PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 3 Jun 2020, 9:12 AM


PublicInvest Research Headlines - 22 Oct 2019

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US: Fed leaves Oct cut on table, and questions about what’s next. Federal Reserve officials have said little to take a third straight interest rate cut off the table when they meet this month. They also haven’t said much about what they’ll do after that. Fed Vice Chairman Richard Clarida saw lots to be happy about in the domestic economy. But there are also risks that weakness from abroad, which has already hit manufacturing, will seep into the wider US economy. Global growth estimates continue to be marked down, and global disinflationary pressures cloud the outlook for US inflation. Trade disputes have slammed global manufacturing and US growth is expected to slow in the second half of the year. Traders have almost entirely priced in a quarter percentage point cut at the upcoming Fed meeting, which would match its moves in July and Sept. (Bloomberg) 

EU: Union revises up German 2018 budget surplus, next year's easing seen small. The European Union’s statistics agency revised up Germany’s budget surplus for 2018, following a trend that could signal Berlin’s plan to spend more next year may end up delivering less than expected. The data may not bode well for euro zone’s economic growth prospects, as the bloc is facing risks of a protracted slowdown, which many economists say could be countered only with a significant increase in governments’ spending - especially by Germany, the euro area’s largest economy. Eurostat said Germany’s revenues last year exceeded expenses by more than previously estimated, allowing Berlin to post a budget surplus of 1.9% of its output, above the 1.7% that Eurostat had calculated in April. (Reuters)

UK: Inflation gauge plunges on hopes brexit gridlock nears its end. The five-year breakeven inflation rate fell to its lowest level since April 2018, showing easing concern at rising consumer prices eroding the returns on offer from bonds in real terms. The move came as sterling re took the USD1.30 level for the first time in five months. That helped reduce the extent to which inflation is imported into the country by a weak currency, limiting the contribution it makes to higher costs for businesses and households. The UK has been one of the few major economies where inflation expectations have been on the rise, running counter to the plunge in those of its global peers on the back of faltering world growth. That has come as the risk of a no-deal Brexit drove the pound to its weakest levels since 2016 last month against the dollar, increasing imported inflation. (Bloomberg)

China: Central Bank keeps loan prime rates unchanged. China's central bank retained its interest rate for new corporate loan despite economic growth easing to the lowest level in nearly three decades. The People's Bank of China left the one-year loan prime rate unchanged at 4.20%. The five-year lending rate was also maintained at 4.85%. The loan prime rate is fixed monthly based on the submission of 18 banks, though Beijing has influence over the rate-setting. This new lending rate replaced PBoC's traditional benchmark lending rate in Aug. Markets were expecting a rate cut this month as the economy grew only 6% in the 3Q, the weakest since 1992. The prolonged trade disputes with the US weighed heavily on foreign demand and investment. The IMF forecast China's growth to slow to 6.1% this year and to 5.8% next year. (RTT)

China: House prices increase in Sept. House prices in majority of the Chinese cities increased in September, data from the National Bureau of Statistics showed on Monday. On a monthly basis, house prices increased in 53 cities out of 70. In August, house prices had increased in 55 cities. Data showed that house prices in four first-tier cities grew 0.4% from the previous month. At the same time, prices in 31 second tier cities gained 0.6% on month and that in 35 third-tier cities climbed 0.8%. Data released last week showed that real estate investment increased 10.5% in January to September, the same pace of growth as seen in the first eight months of the year. (RTT)

Japan: All industry activity stable in Aug. Japan's all industry activity remained unchanged in August, figures from the Ministry of Economy, Trade and Industry showed on Monday. The all industry activity index remained unchanged month-on-month in August, after a 0.2% rise in July. Economists had forecast a modest 0.1% fall. Among components, industrial production dropped 1.2% annually in August, reversing a 1.3% rise in July. Construction activity fell 0.6% in August, following a 1.3% decline in the preceding month. Meanwhile, the tertiary industry activity rose 0.4% in August, following a 0.1% increase in the previous month. On a yearly basis, the all industry activity index declined 0.5% in August, after a 1.3% increase in the prior month. (RTT)


KKB Engineering (Neutral, TP: RM1.15): Bags contracts worth RM60.9m. KKB Engineering has secured jobs totalling RM60.9m comprising water supply contracts and pipes in Sarawak. It said it had received two letters of award from the Sarawak Rural Water Department for the water supply from Kota Samarahan to Sebuyau under the Sarawak water supply grid programme, stressed areas. The contract period for the construction under the first package was 14 months, starting from end Oct and scheduled to be completed by Dec 2020. As for the second package, the contract is for 16 months, starting end-Oct. (StarBiz)

TRC Synergy: To build new Prasarana HQ. TRC Synergy’s wholly owned subsidiary Trans Resources Corp SB has received a RM99.5m contract from Prasarana Malaysia for the construction of its new headquarters. The contract is for the proposed design, construction and completion of the new headquarters in Lembah Subang, Selangor. (SunBiz)

MGB: Completes first batch of IBS-built homes ahead of schedule. MGB, a subsidiary of LBS Bina Group, has completed its first batch of Industrialised Building System (IBS)-built homes in LBS Alam Perdana in 12 months instead of 18 months. Group MD Tan Sri Lim Hock San said LBS Alam Perdana is MGB’s first IBS precast concrete development. (SunBiz)

OCR: To launch RM268m GDV Vertex Kuantan project in 1H20. OCR Group is targeting to launch its second Kuantan project, named Vertex Kuantan, in the 1HCY20. The RM268m GDV mixed development will be the tallest development in Kuantan and is planned for completion by the 1HCY23, MD Billy Ong Kah Hoe said. This launch follows the healthy take-up rate of 85% that the company has secured for the current phase of the PRIYA Scheme Kuantan to date, reflecting the strong demand for affordable housing. (StarBiz)

Kejuruteraan Asastera: Partners Resource Data Management Asia to provide technological solutions. Kejuruteraan Asastera (KAB) is partnering Resource Data Management Asia SB (RDMA) in identifying opportunities in the provision of end-to-end solutions related to energy efficiency, automation engineering as well as Internet of Things (IoT) integration. KAB said its wholly-owned subsidiary KAB Technologies SB (KABT) has inked a JV and shareholders' agreement with RDMA, following the MoU entered into by the parties on Sept 3. (The Edge)

iDimension: Director quits, cites lack of transparency in board. An independent and non-executive director of iDimension Consolidated, Collin Goonting, has resigned from his post, citing a lack of transparency in the company’s board. Goonting indicated there has been a lack of transparency within the members of the board and he is very concerned that the interest of the shareholders are not considered when certain decisions are made. “His only option is either to condone the decisions or to resign and he chose the latter,” the company said. (The Edge)

Consumer (Neutral): MRCA expects retail growth to slow this year. The Malaysia Retail Chain Association (MRCA) expects the retail sector’s growth this year to be less than the 3.9% recorded last year. This is in view of the subdued performance of the retail market amid a slowing economy, said MRCA president Datuk Seri Garry Chua. "The sector has been sluggish, which reflects the economy. Last year, there was about a 4% growth. This year, it will be less," Chua said. (The Edge)

Market Update

The FBM KLCI might open stronger today as U.S. stock benchmarks closed higher Monday, amid optimism over tariff talks and better-than-expected corporate earnings, but a decline in shares of Boeing capped gains for the blue-chip Dow Jones Industrial Average. The Dow ended the day 57.44 points, or 0.2%, higher at 26,827.64. The S&P 500 index, meanwhile, advanced 20.52 points, or 0.7%, to end at 3,006.72, leaving it 0.6% away from its record closing high of 3,025.86 set on July 26. The Nasdaq Composite Index climbed 73.44 points, or 0.9%, to finish at 8,162.99. The Stoxx Europe 600 closed up 0.6% to 394.22.

Back home, the FBM KLCI index lost 0.22 point or 0.01% to 1,570.93 points on Monday. Trading volume decreased to 2.58bn worth RM1.48bn. Market breadth was negative with 380 gainers as compared to 438 losers. In the region, Japan’s Topix index gained 0.4% and China’s CSI 300 index finished up 0.3%.

Source: PublicInvest Research - 22 Oct 2019

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