PublicInvest Research

PublicInvest Research Headlines - 6 May 2022

PublicInvest
Publish date: Fri, 06 May 2022, 09:19 AM
PublicInvest
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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: Weekly jobless claims rise, productivity plunges at fastest pace in 74 years. New claims for US unemployment benefits increased to a more than two-month high last week, but remained at a level consistent with tightening labour market conditions and further wage gains that could keep inflation hot for a while. The report from the Labour Department also showed the number of Americans collecting state unemployment checks was the smallest in more than 52 years towards the end of April. Economists brushed off last week’s increase in initial claims, arguing that the data are volatile around moving holidays like Easter, Passover and school spring breaks. Initial claims for state unemployment benefits rose 19,000 to a seasonally adjusted 200,000 for the week ended April 30, the highest since mid-Feb. (Reuters)

EU: Germany wants to attract chip makers with EUR14bn state aid. Germany’s government wants to attract chip makers with EUR14bn (USD14.71bn) in support, Economy Minister Robert Habeck said, adding that the lack of semiconductors used in everything from smartphones to cars was a massive problem. A global chip shortage and supply chain bottlenecks have created havoc for car makers, healthcare providers, telecoms operators and others. In February, the European Commission set out plans to encourage chip manufacturing in the European Union due to a boom in demand, with proposed new legislation to ease state aid rules for chip factories. In March, US chipmaker Intel Corp announced it had picked the German town of Magdeburg as the site for a huge new EUR17bn euro chipmaking complex. (Reuters)

China: Services activity falls at second sharpest rate on record - Caixin PMI. China's services sector activity contracted at the second-steepest rate on record in April, as tighter COVID curbs halted the industry, leading to sharper reductions in new business and employment, a private-sector survey showed. The Caixin services purchasing managers' index (PMI) fell to 36.2 in April, the second-lowest since the survey begun in Nov 2005 and down from 42 in March. The index hit 26.5 in Feb 2020 during the onset of the pandemic, representing the biggest contraction in activity on record. The pessimistic findings from the survey, which focuses more on small firms in coastal regions, are in line with the government's official PMI. (Reuters)

Hong Kong: Retail sales fall for second month. Hong Kong's retail sales declined for the second straight month in March, figures from the Census and Statistics Department showed. The retail sales volume decreased 16.8% YoY in March, following a 17.6% fall in Feb. The value of retail sales declined 13.8% annually in March, following a 14.6% drop in the preceding month. Sales value of clothing, footwear and allied products declined 41.5% annually in March. Sales of jewellery, watches and clocks, and valuable gifts decreased 36.8% and those of fuels fell 15.7%. Sales for department stores and consumer durable goods decreased by 16.9% and 9.8%, respectively. (RTT)

India: Services growth strongest since Nov 2021. India's service sector growth expanded at the strongest rate since Nov last year amid strong growth in output and demand, while rising inflationary pressures damped business confidence. The services Purchasing Managers' Index rose to 57.9 in April from 53.6 in March, survey results from S&P Global showed on Wednesday. Any score above 50.0 indicates expansion in the sector. New business inflows and output increased at the strongest pace since November last year due to higher bookings after the easing of Covid-19 pandemic related restrictions and favourable demand conditions. (RTT)

Philippine: April inflation surges above 2022 target. Philippine inflation in April climbed to the highest level since December 2018, increasing pressure on the central bank to tighten monetary policy, at a time when an economic recovery is showing signs of being on a firmer footing. The consumer price index rose 4.9% last month from a year earlier, stronger than the median forecast for a 4.6% increase in a Reuters poll and near the top end of the central bank’s projected range of 4.2% to 5.0% for the month. The surge was mainly attributed to increases in the heavily weighted food index and in energy and water utilities. (Reuters)

Singapore: Retail sales rebound strongly. Singapore's retail sales recovered strongly in April as most industries marked sharp growth, especially in the computer and telecommunications equipment segment, data from the Department of Statistics showed. Retail sales climbed 8.7% YoY in March, in contrast to a 3.5% fall in Feb. Singapore lifted Covid-19 restrictions in April and this is likely to boost sales in coming months. Online retail sales accounted for 14.9% of total sales value in March, which was higher than the 13.5% recorded in Feb. The statistical office attributed the higher proportion to more online sales recorded during promotional events in March 2022. (RTT)

Markets

Petronas Dagangan: Petronas Dagangan and PETROS complete business transfer, operationalise Sarawak LPG. Petronas Dagangan (PDB) and Petroleum Sarawak Bhd (PETROS) announced the completion of the business transfer and share subscription agreement for PETROSNiaga. This conclusion marks the operationalisation of the partnership for the liquefied petroleum gas (LPG) business in Sarawak. (The Edge)

Cahya Mata Sarawak: To dispose of entire stakes in Sarawak alloy smelter, OM Samalaju to OM Holdings for RM521m. Diversified group Cahya Mata Sarawak (CMS) is selling its entire 25% stakes in OM Materials (Sarawak) (OM Sarawak) and OM Materials (Samalaju) (OM Samalaju) to OM Materials (S) Pte Ltd (OMS) for a combined USD120m (RM521m) cash. Currently, the remaining 75% stakes in both OM Sarawak and OM Samalaju are owned by OMS. (The Edge)

Serba Dinamik: To file regularisation plan within 8 months. Serba Dinamik Holdings is looking into formulating a plan to regularise its financial condition and it is required to submit it within eight months. Serba Dinamik, an engineering services company, has approximately eight months to submit its regularisation plan to the relevant authorities for approval. The company will make the necessary announcement on the Regularisation Plan in accordance with the requirements under Practice Note 17. (The Edge)

Maybulk: Businessmen Chin Yoke Choon and Chin Yoke Kan emerge as Maybulk's substantial shareholders. Businessmen Datuk Chin Yoke Choon and Datuk Chin Yoke Kan have emerged as substantial shareholders of Malaysian Bulk Carriers (Maybulk) after their private vehicle Tunas Capital acquired 160m shares or a 16% stake in the dry bulk carrier last week. (The Edge)

GDEX: To focus on boosting digital, technology capabilities. Express delivery and logistics services provider GDEX will put its growth focus on enhancing the digital and technological competencies of the company's new products and business segments. The Covid-19 pandemic had brought a more significant focus on the importance of business resiliency and the development of innovative solutions. (Business Times)

G3 Global: Bags RM118m contract to develop AIS3 in KLIA, klia2. Artificial Intelligence (AI) specialist G3 Global has secured a RM118.38m agreement to design and develop the Airport Integrated Security and Safety System (AIS3) for Malaysia's two busiest airports. The AIS3 development contract, the company's largest since restructuring the business, is for Kuala Lumpur International Airport (KLIA) and klia2, in collaboration with SenseTime, a leading AI software company listed on the main board of the Stock Exchange of Hong Kong Ltd. (HKEX). (Business Times)

Favelle Favco: Declares interim dividend of 85.0sen. Favelle Favco has declared a first interim tax exempt dividend of 85.0sen per ordinary share in respect of the financial year ending Dec 31, 2022. (StarBiz)

Market Update

FBMKLCI is likely to fall after a major selloff in the US markets. US stocks pulled back sharply, erasing a rally from the prior session in a stunning reversal making it one of the worst days since 2020. The Dow lost 1,063 points or 3.1% while the S&P 500 fell 3.6%. The tech-heavy Nasdaq fell 5%. This signals investors remain worried about whether the Fed will be able to slow economic activity enough to cool price increases without tipping the economy into recession. The European markets closed lower, as traders weighed warnings from the Bank of England and a heavy selloff in the US. The Stoxx 600 was down 0.8% with travel stocks losing over 3.6%. The UK’s FTSE 100, German’s DAX and France’s CAC lost 0.1%, 0.5% and 0.4% respectively. Shares in Asia-Pacific were mixed following the US Federal Reserve’s widely expected decision overnight to hike rates by half a percentage point, its biggest increase in two decades. Shanghai Composite was 0.7% higher while the Hang Seng Index and Straits Times were 0.4% and 0.2% lower.

Back home, the FBMKLCI fell over 1% to 1,582.98 points, mainly dragged by the telco and tech stocks. Cahya Mata Sarawak Bhd is selling its entire 25% stakes in OM Materials (Sarawak) and OM Materials (Samalaju) to OM Materials (S) Pte Ltd for a combined USD120m (RM521m) cash. G3 Global Bhd, a developer of artificial intelligence and other information technology-based solutions, has bagged an RM118.4m contract from Malaysia Airports Holdings Bhd to jointly develop with Hong Kong-listed software company SenseTime Group Ltd an airport integrated security and safety system for the Kuala Lumpur International Airport and klia2.

Source: PublicInvest Research - 6 May 2022

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