PublicInvest Research

PublicInvest Research Headlines - 8 Sept 2022

Publish date: Thu, 08 Sep 2022, 09:10 AM
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US: Trade deficit narrows in July, exports at record high. The US trade deficit narrowed in July as exports hit a record high, a trend that could see trade continuing to contribute to GDP in the 3Q. The Commerce Department said the trade deficit shrank to USD70.6bn in July from a revised USD80.9bn in June. Economists had expected the trade deficit to narrow to USD70.3bn from the USD79.6bn originally reported for the previous month. The trade deficit for July represents the smallest deficit since the USD68.2bn reported for last Oct. The narrower deficit was largely due to a steep drop in the value of imports, which tumbled by 2.9% to USD329.9bn in July after edging down by 0.2% to USD339.6bn in June. (Reuters)

US: Firms see progress on labor supply, price pressures, Fed survey shows. US economic activity was unchanged in July through late Aug, but firms reported some easing in labor shortages and price pressures, a Federal Reserve report showed. The US central bank released its latest summary of feedback from business contacts nationwide as it mulls whether to proceed with a third straight 75 bp interest rate hike or go with a still larger-than-usual 50 bp rise in its battle to curb high inflation. (Reuters)

EU: 2Q GDP growth revised up. The euro area economy expanded more than estimated in the 2Q, the latest figures from Eurostat showed. GDP advanced 0.8% sequentially, following a 0.7% rise in the 1Q. The 2Q figure was revised up from a 0.6% expansion seen in the second estimate published on Aug 17. At the same time, the annual GDP growth eased to 4.1% from 5.4% a quarter ago. The annual rate was revised up from 3.9%. (RTT)

EU: Germany industrial production falls in July. Germany industrial production declined in July on widespread falls across consumer, capital and intermediate goods, official data showed. Industrial production fell 0.3% monthly, reversing a 0.8% rise in June, Destatis reported. Output was forecast to decline 0.5%. Excluding energy and construction, industrial output was down 1.0% in July. Declines in production were observed in all main groupings. The production of consumer goods fell 2.4% due to the development of non-durable goods production, which went down by 3.0%. (RTT)

UK: House price inflation eases further. UK house price inflation eased for the second straight month in Aug, while house prices rebounded slightly on a monthly basis, survey data from the Lloyds Bank subsidiary Halifax showed. The house price index climbed 11.5% YoY in Aug, slower than the 11.8% increase in the previous month. This was the slowest rate of increase in three months. On a monthly basis, house prices rose 0.4% in August, reversing a 0.1% decrease in the prior month. However, that was below the average monthly inflation of 0.9% over the last year. (RTT)

China: Exports growth eases sharply in Aug. China's exports growth eased sharply in Aug reflecting weak global demand amid power shortages and heat waves dampening production, figures published by the General Administration of Customs revealed. Exports increased by less-than-expected 7.1% on a yearly basis in Aug. Economists had forecast the annual growth in shipments to ease to 12.8% from 18.0% in July. At the same time, imports logged a marginal growth of 0.3%, which was also slower than the 2.3% increase in July and economists' forecast of 1.1%. As a result, the trade surplus narrowed to USD79.39bn from USD101.26bn in July. The expected level was USD92.7bn. (RTT)

China: Trade with Russia picks up speed in Aug. Chinese shipments to and from Russia accelerated in Aug compared with a month earlier, contrasting with slower flows elsewhere amid weak global demand. Chinese shipments to Russia, which has been hit by Western sanctions over its invasion of Ukraine, rose 26.5% from a year earlier in dollar terms, up from a 22.2% gain in July, Reuters calculations based on Chinese customs data showed. Imports from Russia jumped 59.3% versus a 49.3% increase in July. (Reuters)

Japan: Leading index at 17-month low. Japan's leading index weakened for the third straight month in July to reach its lowest level in nearly one-and-a-half years, preliminary data from the Cabinet Office showed. The leading index, which measures future economic activity, dropped to 99.6 in July from 100.3 in June. Further, this was the lowest reading since Feb 2020, when it was 99.0. The coincident index that measures the current economic situation improved to 100.6 in July from 99.2 in the previous month. (RTT)

South Korea: Has USD1.09bn current account surplus. South Korea had a current account surplus of USD1.09bn in July, the Bank of Korea said, down from USD5.61bn in June. The goods account saw a USD1.18bn deficit, down from the USD5.55bn surplus a year earlier. The services account recorded a USD0.34bn surplus, up from the USD0.28bn deficit in 2021, owing to a large surplus in the transport account. The primary income account surplus fell from USD2.84bn last year to USD2.27bn in July 2022. (RTT)


Capital A (Outperform, TP: RM1.04): To replace A320 fleet to more efficient A321. Capital A will be replacing its narrow-body aircraft fleet of Airbus A320 to a more fuel-efficient A321 as resumption of the aircraft delivery is expected in 2024. Capital A's airline unit AirAsia would eventually operate all the A321s as the carrier sought to re-grow its operations in the next few years. The company’s first goal is to get all their 205 aircraft flying. As to date, only 110 aircrafts are flying. (BTimes)

FGV (Neutral, TP: RM1.61): Plans to penetrate Perak market with alma poultry feed. There are plans for 'kampung chicken' or native chicken feed brand ALMA, developed by FGV Integrated Farming SB to explore the Perak market by using the existing distribution network in an effort to reduce the dependency on imported poultry feed. FGV Holdings said the move was through the cooperation of strategic partners such as FELDA, Felda Capital Cooperative (KPF) and BERNAS. (BTimes)

Trive Property: Aborts talks to build SPNB project worth RM1.1bn. Trive Property has sent a letter to Syarikat Perumahan Negara (SPNB) to abort the MOU they had entered into in 2017 in relation to being a turnkey contractor for an affordable housing project amounting to RM1.1bn GDV. The termination of the MOU is not expected to have any material financial impact on the company for FY23. (The Edge)

Haily: Bags RM17.5m contract from Mah Sing to build double storey homes in Johor. Haily Group has won a second contract worth RM17.5m from Mah Sing Group in less than a year to build 108 double-storey terrace homes in Johor. The job will take a period of 16 months. (The Edge)

KAB: Plans sustainable energy solutions foray and RM119.2m fundraising. Kejuruteraan Asastera (KAB) has proposed to diversify into the sustainable energy solutions segment, and is planning to raise RM119m from a private placement to fund the diversification. The group has been steadily venturing into the SES business since 2019. (The Edge)

TAFI Industries: Wins RM115m contract from Magna Prima to build serviced apartments in Kepong. TAFI Industries has secured a RM115m contract from Magna Prima to build serviced apartments in Kepong, Kuala Lumpur over 4 years. Its wholly owned subsidiary TAFI Home & Office SB accepted a turnkey construction contract awarded by Magna Prima. Magna Park has also appointed TAFI Industries' wholly owned TA Furniture Industries SB as the project management consultant. (The Edge)

T7 Global: Secures third mini remotely operated vehicles contract. T7 Global has received a letter of award from Petronas Carigali SB to provide platform-based underwater inspection services for two years until Aug 11, 2024, by utilising mini remotely operated vehicles for over 30 offshore structures such as jackets and pipelines in Malaysia. This is the company’s third mini-ROV contract, with the previous contracts awarded by Petronas in 2019 and Pioneer Pegasus SB in 2021 for a total of 15 platforms inspection works. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks snapped their recent losing streak on Wednesday, while government bond prices rose despite fresh warnings about large interest rate rises. The tech-heavy Nasdaq Composite index jumped 2.1% for its first daily rise of the month, and the broader S&P 500 index rose 1.8%. In bond markets, the yield on the benchmark 10-year US Treasury note — seen as a proxy for borrowing costs around the world — fell 0.08 percentage points to 3.26%. Europe’s regional Stoxx 600 share index closed down 0.6%. Chinese trade data showed outbound shipments rose 7.1% from a year earlier in August, slowing from an 18% increase in July. China’s imports increased 0.3% from a year earlier, down from 2.3% growth in July

Back home, Bursa Malaysia ended mixed on Wednesday with the key index rising slightly on bargain-hunting activities led by industrial products and services counters. At 5pm, the benchmark FBM KLCI added 3.08 points, or 0.21%, to 1,491.35 compared with Tuesday’s close of 1,488.27. Elsewhere, Hong Kong’s Hang Seng closed 0.8% lower and Japan’s Nikkei 225 lost 0.7%.

Source: PublicInvest Research - 8 Sept 2022

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