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Author: PublicInvest   |   Latest post: Tue, 14 Jul 2020, 10:11 AM

 

PublicInvest Research Headlines - 23 Apr 2020

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Economy

US: House set to pass new stimulus with plans to dole out more. With the House poised to give final passage to a USD484bn package of new pandemic relief funds, lawmakers and the Trump administration are already turning their focus on the next round of stimulus for the stalled US economy. The legislation that the House will take up, which passed the Senate, includes USD320bn for the Paycheck Protection Program, designed to help struggling small businesses keep their workers on the payroll. It’s widely regarded as an interim step as the coronavirus pandemic continues to cause death and economic havoc. (Bloomberg)

EU: Eurozone consumer confidence near record low. Eurozone's consumer confidence weakened for a second straight month in Apr to reach near its record lows seen during the global financial crisis in 2009, amid the lockdown triggered by the spread of Covid-19. The flash consumer confidence index dropped to -22.7 from -11.6 in March. Economists had expected a score of -19.6. The consumer confidence index for EU fell to -22 from -10.4 in the previous month. Both indicators fell to well below their long-term averages of -11.1 and -10.4, respectively. (RTT)

EU: ECB acts to shield weakest euro economies from rating cuts. The ECB will accept some junk-rated debt as collateral for its loans to banks in a move that aims to shield the euro area’s most vulnerable economies as they face the risk of credit downgrades in the coronavirus pandemic. The ECB will accept bonds as long as they had at least the lowest investment grade on April 7. The decision to ignore deeper cuts comes two days before a possible reduction for Italy by S&P Global Ratings. The prospect that some government and corporate bonds may face downgrades because of the cost of fighting the pandemic has unsettled investors. It threatens to limit the ability of distressed companies to access the credit they need to survive. (Bloomberg)

UK: Inflation Eases To 3-Month Low. Consumer price inflation eased to 1.5% in March from 1.7% in Feb. This was the lowest rate since last Dec, when prices were up 1.3%. The rate came in line with expectations. On a monthly basis, consumer prices remained flat after climbing 0.4% percent in Feb. Excluding food and energy, core inflation slowed marginally to 1.6% from 1.7% a month ago. Output price inflation slowed to 0.3% in March from 0.5% in Feb. Economists had forecast a marginal 0.1% rise. On a monthly basis, output prices decreased 0.2% for the second straight month compared to a forecast of 0.3% fall. At the same time, input prices declined 2.9% annually, much faster than the 0.2% drop seen in Feb. This was the lowest rate since Oct 2019. Nonetheless, this was slower than the expected 3.2% fall. MoM, input prices were down 3.6% versus forecast of -3.5% and Feb’s 0.9% decrease. (RTT)

China: Loan defaults, NPLs rise as virus hits Chinese economy. China’s loan defaults, repayment delays and bad loans all rose in the 1Q as the coronavirus outbreak triggered unprecedented economic challenges. The sector’s non-performing loan (NPL) ratio climbed in the 1Q to 2.04%, and it will continue to rise at a moderate pace in the 2Q. More than CNY450bn worth of bad loans were settled in the 1Q, up CNY81bn from the same period last year. The banking sector deferred principle and interest payments on about CNY880bn of loans extended to small and micro enterprises, a vulnerable group hardest-hit during the crisis, from January 25 to March 31. Loans to the SMEs grew particularly fast in the 1Q with their outstanding amount at CNY12.55trn by end March, up a robust 25.93% YoY. Total coronavirus-related new loan issuance in the 1Q was more than CNY2.5trn. (Reuters)

Japan: Pandemic reduces BOJ's options in backstopping frail economy. The BOJ is set to boost funding support for companies, but it will avoid cutting interest rates as it could encourage people to step out of their homes to splurge and undermine government efforts to curb the coronavirus outbreak. The dilemma for the BOJ underlines the difficulties of managing Japan’s approach to controlling the spread of the virus, which lacks punitive measures applied in lockdowns of many Western countries. More radical monetary easing steps to spur demand, such as interest rate cuts are off the table as they could hamper government efforts to keep households home and businesses shut. (Reuters)

South Korea: GDP Sinks 1.4% On Quarter In Q1 . South Korea's gross domestic product was down a seasonally adjusted 1.4% on quarter in the first quarter of 2020, the Bank of Korea said on Thursday. That follows the 1.3% increase in the previous three months. On a yearly basis, GDP climbed 1.3% after gained 2.3% in the three months prior. Real gross domestic income (GDI) decreased by 0.6% on quarter compared to the previous quarter. On the expenditure side, private consumption fell 6.4% on quarter as expenditures on goods (e.g. motor vehicles, clothing) and services (e.g. accommodation & food, recreation & culture) both decreased. (RTT)

Markets

Ageson: Receives LOI worth RM116m from HK buyer to purchase sand. Ageson, formerly known as Prinsiptek Corp, said a company based in Hong Kong is planning to buy natural sand from its wholly owned unit Esa Pile SB. Ageson said Esa Pile had received a letter of intent from Boyijun Resources (HK) Ltd to to purchase sand for a contract value of USD26.6m (RM116.8m). "Boyijun, via the LOI, stated that Boyijun is ready to purchase natural sand in bulk in freight on board terms," Ageson said. (StarBiz)

HeiTech Padu: Wins RM19.9m NRD job. Heitech Padu has secured a RM19.9m contract awarded by the National Registration Department. Under contract, HeiTech Padu wicll supply, deliver, install, test, integrate and commission hardware and software upgrade the department's core business application. The contract period was 24 months, starting from May 1. (StarBiz)

Minetech: Bags Perak civil works contract. Minetech Resources (MRB)has received a letter of intent from Bumimaju MTE Engineering SB, appointing its wholly-owned subsidiary Minetech Construction SB as a contractor to undertake civil works related to a pipeline laying project in Hulu Grik, Perak. It said the project is expected to take approximately 12 months from the date of securing the site, whilst the terms and conditions will be finalised within 6 months’ time. (SunBiz)

Nexgram: Inks agreement with Indonesian firm to distribute ventilators. Nexgram Holdings has entered into a deal to sell medical ventilators to an Indonesian firm for distribution in East Jakarta and certain other parts of Southeast Asia. It said the agreement with PT Rafa Topaz Utama was signed by its wholly owned subsidiary Nexgram Industries SB (NISB). The price and quantity of the products will be sold based on the purchase order as required by Rafa, Nexgram said. (The Edge)

CSC Steel: Sells off stake in Vietnamese unit amid fierce competition. CSC Steel Holdings (CHB) is disposing of its entire 6% shareholding in CSGT Metals Vietnam Joint Stock Company for USD1.2m (RM5.25m), as it has not been able to secure a commanding share of the Vietnam steel market. The group said it had inked a share transfer agreement (STA) with CSGT International Corp for the disposal. Proceeds from the disposal will be used for the group's working capital. (The Edge)

MMAG: Payment schedule for Penang land acquisition revised amid Covid-19 crisis. MMAG Holdings, which is buying two parcels of land in mainland Penang from Dynaciate Group for RM41m, entered into a supplemental agreement on the deal. The agreement entails a revised schedule for the payment of RM8.2m, being the second out of five payment tranches, for the contiguous industrial land in Sungai Bakap. The amount is now payable within 12 months, instead of six months, from the date of the sale and purchase agreement. The SPA was signed on Oct 18 last year. (The Edge)

MCE: Seeks collaboration with Taiwanese firm to make automotive lighting parts. MCE Holdings is teaming up with Taiwan-based Juoku Technology Co Ltd to develop, produce and supply automotive lighting parts in Malaysia. MCE said its wholly owned subsidiary Multi-Code Electronics Industries (M) (MCE) has signed a MoU with Juoku for the proposed collaboration. Juoku is a manufacturer of lighting systems and plastic moulding parts for the automotive industries. (The Edge)

Market Update

The FBM KLCI might open with a positive note today after U.S. stocks rebounded Wednesday, ending higher for the first time in three days, as investors gained confidence from stabilizing crude oil markets, some better-than-expected corporate earnings reports, and expectations for Congress to roll out another fiscal stimulus package. The Dow Jones Industrial Average advanced 456.94 points, or 2%, to finish at 23,475.82. The S&P 500 gained 62.75 points, or 2.3%, to end at 2,799.31. The Nasdaq Composite Index climbed 232.15 points, or 2.7%, to close at 8,495.38. Meanwhile, the STOXX Europe 600 index rose 1.8%.

Back home, the FBM KLCI closed up 0.16 point at 1,381.89 after erasing losses with Asian share indices as investors weighed the economic impact of crude oil prices at below US$20 a barrel and as nations contend with the Covid-19 pandemic. Rubber glove manufacturers' share prices rose against such sentiment. Japan’s TOPIX index fell 0.6%, while China’s CSI benchmark gained 0.8%.

Source: PublicInvest Research - 23 Apr 2020

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