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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 4 Dec 2020, 10:06 AM

 

PublicInvest Research Headlines - 19 Mar 2020

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Economy

US: Housing starts fall less than expected in Feb . US homebuilding fell in Feb, pulled down by a sharp decline in the construction of multifamily housing units, and could continue to weaken as the coronavirus pandemic disrupts economic activity. Housing starts dropped 1.5% to a seasonally adjusted annual rate of 1.599m units last month, the Commerce Department said. Data for Jan was revised higher to show homebuilding increasing to a pace of 1.62m units instead of dropping to 1.57m units as previously reported. Housing starts jumped 39.2% on a YoY basis in Feb. Building permits tumbled 5.5% to a rate of 1.464m units in Feb. (CNBC)

US: Fed feels heat to pump out more loans, go past crisis-era rules . The US Fed is facing increasing pressure to go well beyond its crisis-era play book and dramatically boost its support for the nose-diving economy via new lending programs for businesses and state and local governments. Proponents of the more aggressive measures argue that the Fed needs to open up the spigots to help offset a coronavirus-driven cash crunch that threatens to force firms to shut down and push state and local finances to the breaking point. (Bloomberg) US: Manufacturers delay new goods due to coronavirus disruptions. One early victim of the coronavirus at many US manufacturers is their latest innovations. A factory in Wisconsin pushed back introduction of new, lower-priced concrete pumping machines — crucial to staying competitive with other producers — because it cannot obtain spare parts from China to support the launch. A cosmetics company in California delayed a new beauty line, because it cannot get imported packaging. The result is delays, not cancellations,” said Mark Bissell, chief executive of Bissell Inc, a leading maker of vacuums and other small appliances, describing the delays in getting some new appliances to market in the United States. (Reuters)

EU: ECB announces EUR750bn pandemic bond-buying program . The ECB launched an extra emergency bond-buying program worth EUR750bn in the latest attempt to calm markets and protect a euro-area economy struggling to cope with the coronavirus epidemic. “Extraordinary times require extraordinary action. There are no limits to our commitment to the euro,” President Christine Lagarde said. The euro and US equity futures rose after the stimulus measures. The decision in an unscheduled meeting on Wednesday night is the latest in an escalating global response to an outbreak widely seen driving the economy into recession this year. (Bloomberg)

EU: ECB's Schnabel says strong fiscal response needed to ease Covid-19 impact . ECB Executive Board member Isabel Schnabel sought a strong fiscal response at the European level to deal with the economic crisis caused by the spread of the coronavirus, and said the central bank is ready to do everything in its power to ease the impact. "Monetary policy cannot solve this crisis on its own," Schnabel said. "Most economists agree that fiscal policy is currently the most important tool for dealing with the crisis," she said. The monetary policy aims to avoid a fragmentation in the euro area, the policymaker said. (RTT)

UK: Bailey says BoE ready to do more to reduce Covid-19 economic shock . BoE Governor Andrew Bailey said that the central bank is ready to what it takes to support the economy amid the severe shock caused by the spread of the coronavirus, or Covid-19 and urged short-sellers to just "stop". Bailey, who succeeded Mark Carney as the BoE chief at the start of this week, told reporters that the impact on both big and small and medium sized companies has been much severe over the past week. The central bank and the government has announced measures including loan guarantees, and cash injections for SMEs, to help them survive this crisis that has seen entire countries lock down. (RTT)

Indonesia, Philippines: Set to ramp up rate cuts . Central bankers in Indonesia and the Philippines are likely to cut interest rates for a second time this year, joining colleagues around the globe in boosting efforts to protect their economies from the coronavirus. As the infection continues its rapid spread across the region, economic growth is taking a knock from trade disruptions, shuttered borders and lockdowns. Both Bank Indonesia and Bangko Sentral ng Pilipinas are expected to lower their benchmark interest rates Thursday, adding to cuts announced by a host of other central banks in recent days. For Indonesia, the growth outlook has deteriorated significantly since policy makers lowered rates last month to 4.75%. (Bloomberg)

Markets

Cypark: Posts 12% rise in 1Q profit. Cypark Resources reported an 11.84% increase in net profit to RM14.54m in its 1QFY20, from RM13m in the same period last year. The increase in net profit was mainly due to the full-year effect of adoption of MFRS 15 that was recorded in the immediate preceding quarter. (The Edge)

Gas Malaysia: Awarded LNG import licence. Gas Malaysia was awarded an import into regasification terminal licence by the Energy Commission on March 17. The licence allows Gas Malaysia Energy and Services SB to carry out the activity of an import into regasification terminal, bringing or causing to be brought liquefied natural gas into or within Malaysia by any means other than by transhipment. The licence is valid for a period of 10 years. (SunBiz)

Dutch Lady: Proposes to buy 32.59 acres of land in Negri Sembilan for RM56.8m. Dutch Lady Milk Industries has proposed to acquire 3 parcels of freehold land in Bandar Baru Enstek, Negri Sembilan, totalling 32.59 acres for RM56.79m cash. The proposed acquisition is for future manufacturing activities and business operations and is in line with long-term plans of improving its manufacturing capabilities to keep up with the increasing demand for its products and with the new customer trends. (SunBiz)

TAS Offshore: Secures RM20m in vessel sale contracts. TAS Offshore has secured contracts for the sale of 5 units of Garbage Collection Craft and two units of Flotsam Retrieval Craft for RM19.6m. The vessels were sold to its foreign customers and are expected to be delivered by the end of the year. The revenue generated from the contract is expected to contribute positively to the earnings and net assets of TAS Group for the FYE May 31, 2021. (The Edge)

SYF Resources: Sells another Semenyih property for RM11.7m. SYF Resources is selling a freehold property in Semenyih for RM11.7m cash to pare down its borrowings and add to its working capital. The property comprises a 1.29ha parcel of land and a single storey factory. The disposal is expected to be completed by the 4Q of this year and give rise to an estimated net gain on disposal of RM500,000. Of the RM11.7m, RM7m will be used to repay bank borrowings and RM2.25m will be used for working capital. (The Edge)

Tien Wah, BAT: Tien Wah gets BAT contract extension for 5 years. Tien Wah Press Holdings’ 51% owned subsidiary Max Ease International Limited will continue to supply printed carton to British American Tobacco (BAT) for the latter’s operations in Malaysia, Singapore and Vietnam for another 5 years. This comes after BAT agreed to extend its current supply agreement for printed carton requirements from Jan 1, 2020 to Dec 31, 2024 for the domestic and/or export markets. Execution of a formal contract is expected to be in 2Q2020. (SunBiz)

Censof, DNex: Margin call forces Censof to sell 43m shares of DNeX. Censof Holdings announced that it has been forced to sell 43m shares equivalent to a 2.45% stake in Dagang Nexchange (DNeX) for RM3.92m or 9.1sen apiece, due to a margin call by its brokerage. The original cost of investment was RM8.76m, and because of the forced selling, it will book a loss of RM10.71m at group level and RM4.84m at company level. Since March 11, Censof had sold a total 53m shares of DNeX, and now owns 232.05m shares or a 13.19% stake. (The Edge)

Market Update

The FBM KLCI might open weaker today as US stocks ended sharply lower Wednesday, with the Dow Jones Industrial Average finishing below the psychologically important 20,000 level for the first time since February 2017 as investors continued to dump equities and other assets on worries over the economic impact of the global COVID-19 pandemic. The Dow Jones Industrial Average dropped around 1,338 points, or 6.3%, to end near 19,899 while the S&P 500 ended down around 131 points, or 5.2%, near 2,398. The Nasdaq Composite finished around 345 points lower, down 4.7%, near 6,990. Losses compounded for European stock markets on Wednesday, as oil prices slumped and investors fretted that plans by governments to prevent economic collapse from the coronavirus pandemic are lacking. The Stoxx Europe 600 index fell 4.8% to 276.97, after closing up 2.3% on Tuesday.

Back home, the FBM KLCI closed down 17.57 points to 1,239.01 points. Elsewhere in the region, Hong Kong’s Hang Seng index fell 4.2% to 22,291.82, its lowest close since January 2017, China's main Shanghai Composite index closed down 1.83% at 2,728.76, while the blue-chip CSI 300 index ended down 1.98%. Japan’s Nikkei 225 closed 1.7% lower to 16,726.55 while South Korea’s Kospi fell 81.24 points, or 4.86%, to 1,591.20

Source: PublicInvest Research - 19 Mar 2020

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