PublicInvest Research

PublicInvest Research Headlines - 5 Jul 2021

PublicInvest
Publish date: Mon, 05 Jul 2021, 09:34 AM
An official blog in I3investor to publish research reports provided by PublicInvest Research team.

All materials published here are prepared by Public Investment Bank Berhad. For latest offers on Public Invest trading products and news, please refer to: https://www.publicinvestbank.com.my/pbswecos/default.asp

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Economy

US: Adds 850,000 jobs in June, better than expected. Job growth leaped higher in June as businesses looked to keep up with a rapidly recovering US economy, the Labor Department reported. Nonfarm payrolls increased 850,000 for the month, compared with the Dow Jones estimate of 706,000 and better than the upwardly revised 583,000 in May. The unemployment rate, however, rose to 5.9% against the 5.6% expectation. The jobless rate increase came even though the labor force participation rate was unchanged at 61.6%. A separate figure that accounts for discouraged workers and those holding part-time jobs for economic reasons fell sharply to 9.8%, with the 0.4%age point decline putting the so-called real unemployment rate below 10% for the first time since March 2020. (CNBC)

US: Trade deficit widens in May amid jump in imports. With imports increasing by much more than exports, the Commerce Department released a report showing the US trade deficit widened in the month of May. The Commerce Department said the trade deficit widened to USD71.2bn in May from a revised USD69.1bn in April. Economists had expected the trade deficit to widen USD71.4bn from the USD68.9bn originally reported for the previous month. The wider trade deficit came as the value of imports jumped by 1.3% to USD277.3bn in May from USD273.8bn in April. A sharp increase in import of industrial supplies and materials helped offset a notable decrease in imports of capital goods such as computers. Meanwhile, the report showed the value of exports rose by 0.6% to USD206.0bn in May from USD204.7bn in April. (RTT)

US: Factory orders rebound strongly in May. New orders for USmade goods rebounded sharply in May, while business spending on equipment remained solid, despite bottlenecks in the supply chain. The Commerce Department said that factory orders surged 1.7% in May after slipping 0.1% in April. Economists polled by Reuters had forecast factory orders rebounding 1.6%. Orders increased 17.2% on a YoY basis. Manufacturing accounts for 11.9% of the US economy. Massive fiscal stimulus boosted demand for long-lasting manufactured goods during the COVID-19 pandemic, with millions of American working from home and learning remotely. Factories are struggling to keep up as the pandemic fractured supply chains and disrupted the global shipping industry. The Institute for Supply Management reported on Thursday that manufacturing activity grew moderately in June. (Reuters)

EU: ECB's Lagarde says euro zone recovery still fragile. The euro zone economy is beginning to rebound from a pandemic-induced slump but the recovery remains fragile, the ECB’s President Christine Lagarde said in an interview published. ECB policymakers have started to debate when they should dial back their emergency bond purchases, which have pumped over a trillion euros into the financial system since the start of the pandemic. Lagarde signalled she was not ready to wind down the Pandemic Emergency Purchase Programme (PEPP) just yet. "We agreed to maintain (PEPP) until at least March 2022, and in any case, until we judge that the coronavirus crisis phase is over," she told local French daily La Provence. "While the recovery is now beginning to get under way, it remains fragile." (Reuters)

EU: Eurozone producer price inflation accelerates in May. Eurozone producer prices increased at a faster pace in May driven by a surge in energy cost, data from Eurostat showed. Industrial producer prices were up 9.6% YoY, following a 7.6% rise in April. Economists had forecast an annual increase of 9.5%. Excluding energy, producer price inflation advanced to 4.9% from 3.6% in the previous month. Energy prices grew sharply by 25.1% annually in May. Intermediate goods prices rose 9.2% and capital goods prices were up 1.8%. Durable consumer goods and non-durable consumer goods prices moved up 2% and 1.9%, respectively. (RTT)

EU: Spain unemployment logs record fall in June. Spain's unemployment logged its biggest fall on record in June, data from labor ministry showed. The number of registered unemployment decreased by 166,911 in June after falling 129,378 in May. This was the fourth consecutive decrease. Compared to June 2020, unemployment decreased by 248,544 people or 6.43% in June. By economic sectors, registered unemployment decreased in services by 131,217 and by 12,698 in industry. In construction, unemployment dropped 11,763 people, while unemployment rose 1,882 in the farm sector. Unemployment among those under the age of 25 decreased by 23,557 or 7.3% compared to the previous month. (RTT)

China: Chinese vehicle exports grow robustly amid global chip shortage - Global Times. The chip supply shortage that has been roiling the global auto sector seems to have provided an opportunity for exports of domestic-branded vehicles to grow, thanks to their flexible sourcing ability and stable supply chains, a senior analyst told the Global Times. China Passenger Car Association (CPCA) data showed that China exported about 760,000 cars in the first five months of the year, up 103% YoY. The main export destinations included Chile, Saudi Arabia, Russia and Australia. New-energy vehicle (NEV) exports surged, mainly to Western Europe. In May, exports stood at almost 20,000 units, driven by Tesla's exports from its Gigafactory in Shanghai. (The Edge)

South Korea: Inflation slows in June. South Korea's consumer price inflation slowed in June but remained above the central bank's target for the third straight month, data from Statistics Korea showed. Consumer prices grew 2.4% YoY in June, slower than the 2.6% increase seen in May and the economists' forecast of 2.5%. Nonetheless, the rate remained above the target of 2% since April. The 2.6% inflation rate posted in May was the highest since early 2012. On a monthly basis, consumer prices were down 0.1%, offsetting May's 0.1% rise. (RTT)

Markets

Serba Dinamik (Neutral, TP: RM0.44): Appoints EY as independent reviewer. Serba Dinamik Holdings has confirmed the appointment of Ernst & Young Consulting SB (EY) as the special independent reviewer to assess the accuracy and veracity of the matters highlighted by the company's former external auditors KPMG PLT. The appointment was also made under the directive from Bursa Malaysia. It would also appoint new independent non-executive directors to replace the resigned directors as soon as possible. (BTimes)

Boustead: Joins the bid for Islamic digital banking licence. Boustead Holdings has entered into a consortium with Angkatan Koperasi Kebangsaan Malaysia (Angkasa) and an independent insurance brokerage company to jointly submit an application for the Islamic Digital Banking Licence. The three parties will collaborate under MyAngkasa Digital Services to apply for the Islamic digital banking licence from BNM. (The Edge)

Metronic: Targets over RM1.25bn revenue over 25 years from solar power venture with Earthtech. Metronic Global has formed a JV with Earthtech Energy SB to seek opportunities in the solar power sector. Earthtech is a member of the multinational group Dehui Group, a comprehensive green energy group which operates globally including China, Vietnam, Germany, the United States (US) and Malaysia. (BTimes)

GUH: Sells stake in Straits International Education Group to Tenby Educare. GUH Holdings and fellow shareholders of Straits International Education Group SB are disposing of their stakes in the education group to Tenby Educare SB for RM52.5m. The sale of the stake will enable the group to deconsolidate a non-core business entity and focus its resources into other core businesses. (The Edge)

MAG: Gets shareholders nod to buy NCube, eyes top 3 aquaculture producers. MAG Holdings has secured its shareholders’ approval to acquire a 100% equity interest in North Cube SB (NCUBE) for RM200m. The group, which aspires to be among Malaysia’s top three aquaculture producers, said NCUBE's prawn aquaculture farming comprised 133 cultivation ponds, situated in Tawau, Sabah. (SunBiz)

China Automobile: Takes another stab at PN17 exit. China Automobile Parts Holdings is making another attempt at regularising its PN17 condition by inking a memorandum of understanding with Lee Seng Guan, Tan Gim Yiam, Lee Hay Chiang and Lee Peng Quan for the acquisition of Singaporebased Tenda Construction Equipment Pte Ltd and Tenda Equipment & Services Pte Ltd. (The Edge)

Rubber Gloves (Neutral): Margma pleads with government to allow glove makers in Selangor to operate. The Malaysian Rubber Gloves Manufacturers Association (Margma) has called for an urgent meeting with the Ministry of International Trade and Industry to resolve issues surrounding the enhanced MCO in Selangor as 58% of all gloves produced in Malaysia come from glove manufacturers in the state. The medical examination gloves, like face masks, are part of essential personal protection equipment that are required by countries around the world during the current battle against the Covid-19 pandemic. (SunBiz)

MARKET UPDATE

The FBM KLCI might open higher today after US stocks closed at new all-time highs on Friday after jobs data for June came in better than expected, signalling that the world’s largest economy was emerging from the pandemic at a robust pace. The US labour market added 850,000 positions last month, beating economists’ expectations for 720,000 new jobs and substantially above the 583,000 revised figure for May. Wall Street’s broad S&P 500 and technology-heavy Nasdaq Composite built on records hit earlier this week, with both benchmarks closing up 0.8%. The advance marked the seventh straight trading day the S&P 500 has closed at a record, the longest such streak since 1997. The region-wide Stoxx Europe 600 and Frankfurt’s Xetra both closed up 0.3%, while London’s FTSE 100 was flat.

Back home, the FBM KLCI lost ground and fell into the red as the implementation of a two-week Enhanced Movement Control Order (EMCO) over most parts of Selangor and 15 localities in Kuala Lumpur soured market sentiment. At closing, the benchmark index pared some losses and closed at 1,533.35, still down 0.06% or 0.88 of a point. Elsewhere in the region, Japan’s Nikkei 225 increased 0.27%, while Hong Kong’s Hang Seng Index was down 1.8%. China’s Shanghai Composite Index fell 1.95% and South Korea's KOSPI slid 0.01%.

Source: PublicInvest Research - 5 Jul 2021

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