Economy

Global: Tax burden on wages rose in most OECD countries in 2017. Workers' tax burden crept higher in most OECD countries last year, averaging slightly more than a quarter of gross wages, the Organisation for Economic Cooperation and Development said on Thursday. The average masked wide divergences with rates ranging from 40.5% in Belgium and 39.9% in Germany to 7% in Chile and 14.5% in Korea, the OECD said. The net personal average tax rate, income tax and workers' social security contributions minus family benefits received, as a percent of gross wages, rose in 20 out of the OECD's 35 member countries mainly due to higher wages reducing the impact of tax-free allowances and credits. (Reuters)

US: Business spending on equipment cooling; labor market strong. New orders for key US-made capital goods fell in March, weighed down by the biggest decline in demand for machinery in nearly two years, and a drop in shipments cemented expectations that business spending on equipment slowed in the 1Q. But other data on Thursday showed the economy remains on a strong footing. The number of Americans filing for unemployment benefits fell to the lowest level in more than 48 years last week and the goods trade deficit narrowed sharply in March amid strong export growth. (Reuters)

US: Consumer comfort eases from 17-year high as gas prices rise. US consumer sentiment eased last week from a 17-year high as Americans felt the pinch of higher gasoline prices, the Bloomberg Consumer Comfort Index showed Thursday. Weekly comfort index cooled to 57.5 from 58.1. Personal finances measure dropped to 64.3 from 65.9, the biggest one-week decline since Oct. Retail gasoline prices at their highest since mid-2015 are hitting Americans in their pocketbooks, helping explain the more subdued personal finances measure. (Bloomberg)

EU: Starts monitoring aluminum imports after US tariffs. The European Union has started monitoring imports of aluminum to determine whether US tariffs have led to a surge in shipments of the metal into Europe, the EU official journal said on Thursday. Data collected on the quantity and value of incoming aluminum products will help the bloc decide whether to take measures to limit imports. The Commission, which oversees trade policy in the 28-nation EU, believes that the 10% tariff introduced by the US has increased the risk that more aluminum will be diverted to Europe at depressed prices. The EU official journal said that aluminum product imports increased by 28% between 2013 and 2017, while prices of such imports fell by 5%. (Reuters)

Japan: BOJ set to keep policy steady, maintain price forecasts. Japan’s central bank is set to keep monetary policy steady on Friday and project inflation to hit its target next fiscal year, signaling that its next move could be to dial back its huge stimulus albeit at a much slower pace than its global peers. Two new deputy governors - career central banker Masayoshi Amamiya and former academic Masazumi Wakatabe who is known as a vocal advocate of aggressive easing - make their debut at the two-day rate review ending on Friday. While many analysts do not expect the newcomers to rock the boat at their debut rate review, some say Wakatabe could widen a rift in the board between advocates of big easing and those wary of the rising cost of prolonged easing. (Reuters)

Markets

Ireka Corp: Gets RM92.0m job from Pantai Hospital Ayer Keroh. Ireka Corporation's unit has secured a RM92.0m contract from Pantai Hospital Ayer Keroh, Melaka to build a one-storey basement and eight storey hospital. Ireka said its unit Ireka Engineering & Construction SB had accepted the letter of award for the new building and also refurbishment of an existing hospital building including the mechanical and electrical rooms. It added the contract period was for 24 months and to be completed on April 15, 2020. (StarBiz)

PPB: To acquire LTAT's 16.8% stake in Hillcrest for RM59.1m. PPB Group is acquiring the Armed Forces Fund Board's (LTAT's) 16.8% stake in Hillcrest Gardens SB for RM59.1m. Hillcrest's audited consolidated net assets as at Dec 31, 2017 stood at RM199.6m, including 147.78 acres of freehold land in Taman Seri Gombak and Taman Puchong Utama, PBB said. The purchase consideration represents a premium of 76% over 16.8% of audited consolidated net assets, PBB said. (The Edge)

Comintel Corp: Expects first waste-to-energy plant to contribute to earnings by June. Comintel Corp (Comcorp) said it expects its first waste-to-energy (WTE) plant at Kuang, Rawang to commence recurring revenue and profit generation by June upon the issuance of the formal commencement operation date (COD) certificate from the Sustainable Energy Development Authority (Seda). Comcorp said following this, it intends to replicate a 2-megawatt (MW) WTE plant in Ampang Jajar, Penang. (The Edge)

Nexgram: Placement shares fixed at 5.9 sen, below closing price of 6.5 sen. Nexgram Holdings has fixed the issue price of its first tranche of placement shares at 5.9 sen per share, which is at a 9.2% discount to its closing price of 6.5 sen yesterday. The group said the issue price also represents a discount of 0.57 sen or 8.81%, compared with the five-day weighted average market price of Nexgram from April 19 to April 25 of 6.47 sen per share. (The Edge)

Poh Huat: To get RM4.3m compensation for fire at Muar plant. Poh Huat Resources Holdings said that compensation for the losses arising from the fire which broke out at one of its factories in Muar, Johor in Jan, amounts to RM4.3m, after due assessment by and negotiation with the insurers. Poh Huat said the total net book value of the assets affected by the fire, comprising part of the factory building, machinery and inventories, has been ascertained to be RM3.0m. (The Edge)

OCR: Disposes loss-making subsidiary for RM4.4m. OCR Group has entered into a share sale agreement with Singaporean Choo Peng Hung to dispose its entire equity stake of 100% in Takaso Industries Pte Ltd (TIPL) for RM4.4m. The group said there is also an owing amount of RM2.1m due by TIPL to OCR, bringing the amount repayable to OCR to RM6.5m, which shall be paid in instalments by the purchaser. (The Edge)

Property (Neutral): High-end condo sales expected to slow this year. With the current freeze on new approvals for luxury residential properties, developers are focusing on launching more affordable units and clearing completed unsold stock, said property consultancies Edmund Tie & Co (SEA) Pte Ltd and Nawawi Tie Leung Property Consultants SB. Thus, sales and new launches of high-end strata residential projects are expected to be subdued in 2018, said both firms. (The Edge)

Market Update

US markets ended the day higher, lifted by the technology sector which saw earnings from the likes of Facebook and Advanced Micro Devices beating estimates. Amazon Inc’s share price also surged in extended trading after reporting robust profits in the first quarter and forecasted more of the same in subsequent quarters. Rate-sensitive shares advanced meanwhile, as the 10-year yield fell for the first time in 9 days. Both the Dow Jones Industrial Average and S&P 500 gained 1.0% while the tech-heavy Nasdaq Composite jumped 1.6%. European equities were mostly higher as investors monitored a fresh batch of corporate earnings. Focus on the day was the European Central Bank however, voting to keep its benchmark interest rates unchanged while also saying growth in the euro area is expected to remain solid, albeit with some moderation. France’s CAC 40 led gainers amongst major indices, up 0.7%. UK’s FTSE 100 and Germany’s DAX both rose 0.6% as Spain’s IBEX 35 was just a notch behind with a 0.5% gain. Asian stocks were mostly lower earlier in the day with investors struggling to grapple with fluctuating (but gradually rising) bond yields and global equities’ ability to cope with higher rates as the earnings season ramps up. The Shanghai Composite and Hang Seng indices slumped 1.3% and 1.1% while benchmarks in Thailand and Indonesia fell 0.4% and 2.8% respectively. The FBM KLCI bucked regional trends however, with a late buying spurt seeing the benchmark ending fractionally higher (+0.34pts).

Ireka Corporation announced the securing of an RM91.9m contract from Pantai Hospital Ayer Keroh for the proposed construction of an additional 1-storey basement and 8-storey hospital and refurbishment of the existing hospital building. PPB Group is acquiring Lembaga Angkatan Tentera’s (LTAT) 16.8% stake in Hillcrest Gardens Sdn Bhd for RM59.1mn as part of its new initiative to expand its investments in property-based activities and enable it to continue diversifying its source of earnings. Amongst assets owned by Hillcrest are 147.78 acres of freehold land in Taman Seri Gombak and Taman Puchong Utama.

Source: PublicInvest Research - 27 Apr 2018