Global: IMF wants middle-income-nation trust to start with USD30bn. The IMF wants its new trust for middle-income and fragile island economies to start with about USD30bn and be in place by its annual meetings next Oct. The fund plans to build the so-called Resilience and Sustainability Trust up to USD50bn and beyond, adding the aim is to have a design in place by the spring meetings in April, and implementation by the annual gathering in the fall. The new trust would provide long-term funding at low interest rates to help countries weather both the pandemic and climate crises. Funding for the trust would come from rich nations reallocating some of the reserves that they received through the IMF’s record USD650bn issuance in Aug. The assets, known as special drawing rights, already can be re-channeled to low-income countries through the fund’s Poverty Reduction and Growth Trust, which gives interest-free loans. To broaden the group of nations that can benefit from redirected SDRs, the IMF has been working on the second vehicle. (Bloomberg)
EU: Consumers expect inflation to fall back after spike. Eurozone consumers expect prices in the bloc to grow by 3% in the next 12 months before easing back to the ECB’s 2% goal. Euro zone inflation hit 4.1% in Oct and economists have started to warn it could stay above the ECB’s target next year as higher energy costs and supply disruptions feed into wage and price expectations. The ECB’s belief that the current surge in the cost of living is temporary because households are not bracing for it to continue after next year. The median respondent in the ECB’s Consumer Expectations Survey saw annual price growth at 3% for the coming 12 months and at 2% per year for the next three years. By and large households are very aware of the fact that there’s a near-term surge in inflation, so that they’re upgrading their one-year-ahead beliefs. But they’re not changing, at least in terms of the median, the three-year belief. (Reuters)
EU: Economic growth to moderate in 2022. Although the damage caused by the pandemic to the EU appears considerably less than feared, the economic growth is likely to moderate next year as the propelling forces of the re-opening are set to fade out amid loosening supply bottlenecks. The euro area GDP is projected to expand 5% this year, up from the prior outlook of 4.8%. Meanwhile, the outlook for next year was lowered to 4.3% from 4.5%. In 2023, the currency bloc is forecast to expand 2.4%. The EU is also forecast to grow 5% in 2021 and 4.3% in 2022. Growth is projected to ease to 2.5% in 2023. The EU said inflation in the euro area is set to peak at 3.7% in the last quarter of the year and continue recording high prints in the first half of 2022. After reaching 2.4% in 2021, inflation is forecast to decline to 2.2% in 2022 and 1.4% in 2023, as energy prices are set to gradually level out as from the second half of next year and the imbalances between supply and demand solve. The inflation forecast for this year and next year was upgraded notably from 1.9% and 1.4%, respectively. (RTT)
UK: GDP growth eases in 3Q. The UK economy expanded at a slower pace in the 3Q on negative contribution from net trade and the recent supply chain challenges. GDP grew 1.3% sequentially in the 3Q, but weaker than the 5.5% expansion seen in the previous quarter and the economists' forecast of 1.5%. Nonetheless, this was the second consecutive quarterly growth. The largest contributors to the increase were from hospitality, arts and recreation and health following the further easing of restrictions and reopening of the economy. The level of GDP was 2.1% below where it was before the coronavirus pandemic at the end of 2019. On a monthly basis, GDP growth improved to 0.6% from revised 0.2% in Aug. The rate also exceeded the economists' forecast of 0.4%. Industrial output grew 0.8% in the 3Q driven by the 26.3% increase in mining and quarrying. The expansion in mining reflects the reopening of sites that had previously been temporarily closed for planned maintenance. (RTT)
Japan: Producer prices climb 1.2% in Oct. Producer prices in Japan were up 1.2% on month in Oct, accelerating from the 0.3% increase in Sept. On a yearly basis, producer prices spiked 8.0%, up from 6.3% in the previous month. Export prices were up 2.1% on month and 13.7% on year in Oct, while import prices spiked 4.1% on month and 38.0% on year. The foreign exchange rate was up 2.7% on month. (RTT)
South Korea: Export prices rise 1.6% in Oct. Export prices in South Korea were up 1.6% on month in Oct - after rising 1.2% in Sept. On a yearly basis, export prices jumped 25.3%, accelerating from 20.4% in the previous month. Individually, prices for agricultural, forestry and marine products fell 0.4% on month and gained 14.1% on year, while manufactured products gained 1.6% on month and 25.3% on year. Import prices advanced 4.8% on month and 35.8% on year. Individually, prices for raw materials rose 10.1% on month and 88.5% on year, while intermediate goods were up 3.3% on month and 28.4% on year, capital goods rose 0.3% on month and 2.7% on year and consumer goods were up 0.8% on month and 5.0% on year. (RTT)
Australia: Unemployment rate climbs to 5.2% in Oct. The jobless rate in Australia came in at a seasonally adjusted 5.2% in Oct. That was well above expectations for 4.8% and up from 4.6% in Sept. The Australian economy lost 46,300 jobs last month, missing forecasts for an increase of 50,000 following the loss of 138,000 jobs in the previous month. (RTT)
Serba Dinamik (Neutral, TP: RM0.31): Misses coupon payment for USD300m sukuk. Serba Dinamik Holdings, which is currently in a legal stand-off with Bursa Malaysia, KPMG and EY Consulting, has missed the coupon payment due on its USD300m sukuk. The Islamic bond paper is a three-year senior unsecured sukuk with a 6.3% annual profit rate that is payable biannually. The tranche of bonds will mature on May 9 next year. (The Edge)
Comments: This is not deemed as a default yet as the bond covenant includes a 30-day grace period for the coupon payment to be made from the due date. Given this tumbling development amid recent legal issues, we maintain Neutral call for Serba Dinamik.
Dialog (Outperform, TP: RM3.86): Enter SPV for recycled plastic business. Dialog Group entered into a shareholders’ agreement with Diyou PCR SB to form a special purpose vehicle (SPV) to build, own and operate a food grade recycled polyethylene terephthalate (recycled PET) pellets production facility. The facility will use recycled PET flakes as raw material to produce food grade recycled PET pellets for sale. The SPV will sell food grade recycled PET to food & beverages customers. (SunBiz)
AirAsia Group (Neutral, TP: RM0.86): Shareholders approve RM1bn cash call at EGM. Shareholders of AirAsia Group have approved its proposed cash call to raise more than RM1bn to recapitalise the low-cost carrier that has been badly hit by the Covid-19 pandemic. The cash call offers shareholders the right to buy two redeemable convertible unsecured Islamic debt securities (RCUIDS), with one free detachable warrant, for every six AirAsia shares held. Each RCUIDS will be priced at a nominal value of 75 sen apiece. (The Edge)
Iconic Worldwide: To raise RM38.25m from private placement for working capital of glove venture. Iconic Worldwide is planning to raise RM38.25m from a private placement to fund the working capital of its glove and medical face mask venture. This is the group's second private placement in the last 12 months. The group placed out 97.11m new shares in Nov last year, raising RM43.7m then. (The Edge)
Compugates: To raise RM11m via private placement for working capital. Compugates Holdings has proposed to undertake a private placement of up to 20% of its issued shares to raise RM11.08m for working capital. The proposed private placement may involve the issuance of up to 763.94m Compugates shares. (The Edge)
Ajiya: To purchase two plots of land in Negeri Sembilan worth RM34m. Ajiya is buying two parcels of contiguous freehold vacant industrial land in Setul, Negeri Sembilan from Sime Darby (Nilai) SB for a total cash consideration of RM34.48m. (The Edge)
Destini: To partner with Indonesia’s PT Inka for regional expansion. Destini has entered into a heads of agreement (HOA) with Indonesia’s state-owned entity PT Industri Kereta Api (PT Inka) for a collaboration to identify and pursue opportunities in the railway system business sector and infrastructure projects in both countries and the region at large. (SunBiz)
The FBM KLCI might open within a tight range today after Wall Street equities were little changed, with the benchmark S&P 500 doing just enough to snap its two-day losing streak with a gain of less than 0.1%. The technology-heavy Nasdaq Composite regained 0.5% after suffering a 1.7% drop on Wednesday. A combination of strong earnings and encouraging economic data have helped push stock markets to record highs in recent weeks, and they remain close to their peaks despite the recent pullback. Many investors judge stocks to be less affected by inflationary concerns than fixed income-paying debt securities. Europe’s Stoxx 600 share index closed up 0.3%, while London’s FTSE 100 gained 0.6% as exporters were boosted by the weak pound.
Back home, Bursa Malaysia ended lower for the third consecutive day on Thursday, dragged by continued profit taking on selected industrial products and services as well as plantation counters amid weaker sentiments on regional markets. At the closing bell, the benchmark FBM KLCI closed 1.89 points lower at 1,518.85 from Wednesday's close at 1,520.74. In the region, Hong Kong’s Hang Seng index closed up 1% and mainland China’s CSI 300 rose 1.6%, boosted by media reports suggesting the Beijing government was preparing support for the nation’s ailing real estate sector.
Source: PublicInvest Research - 12 Nov 2021
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ICONIC2024-03-26
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DIALOGCreated by PublicInvest | Mar 21, 2024