PublicInvest Research

PublicInvest Research Headlines - 4 Aug 2021

Publish date: Wed, 04 Aug 2021, 09:44 AM
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An official blog in I3investor to publish research reports provided by PublicInvest Research team.

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US: Solid US factory orders, business spending on equipment point to enduring manufacturing strength . New orders for US made goods increased more than expected in June, while business spending on equipment was solid, pointing to sustained strength in manufacturing even as spending is shifting away from goods to services. The Commerce Department said that factory orders rose 1.5% in June after advancing 2.3% in May. Economists polled by Reuters had forecast factory orders increasing 1.0%. Orders soared 18.4% on a YoY basis. Demand pivoted towards goods during the COVID-19 pandemic as millions of Americans were cooped up at home, boosting manufacturing, which accounts for 11.9% of the US economy. But the surge in demand is straining the supply chain. “We expect a solid growth path for the factory data through 2021, capped by capacity constraints and supply chain problems,” said Mike Englund, chief economist at Action Economics in Boulder, Colorado. (Reuters)

US: Hiring may have slowed in July amid COVID surge –data . High-frequency data indicate US hiring slowed in July - not held steady as widely expected - with particular softness among states that ended federal unemployment benefits and areas where the COVID-19 Delta variant is raging. Payroll firm UKG said growth in employees across a wide set of industries grew 1.1% from mid-June to mid-July, coinciding with the period when the federal government employment survey is conducted. That was about half the 2% rate of growth seen  between May and June, ahead of a blockbuster June national jobs report showing 850,000 additional positions added to payrolls. Data on small business hiring from time management company Homebase also fell from mid-June to mid-July. Notably, a UKG analysis of data spanning the period when 26 states began halting federal unemployment benefits showed that growth in work shifts in those states was half of what it was elsewhere - 2.2% from May through July versus 4.1%. (Reuters)

EU: Eurozone producer price inflation accelerates in June . Eurozone producer price inflation accelerated in June on higher energy prices, data from Eurostat showed. Producer prices increased 10.2% on a yearly basis in June, faster than the 9.6% growth posted in May but slightly slower than the economists' forecast of 10.3%. Excluding energy, producer price inflation growth climbed to 5.6% from 4.9% in the previous month. Among components of producer prices, energy prices registered the biggest annual growth of 25.4% annually in June, followed by a 10.6% rise in intermediate goods prices. Prices of durable consumer goods and non-durable consumer goods grew 2.3%, each. At the same time, capital goods prices were up 2%. (RTT)

EU: Spain unemployment declines at record pace in July . Spain unemployment declined at a record pace in July as the labor market started to recover from the impact of the coronavirus pandemic, data from the labor ministry showed. Exceeding the record falls of the previous two months, unemployment decreased sharply by 197,841 in July. Unemployment was down 166,911 in June and 129,378 in May. In seasonally adjusted terms, registered unemployment fell by 191,756 in July. (RTT)

Australia: Central bank maintains monetary policy . Australia central bank left its key interest rate and the yield target for government bonds unchanged, as widely expected. The policy board of the Reserve Bank of Australia headed by Governor Philip Lowe decided to leave its cash rate unchanged at a record low of 0.10%. The board maintained the target of 10 bps for the April 2024 Australian Government bond. The board also decided to continue to purchase government securities at the rate of AUD5bn a week until early Sept and then AUD4bn a week until at least mid Nov. The bank reiterated that it will not increase the cash rate until actual inflation is sustainably within the 2 to 3% target range. The central scenario for the economy is that this condition will not be met before 2024. (RTT)

Japan: Tokyo inflation sinks 0.1% on year in July . Consumer prices in the Tokyo region were down 0.1% on year in July, the Ministry of Internal Affairs and communications said. That was in line with expectations following the flat reading in June. Core CPI, which excludes volatile food prices, was up an annual 0.1% - exceeding expectations for a flat reading, which would have been unchanged. On a seasonally adjusted monthly basis, overall inflation was up 0.1% and core CPI rose 0.3%. (RTT)

South Korea: Inflation climbs 0.2% in July . Consumer prices in South Korea were up a seasonally adjusted 0.2% on month in July, Statistics Korea said. That exceeded expectations for a flat reading following the 0.1% decline in June. On a yearly basis, inflation climbed 2.6% - again beating forecasts for 2.4%, which would have been unchanged. Core CPI was up 0.4% on month following the flat reading in June; it was steady at 1.2% on year. (RTT)


HPP Holdings: Shuts Melaka factories, office for two weeks after eight Covid-19 cases detected. HPP Holdings is temporarily ceasing operations for two weeks from today until Aug 17 to carry out deep sanitisation and disinfection work at its factories and office after detecting eight Covid-19 cases among its factory employees. The Covid-19 cases were found at four of its manufacturing facilities located at Taman Teknologi Cheng in Melaka. Subject to further directives from the ministry, the affected factories are expected to resume operations as soon as the necessary permissions from the relevant authorities are obtained. (The Edge)

HB Global: Wins contract from Axiata subsidiary. HB Global Ltd said its recently acquired telecommunication unit has secured a contract from Axiata Group’s subsidiary to provide full turnkey fibre implementation work. Forward Resources and Construction SB (FRC), in which it acquired a 60% stake in April, was awarded the RM10m contract by wireless telecommunications services provider On Site Services SB. The commencement date of the one-year contract will be decided later. FRC intends to fund the project via internally generated funds or borrowings. The contract is expected to contribute positively to the earnings and net assets. (The Edge)

Kanger: Confident of returning to the black in FY22. Kanger International is confident of returning to the black in the FY22, driven by the group’s new construction division. Over the past one year, Kanger has embarked on several exercises to build a resilient business that focuses on growth and sustainability. It expanded from the manufacturing of bamboo flooring materials to the construction segment. The group has secured construction projects which give a total order book of RM1bn. It will expand its construction business by undertaking building construction, civil engineering, and project management contracts. (SunBiz)

Berjaya Land, Berjaya Food: BLand sells 6.7m more BFood shares for RM12.55m. Berjaya Land (BLand) has disposed of an aggregate of 6.7m shares representing a 1.88% stake in Berjaya Food (BFood). The disposals were carried out via direct business transactions for RM12.55m at an average price of RM1.87 per share. Post disposals, BLand now holds a total of 4.85m BFood shares, representing a stake of 1.36%. The cash proceeds from the disposals will be used to repay bank borrowings and for working capital, noting that the disposals enabled the group to cash out part of its investment in BFood. (The Edge)

Dufu Technology: 2Q net profit rises 61% to RM16m, pays two sen dividend. Dufu Technology Corp net profit jumped 60.86% to RM15.92m for the 2Q ended June 30, 2021, from RM9.9m a year ago, on strong hard disk drives components demand. Quarterly revenue rose 20.18% to RM88.22m, from RM73.41m previously, mainly due to an increase in volume loading by customers related to HDD components. Dufu also attributed the strong double-digit growth to the enormous demand for sheet metal welded assembly components and parts, and the buoyant orders coming from control and sensors in the non-HDD segment. (The Edge)

Market Update

The FBM KLCI might open higher today after stocks on Wall Street rose on Tuesday as strong company earnings and economic data offset worries about the spread of the Delta coronavirus variant and fears over another regulatory clampdown from Beijing. The blue-chip S&P 500 closed 0.8% higher in New York, its best performance in more than a week. The tech-focused Nasdaq Composite climbed 0.6%. Investor sentiment was lifted by June data for US factory orders, which typically feed into estimates of gross domestic product. New orders for goods rose 1.5% on the month before, well above the consensus estimate of 1%. In Europe, another wave of strong earnings results helped propel the continent’s stocks to a fresh record. The region-wide Stoxx 600 index rose 0.2% after Paris-based bank Société Générale and London-listed lender Standard Chartered reported profits that beat analysts’ expectations. London’s energy-leaning FTSE 100 index rose 0.4%, aided by oil major BP, which rallied after announcing a $1.4bn share buyback programme and an increase in its dividend.

Back home, the FBM KLCI closed up 7.26 points or 0.49% to finish at its intraday high at 1,500.26, helped among others by late bargain hunting in plantation and banking shares, while major Asian equity indices ended lower. In China, the Shanghai Stock Exchange Composite closed 0.47% lower at 3,447.99, while Hong Kong’s Hang Seng settled down 0.16% at 26,194.82. Elsewhere, Japan’s Nikkei 225 finished 0.5% lower at 27,641.83.

Source: PublicInvest Research - 4 Aug 2021

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