PublicInvest Research

PublicInvest Research Headlines - 31 Jul 2017

PublicInvest
Publish date: Mon, 31 Jul 2017, 08:58 AM
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

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Economy

US: Putin says must cut 755 Russia staff in sanctions reprisal. Russia has told the US it must cut staff at its embassy and other facilities in Russia by 755 people by Sept. 1 in retaliation for a new sanctions law passed by the US Congress last week, President Vladimir Putin said. “We waited for a rather long time, thinking that things might improve, nourished the hope that the situation would change somehow,” Putin said in an interview with state television broadcast Sunday, his first comments on the issue since Russia announced the move on Friday. “But by all indications, if it does change, it won’t be soon.” (Bloomberg)

EU: ECB should think about when it wants to wind down bond buys, says Lautenschlaeger. The ECB should start thinking about how it wants to return to normal monetary policy and when it wants to wind down it bond purchases, governing council member Sabine Lautenschlaeger said in remarks published on Saturday. "The expansionary monetary policy has both advantages and side effects. As time passes, the positive effects get weaker and the risks increase," she said. "So it's important to prepare for the exit in good time. What's crucial in that context is a stable trend in the rate of inflation towards our objective of just under 2%. It's not quite there yet." (Reuters)

UK: BOE to cut growth forecasts as rate-increase chances diminish. Mark Carney signaled in June that a BOE rate increase may be approaching. Economists doubt it’s here just yet. The governor, overseeing an economy that slowed sharply in the first half, will probably lower growth projections for the next two years when he presents the central bank’s latest forecasts next week, according to economists. The inflation outlook is expected to be unchanged. In addition to a loss of economic momentum, wage growth has disappointed this year, damping speculation that policy makers will raise interest rates any time soon to tackle faster-than-targeted inflation. (Bloomberg)

UK: Trade boss denies free-movement deal as cabinet rift widens. UK Trade Secretary Liam Fox dismissed claims that British ministers have agreed to allow the free movement of people for as long as three years after leaving the EU, exposing fresh rifts in the government’s Brexit strategy. Continuing free movement after 2019 would “not keep faith” with voters’ decision to leave the EU, he said in an interview with the Sunday Times newspaper. “I have not been involved in any discussion on that,” he said. Fox’s comments add weight to concern about the inconsistencies among senior government figures in the Brexit process. (Bloomberg)

China: Winners and laggards seen in regional growth competition. Even as China continues to anchor global growth, a look under the hood reveals a divergence in regional economies that the nation’s policy makers should be wary about. Eight provincial-level regions reported slower growth in the first half of this year from the result in the first quarter, while 12 showed a pick up. Twenty-seven of 31 had reported as of late Friday, with expansion unchanged in seven regions and the nation as a whole. With GDP figures seen as a performance report for local officials, competition has traditionally been fierce between provinces, with each trying to lure businesses and lobby for infrastructure projects. (Bloomberg)

Japan: Tight labor market has problem sectors that crimp wages. Economic theory suggests that the tightest labor market in more than 40 forty years ought to be more than enough to push wages and inflation higher in Japan. Reality is proving different. A sector-by-sector look at the job-to-applicant ratio released on Friday shows pockets of significant looseness, especially in areas like clerical work. It also indicates that many workers are unwilling or unable to switch occupations to areas where demand is highest. The gap between the different categories in the chart remains fairly even over the past five years. (Bloomberg)

India: Patel seen seizing last chance to spur growth in rate call. A year ago, India had Asia’s fastest growth and inflation. Then Prime Minister Narendra Modi took away most of its money and both indicators slowed, bolstering expectations the central bank will cut borrowing costs for a final time this cycle as pressure mounts for a stimulus. The Reserve Bank of India’s six-member monetary policy committee will lower the repurchase rate to 6% from 6.25%, according to 39 of 55 economists in a Bloomberg survey before Wednesday’s announcement. The rest see no change. (Bloomberg)

Markets

Parkson (Neutral, TP: RM0.75): Chinese units win bid to unfreeze bank deposits. Parkson Holdings said its 54.7%-owned Hong Kong unit Parkson Retail Group Ltd (PRGL) has won a bid to unfreeze the bank deposits of two subsidiaries that are embroiled in a lawsuit in China. Parkson said the court had dismissed the application of China Construction Bank Corp (Changshou branch) to freeze the subsidiaries' deposits, together with Changshou Hang Lung Properties Co Ltd and three others, that totalled CNY212.41m (about RM134.87m). (The Edge)

Berjaya Assets: Increases stake in 7-Eleven to 3.95%. Berjaya Assets has acquired an additional 1.3% equity interest in 7-Eleven Malaysia Holdings for RM18m. Berjaya Assets said its wholly-owned unit Sublime Cartel SB acquired the stake, comprising 14.6m shares, at an average price of RM1.23 per share in the open market between June 8 and July 26. Following the acquisition, Berjaya Assets' stake in 7-Eleven amounts to 3.95% or 43.9m shares. (The Edge)

Tropicana Corp: Expects RM2bn sales from Tropicana Urban Homes. Tropicana Corp expects Tropicana Urban Homes, a new collection of affordable condominiums, to contribute RM2bn sales in the next two years. Under the Tropicana Urban Homes collection, first up will be the 1,025 units in Tropicana Heights, Kajang and the 3,000 units in Tropicana Aman, Kota Kemuning. The GDVs for Tropicana Urban Homes in Tropicana Heights and Tropicana Aman are RM423m and RM1.3bn, respectively, group CEO Datuk Yau Kok Seng said. (The Edge)

Fajarbaru: Wins RM101m contract. Fajarbaru Builder Group (FBG) has secured a RM101.3m contract from TYL Land & Development SB to carry out building and related external works for a commercial development in Semenyih, Selangor. The construction, property development and timber group also announced yesterday it had bagged a RM705,000 contract from Malaysia Airports (Sepang) SB for the proposed apron line marking, access road connection and associated works at KLIA Air Cargo Terminal 1 (KACT 1) in Sepang. (StarBiz)

Pos Malaysia: Partners Singapore firm for warehouse management technology. Pos Malaysia has partnered Singapore based e-commerce logistics and selling platform Anchanto to strengthen its e-commerce warehousing facilities. Under the partnership, Pos Malaysia will use Anchanto's warehouse management technology to expand its ability in providing a comprehensive e-fulfilment service. Group CEO Datuk Mohd Shukrie Mohd Salleh said the initiative is expected to generate a new business stream in e-commerce fulfilment business. (The Edge)

EcoFirst: 4Q earnings soar on sales from Ipoh, Ulu Kelang projects. EcoFirst Consolidated posted a surprise surge in 4QFY17 earnings on a strong note after three successive quarters of YoY profit contraction. The property developer said earnings surged to RM7.8m in 4Q from RM608,000 a year earlier on 50% higher revenue of RM65.6m. The final-quarter effort pushed up its FY17 earnings to RM15.6m, but the figure fell marginally short of the FY16 earnings level of RM16.2m. Revenue for the year, however, grew 5% to RM127.2m. (StarBiz)

Market Update

The FBM KLCI might open flat today after US stocks and the dollar went into last weekend on a cautious note as participants focused on the latest retreat for technology stocks — alongside disappointing results from Amazon — weak data on US wage growth, and the latest setback to Republican plans to repeal Obamacare. But there was no stopping oil prices as Brent climbed above US$52 a barrel to its highest level in two months following further signs this week that a global glut of crude might be easing. For many in the markets the focus remained on technology stocks following a steep and sudden sell-off in the sector last Thursday that caught many by surprise. The Dow Jones Industrial Average wrapped up at an all-time closing high Friday, ending the week up 1.2% higher to 21,830.31. Meanwhile, the S&P 500 index ended down 0.1% at 2,472.10 and the tech-laden Nasdaq Composite Index fell 0.1% at 6,374.68. Across the Atlantic, European stocks on Friday logged their lowest close in three months, flattened partially by a decline in shares of UBS following the Swiss bank’s earnings. Performance-wise, France’s CAC 40 index ended down 1.1% to 5,131.39, Germany’s DAX 30 ended off its worst levels of the session, down by 0.4% to 12,126.70 and the UK’s FTSE 100 gave up 1% at 7,368.37.

Back home, the FBM KLCI index lost 2.99 points or 0.17% to 1,767.08 points. Trading volume increased to 1.64bn worth RM2.20bn. Market breadth was negative with 338 gainers as compared to 492 losers. The regional markets finished mixed with the Shanghai Composite gained 0.11%, while the Nikkei 225 led the Hang Seng lower. They fell 0.60% and 0.56% respectively. Elsewhere, the Australia’s S&P/ASX 200 lost 1.4%.

Source: PublicInvest Research - 31 Jul 2017

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