PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 1 Dec 2020, 10:01 AM


PublicInvest Research Headlines - 27 Apr 2020

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Global: IMF, WTO warns against trade restrictions amid Covid- 19. Governments must take a bold step and avoid imposing trade restrictions on exports, particularly those of food and medical supplies, amid the global crisis caused by the Covid-19 pandemic, the IMF and the World Trade Organsiation said in Friday. While the WTO rules allow temporary export restrictions on key items such as drugs, protective gear, and ventilators in order to address any shortage in the exporting country, both organisations urged governments to exercise caution when implementing such measures in the present circumstances." "Taken collectively, export restrictions can be dangerously counterproductive," they warned. (RTT)

US: Core capital goods orders eke out surprise gain. New orders for key US-made capital goods unexpectedly rose in March, but the gains are unlikely to be sustainable amid the novel coronavirus outbreak, which has virtually shut down the country and contributed to a collapse in crude oil prices. Despite the slight pickup in demand reported by the Commerce Department on Friday, shipments of these goods dropped further last month, suggesting that a downturn in business investment persisted into the 1Q and would contribute to what economists expect will be the sharpest economic contraction since the Great Recession. (Reuters)

US: Deficit could quadruple to USD3.7trn in coronavirus crisis - CBO. A nationwide business shutdown and surge in US government spending will nearly quadruple the federal deficit to a record USD3.7trn this fiscal year as the country combats the coronavirus pandemic, congressional forecasters said on Friday. US GDP will plunge by nearly 40% on an annualized basis in the 2Q, according to the nonpartisan Congressional Budget Office. But the CBO forecast an economic resurgence in the 2H of the year, and said unemployment would crest at 16% but remain in double digits throughout 2021. (Reuters)

US: Economy faces historic shock, with 16% joblessness possible - Trump adviser. The shuttering of the US economy due to the coronavirus pandemic is a shock of historic proportions that likely will push the national unemployment rate to 16% or higher this month and require more stimulus to ensure a strong rebound, a White House economic adviser said on Sunday. “It’s a really grave situation,” President Donald Trump’s adviser Kevin Hassett said. “This is the biggest negative shock that our economy, I think, has ever seen. (Reuters)

US: Will cap how much each bank can lend under emergency coronavirus program - memo. The US government notified lenders on Sunday that it will cap how much each bank can lend under the emergency loan program designed to keep workers on payrolls amid the coronavirus pandemic, hours ahead of the reopening of the lending program. The Small Business Administration (SBA) will impose a maximum dollar amount for individual lenders at 10% of Paycheck Protection Program funding, or USD60bn per lender, and pace the applications filed, according to SBA guidance on Sunday to lenders that have received a significant number of applications. (Reuters)

EU: Belgium business confidence at record low. Belgium's business confidence plummeted to a record low in April, led by the business services sector and retail trade, as business managers grew concerned over the economic impact of the Covid- 19 pandemic, survey data from the National Bank of Belgium showed on Friday. The business confidence index dropped to -36 from -10.9 in March. Economists had forecast a score of -21. The sentiment index for the business services sector slumped to -62.1 from -22. Businesses were severely pessimistic regarding the recent trends and in their assessment of the current situation. (RTT)

Japan: All industry activity drops for first time in 4 months. Japan's all industry activity declined for the first time in four months in Feb, figures from the Ministry of Economy, Trade and Industry showed on Friday. The all industry activity index fell 0.6% MoM in Feb, offsetting a 0.6% rise in Jan. Economists had expected a 0.5% decline. This was the first decrease since Oct. Among components, construction activity decreased 1.6% on month, after a 1.2% rise in Jan. The tertiary industry activity declined 0.6% in Feb, after a 0.3% rise. Industrial production fell 0.3% in Feb, after a 2.0% increase in the preceding month. (RTT)

India: Plans to fast track Chinese investments after policy change - sources. India plans to fast track the review of some investment proposals from neighboring countries such as China following concerns new screening rules could hit plans of companies and investors, three sources said on Saturday. To avoid opportunistic takeovers during the coronavirus outbreak, India said this week that all foreign direct investment from countries sharing a land border would require prior government clearance, meaning they can’t go through a so-called automatic route. The Chinese Embassy in New Delhi has called the new screening policy discriminatory. (Reuters)

Singapore: Industrial production rises unexpectedly on pharma output surge. Singapore industrial production rose unexpectedly in March, led by a sharp increase in the biomedical output as the demand for pharmaceuticals surged amid the Covid-19 pandemic, data from the Economic Development Board showed on Friday. Industrial production increased 16.5% YoY in March, after a 0.7% decrease in Feb. Economists had forecast a 6.3% fall. Excluding biomedical manufacturing, industrial output remained unchanged in March, after a 2.2% fall in the prior month. (RTT)

Singapore: Property prices fall in 1Q. Singapore house prices declined in the 1Q as property market came to a standstill amid coronavirus lockdown, data from Urban Redevelopment Authority showed on Friday. The house price index fell 1.0% in the 1Q after a 0.5% rise in the 4Q. However, this was slower than the initial estimate of -1.2%. (RTT)


Sunway: Buys 51% of fintech firm. Sunway is acquiring a 51% stake in credit firm Credit Bureau Malaysia (CBM). "The acquisition will enable us to advance our ambition of building a financial technology (fintech) ecosystem and securing a digital banking license to promote financial inclusion for Malaysians and SMEs aligned to the 10th United Nations Sustainable Development Goal of Reducing Inequalities," said Sunway. The move was part of Sunway’s exercise to diversify into fintech, citing that the collaboration also allowed the company to offer finance related services to SMEs. (NST)

Majuperak: Seeks to venture into LNG supply, signs deal with access licence holder. Majuperak is proposing to venture into the supply of natural gas and liquefied natural gas (LNG) for power and utilities, cogenerations and district cooling plants. It intends to set up a special purpose vehicle (SPV) with Petrolife Aero SB, an integrated energy company licensed by the government to import and distribute LNG and natural gas. Majuperak will own a 51% stake in the SPV. The parties intend to collaborate to build and operate cogenerations in Perak, aiming to achieve a target of at least 10MW, 20MV and 50MV for the first, second and third years (The Edge)

F&N: Receives deposit refund for Perlis land, to pursue other opportunities. F&N said it has received the refund of a deposit paid in connection with its proposed acquisition of a piece of land in Perlis, following the cancellation of the RM156m deal. The deposit was paid under the agreement signed with MSM Malaysia Holdings. MSM had rescinded the agreement after declining to grant an extension of time for the satisfaction of conditions under the agreement. F&N said: “The Group has decided that it will pursue and evaluate other opportunities for its proposed integrated crop and dairy farming project, when such opportunities arise.” (The Edge)

FGV: Produces Bright Cow dairy products. FGV has ventured into the local food industry by producing Bright Cow brand dairy products. FGV can process 800 tonnes of fresh milk per month. "We are currently in the process of expanding, with the construction of an integrated factory for the production of fresh milk-based products at the Linggi farm, which is expected to be completed within six months. "When ready, FGV will supply 10m litres of fresh milk annually. (NST)

Berjaya Corporation: Announces austerity measures to deal with Covid-19. Salary cuts, reduction of fixed monthly allowances and unpaid leave are among the austerity measures being instituted by Berjaya due to the Covid-19. To sustain the group, certain business units might need to be downsized and this could involve the retrenchment of "surplus staff." The austerity measures for all companies under the group on employees with a combined monthly basic salary of RM6,000 and above were effective from April 1 until June 30. (The Edge)

CCB: 1Q losses widens, expects challenging environment ahead. Mercedes-Benz dealer Cycle & Carriage Bintang’s (CCB) 1QFY20 net loss more than double to RM9.7m. Revenue in 1QFY20 fell 26.35% YoY to RM215.91m, as sales in vehicle units dropped 29% YoY while after sales volume declined 11% YoY. CCB blamed the poor sales to softening demand in the premium luxury segment of the automotive industry. “Markets will remain challenging for the rest of the year, with both volume and margins expected to be lower as a result of the compounding effect of the virus on an already subdued economic environment," It said. (The Edge)

Market Update

The FBM KLCI might open higher today after US stock indices closed higher last Friday but logged weekly losses as investors digested economic data, mixed corporate results, and the latest economic aid package from Congress to combat the COVID-19 pandemic. The Dow Jones Industrial Average ended up 260.01 points, or 1.1%, to 23,775.27. The S&P 500 index added 38.94 points, or 1.4%, to close at 2,836.74, while the Nasdaq Composite Index gained 139.77 points, or 1.7%, to finish at 8,634.52. Stocks ended a choppy week on a high note Friday as investors scooped up technology shares and picked over beleaguered financials— bullish signs after the week started with a historic fall in oil prices to unprecedented negative levels. European equities fell, with the Stoxx Europe 600 down 1.1%, and the FTSE 100 retreated 1.3%.

Back home, the FBM KLCI closed down 11.79 points or 0.85% at 1,369.85 with Asian stock indices, spurred by doubts about the progress in the development of drugs to treat Covid-19 patients. Such sentiment, however, led to gains in rubber glove manufacturers' share prices, in anticipation lingering Covid-19 concerns will result in higher demand for gloves. In the region, Japan’s Nikkei fell 0.9%. The Hong Kong Hang Seng closed about 0.6% lower, China’s Shanghai Composite Index declined 1.1%, while the CSI 300 Index dropped 0.9%.

Source: PublicInvest Research - 27 Apr 2020

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