering in its domestic affairs. Separately, investors also digested minutes of the Federal Reserve meeting which showed officials seeing very little reason to cut rates any further. The Dow Jones Industrial Average and S&P 500 slipped 0.4% as the Nasdaq Composite fell 0.5%. European markets ended lower after President Trump threatened to hike tariffs on China if it didn’t agree to a deal. Investors also monitored impeachment proceedings in Washington while the European Central Bank warned about substantial risks to the area’s economy from banks’ reduced profitability. UK’s FTSE 100 slumped 0.8% as Germany’s DAX and France’s CAC 40 fell 0.5% and 0.3%. Asian markets were also lower on Trump’s tariff threats. Japan’s Nikkei 225 fell 0.6% as the country’s exports fell 9.2% in October, below expectations. Anti-money laundering and terrorism financing regulators filed for civil penalty orders against Westpac Bank, dragging Australia’s ASX200 1.4% lower. Elsewhere, both the Shanghai Composite and Hang Seng indices fell 0.8%.

Source: PublicInvest Research - 21 Nov 2019

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Labels: OIB, MYEG, AEM, NOVAMSC, DNEX, MSM, MBSB

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