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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 22 Jan 2021, 10:40 AM

 

PublicInvest Research Headlines - 12 Mar 2020

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Economy

US: Consumer prices inch up 0.1% in Feb. US CPI consumer price index inched up by 0.1% in Feb, matching the uptick seen in Jan. Economists had expected prices to come in unchanged. Consumer prices edged higher as higher prices for food and shelter more than offset a steep drop in energy prices. The report highlighted core consumer prices, which exclude food and energy prices, rose by 0.2% for the second consecutive month. The increase in core prices matched economist estimates. (RTT)

US: Fed pledges more than USD500bn to keep funding markets calm . The Federal Reserve is trying to get ahead of possible funding disruptions caused by the coronavirus, ramping up cash injections in the coming weeks to as much as USD505bn in a bid to keep short-term financing markets functioning smoothly through quarter-end. The central bank’s New York branch said that it would conduct additional repurchase-agreement operations that could take its support for this crucial corner of the financial markets beyond the total of USD490bn it offered over year-end. Policy makers are trying to avert a repeat of Sept, when short-term borrowing costs spiked amid imbalances in the supply and demand for cash. Bloomberg)

EU: Lagarde warns of a 2008-like crisis unless EU takes action on coronavirus . The European Union could face a financial crisis similar to the global crash of 2008 if governments don’t coordinate to tackle the spread of the coronavirus, the European Central Bank President Christine Lagarde has reportedly said. The central bank is due to meet on Wednesday and Thursday for its latest monetary policy decision. Lagarde said earlier this month that the bank is “ready to take appropriate and targeted measures” to deal with the economic impact from the virus. In addition, Chancellor Angela Merkel of Germany said that she agrees with Lagarde that the EU must not let uncertainty be carried over into the economy. (CNBC)

UK: BOE cuts rates in emergency move to combat coronavirus impact. The BOE announced an emergency cut to interest rates in an attempt to limit the economic impact from the new coronavirus. The announcement follows a similar decision by the Fed last week. The virus that began in China late last year has spread worldwide and is impacting all major economies, with flight cancellations, panic buying and strict quarantine measures in some cases. As of Wednesday, the UK had 382 confirmed cases of the coronavirus. At its special meeting ending on 10 March 2020, the MPC voted unanimously to reduce Bank Rate by 50 bps to 0.25%. The central bank also announced a new term-funding scheme to support SME’s, as well as new steps to help commercial banks lend more. (CNBC)

UK: Britain unveils GBP39bn spending package as it tries to tackle coronavirus slowdown. Rishi Sunak, appointed finance chief last month, told the UK Parliament that there would be GBP7bn available to support the labor market and an additional GBP5bn to help the health-care system. Sunak also announced a further fiscal loosening of GBP18bn to support the UK economy, bringing the total fiscal stimulus to GBP30 bn. The UK public body, the Office for Budget Responsibility, called it the largest budget giveaway since 1992. The UK government also unveiled plans to lower taxes for workers, freeze duties on cider, wine and fuel, and introduce a new plastic packaging tax. (CNBC)

China: Bank lending declines In Feb. China's bank lending decreased in Feb as the coronavirus outbreak weighed on economic activity. Banks extended CNY906bn local currency loans in Feb compared to the expected level of CNY1.1trn. At the same time, aggregate financing decreased to CNY855.4bn. Outstanding total social financing grew 10.7% from the same period last year. The net new lending figures are highly seasonal, so it makes sense to focus on the YoY change in the outstanding amounts to gauge the underlying trend. (RTT)

Singapore: Economy to shrink in 1Q. The Singapore economy is set to contract in the 1Q as escalation in the COVID-19 situation poses downside risk to outlook. GDP is expected to fall 0.8% in the 1Q. The growth projection for 2020 was downgraded to 0.6% from 1.5%. Then the growth is forecast to improve to 2% in 2021. Respondents cited the spread of coronavirus, trade tensions and the outcome of the upcoming US elections as major downside risks to the outlook. Overall inflation and MAS core inflation were expected to come in at 0.7% and 0.6%, respectively, in the 1Q. The median inflation for 2020 as a whole was forecast to be 0.8%, down from 0.9% in the Dec survey. (RTT)

Markets

SD Plantation (Neutral, TP: RM4.94): Reviewing its Indonesia’s business operation. Sime Darby Plantation may undertake corporate exercises, including request for proposals to seek consultancy and financial advice, in relation to its business operations in Indonesia. It said it is in the ordinary course of reviewing its assets and such a corporate exercise would be taken to help the company make decisions later. (The Edge)

Eversendai: Secures projects worth RM490.1m in Morocco, Qatar, Saudi Arabia. Eversendai Corp has secured RM490.1m worth of projects in Morocco, Qatar and Saudi Arabia. Eversendai said its outstanding construction order book stands at a near all-time high of RM2.69bn. It said the newly secured contracts include a 55- storey luxurious commercial tower project in Morocco. The group said it secured two commercial towers in Qatar, which is expected to benefit from investments made in preparation for the 2022 FIFA World Cup and Qatar National Vision 2030. (The Edge)

Kejuruteraan Asastera: Gets RM28.6m electrical job from China Construction Development. Kejuruteraan Asastera (KAB) has secured a contract worth RM28.6m from China Construction Development (Malaysia) SB. KAB said the contract is from March 11 until Jan 9, 2024. (The Edge)

MAHB: Feb passenger traffic depressed by Covid-19 outbreak. Malaysia Airports Holdings (MAHB) saw a 23.4% YoY decline in the number of passengers that travelled through its airports in Malaysia as the Covid-19 outbreak weighed on passenger traffic. Both international and domestic travellers saw reductions. In the case of international passengers, traffic fell 29.7% to 2.95m passengers, from 4.19m passengers registered in Feb 2019. (The Edge)

Tomypak: Takes 51% stake in SP Plastic & Packaging. Tomypak Holdings is purchasing a 51% stake in SP Plastic & Packaging SB for RM1.2m. The group said that it had entered into a conditional sale and purchase agreement with SP Plastic’s shareholders Adrian Goh Sim Han, Charles Goh Sim Yew, and Lim Kok Soon for the acquisition. The purchase sum will be satisfied entirely via the transfer of treasury shares. Based on an indicative transfer price of about 53 sen, it will involve the transfer of 2.2m treasury shares to the vendors. (SunBiz)

Multi Sports: Eyes turnaround via Malaysian shoe wholesaler acquisition. Multi Sports Holdings Ltd plans to acquire shareholdings in Malaysian shoe wholesaler RESTA Enterprise SB via a sale share agreement (SSA) to be executed at a later date. The PN17 company said the proposed deal will enable it to turn itself around. The two parties have agreed to enter into an SSA within three months from the date of the MoU. (The Edge)

IPO: ACO Group oversubscribed by 15.53 times. ACO Group’s IPO has been oversubscribed by 15.53 times. Upon the group’s listing on March 18, its market capitalisation is estimated to be RM84m based on an issue price of 28 sen per share. (SunBiz)

IPO: Econframe to issue 65m new shares for ACE Market listing. Econframe is seeking to list on the ACE Market of Bursa Malaysia. Its IPO entails a public issue of 65m new shares. There will also be an offer for sale of 32.5m existing shares to selected investors. (SunBiz)

Market Update

The FBM KLCI might open in the red today as the Dow Jones Industrial Average fell into a bear market Wednesday, closing more than 20% off its all-time closing high in a broad selloff attributed in part to disappointment in the lack of quick action on fiscal stimulus to cushion the economy from the effects of the spread of COVID-19. The Dow Jones Industrial Average plunged 1,464.94 points, or 5.9%, to settle at 23,553.22, while the S&P 500 fell 4.9%, to 2,741.38, missing a bear-market at or below 2,708.92, while the Nasdaq tumbled 4.7%, to end at 7,952.05, avoiding its bear level at 7,853.74. European shares ended at a 14-month low on Wednesday after surrendering initial gains made on the Bank of England’s stimulus measures, while weakness in markets across the Atlantic also drove losses. The benchmark STOXX 600 closed down 0.7%.

Back home, the FBM KLCI closed up 13.36 points or 0.93% to 1,443.83 points after paring gains in afternoon trades as Asian equities fell in tandem with US stock futures amid persisting concerns over the global Covid-19 outbreak. Regional markets ended mostly lower with Japan’s Nikkei 225 fell 2.27%, South Korea’s Kospi dropped 2.78% while Hong Kong’s Hang Seng was 0.63% lower

Source: PublicInvest Research - 12 Mar 2020

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