PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 15 Jan 2021, 10:38 AM


PublicInvest Research Headlines - 30 Apr 2020

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US: Pending home sales nosedive more than expected in March. A report released by National Association of Realtors on Wednesday showed a bigger than expected nosedive in US pending home sales in the month of March. NAR said its pending home sales index plunged by 20.8% to 88.2 in March after jumping by 2.3% to 111.4 in Feb. Economists had expected the index to tumbled by 10.0. A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale. "As consumers become more accustomed to social distancing protocols, and with the economy slowly and safely reopening, listings and buying activity will resume, especially given the record low mortgage rates," Lawrence Yun, NAR's chief economist said. The bigger than expected slump in pending home sales came as each of the four major regions saw drops in month over-month contract activity and year-over-year pending home sales transactions. (RTT)

US: GDP tumbles 4.8% in 1Q. US economic activity saw a substantial contraction in the 1Q of 2020, according to a report released by the Commerce Department on Wednesday. The report said US real GDP decreased at an annual rate of 4.8% in the 1Q following the 2.1% jump in the 4Q of 2019. The decrease in real GDP in the 1Q reflected negative contributions from consumer spending, non-residential fixed investment, exports, and private inventory investment. Meanwhile, positive contributions from residential fixed investment, federal government spending, and state and local government spending helped limit the downside. Consumer spending plunged by 7.6% in the 1Q amid a steep drop in spending on services, led by health care, and goods, led by motor vehicles and parts. (RTT)

US: Economy faces hard slog back from pandemic, Fed chief says. The head of the Federal Reserve on Wednesday dashed lingering hopes for a fast rebound from the coronavirus pandemic, saying the US economy could feel the weight of consumer fear and social distancing for a year or more in a prolonged climb from a deepening hole. After a two-day policy meeting in which the US central bank kept interest rates near zero and promised to expand emergency programs as needed to help the battered economy, Fed Chair Jerome Powell offered no sanguine words about how fast the country might return - if ever - to the near-record low unemployment and solid growth of just a few weeks ago. The Fed left its benchmark overnight lending rate in a target range of 0% to 0.25% and repeated a vow to use its “full range of tools” to shore up the economy amid what it now says are “considerable risks” over the medium term, perhaps a year or more. “We will continue to use our tools to ensure that the recovery, when it comes, will be as robust as possible,” Powell said, specifically noting the Fed’s willingness to set up even more, and riskier, lending programs than it already has if the U.S. Treasury agrees. (Reuters)

US, China: China committed to Phase 1 trade deal despite pandemic - US official. China remains “very, very committed” to meeting its commitments under a Phase 1 trade deal with the US, despite the unprecedented economic and health impacts of the new coronavirus outbreak, a senior US trade official said on Wednesday. The official said that US officials were talking regularly, and often daily, about implementation of the trade deal and to make sure that China fulfilled its extensive agreements to buy American goods and services. He said the Phase 1 agreement did include “very robust” provisions on IP protections and they were being implemented through a number of actions by China. “We will continually assess its implementation of the Phase 1 agreement,” said the official. “We’ve had very good interactions with Chinese (officials) on that, and they are continuing to implement their obligations.” The official said there were challenges presented by the coronavirus outbreak, but the overall experience showed Beijing was sticking to its commitments under the trade deal. (Reuters)

EU: Eurozone economic confidence falls at record pace amid Covid-19. Eurozone economic confidence deteriorated at the fastest pace on record in April amid the Covid-19 pandemic, survey results from the European Commission showed Wednesday. The economic confidence index fell to 67.0 in April from 94.2 in March. This was the strongest monthly decline since 1985, and the reading reached near the lowest levels seen during the Great Recession in March 2009. Among sectors, the crash was particularly marked in services and retail trade. The industrial sentiment index plunged to - 30.4 from -11.2 a month ago. The steepest monthly fall on record resulted first and foremost from managers' crashing production expectations, the survey showed. (RTT)

EU: German inflation weakest since late 2016. German inflation slowed to the lowest since late 2016, preliminary data from Destatis showed Wednesday. Consumer price inflation eased to 0.8% in April from 1.4% in March. A similar slower rate was last reported in Nov 2016. Nonetheless, this was faster than economists' forecast of 0.6%. The increase in goods cost slowed to 0.3% from 1.3%. At the same time, services cost advanced 1.3%, slightly slower than the 1.4% rise seen in March. On a monthly basis, consumer prices gained 0.3% versus an expected growth of 0.1%. Inflation, based on the harmonized index of consumer prices, also slowed to the lowest level seen since Nov 2016. The HICP climbed 0.8% annually, following a 1.3% rise in March. Economists had forecast an annual growth of 0.5%. MoM, the HICP moved up 0.4%, faster than the expected rise of 0.1%. Final data for April inflation is due on May 14. (RTT)

EU: Italy producer prices fall for ninth month. Italy's producer prices declined for the ninth straight month in March, data from Istat showed on Wednesday. The producer prices index decreased 3.6% YoY in March, following a 2.7% decline in Feb. On a monthly basis, producer prices decreased 1% in March, following a 0.5% fall in the previous month. In the domestic market, producer prices decreased by 1.3% monthly in March and declined 4.9% from a year ago. Producer prices in the foreign market fell by 0.5% MoM and decreased 0.1% from the previous year. (RTT)

Singapore: Producer prices decline in March. Singapore's producer prices declined at a faster rate in March, data from the Department of Statistics showed on Wednesday. The manufactured products price index fell 5.6% YoY in March, following a 2.1% decline in Feb. The oil index fell 45.1% annually in March, while non-oil index rose 0.7%. On a monthly basis, producer prices fell 2.1% in March, following a 0.1% decrease in the preceding month. Another report from the statistical office showed that the import prices fell 8.3% annually in March, following a 1.6% decrease in the previous month. On a MoM basis, import prices dropped 5.6% in March, after a 0.1% increase in the prior month. (RTT)

Australia: Inflation rises 0.3% in 1Q. Overall consumer prices in Australia were up 0.3% on quarter in the 1Q of 2020, the Australian Bureau of Statistics said on Wednesday. That exceeded expectations for an increase of 0.2% and was down from 0.7% in the three months prior. On a yearly basis, inflation climbed 2.2% - again topping forecasts for 2% and up from 1.8% in 4Q. The Reserve Bank of Australia's trimmed mean was up 0.5% on quarter and 1.8% on year following the 0.4% quarterly increase and the 1.6% yearly gain in the previous three months. The RBA's weighted median was up 0.5% on quarter and 1.7% on year after adding 0.4% on quarter and 1.3% on year in the 4Q. (RTT)


AirAsia (Neutral, TP: RM0.78): Looks to cut 30% of costs this year. AirAsia Group expects to achieve at least a 30% YoY cost reduction in 2020 as a result of initiatives, including deferring aircraft deliveries and restructuring its fuel hedges. It is relooking at its aircraft order book with Airbus and will not take any new aircraft deliveries this year. It expects to end 2020 with 242 aircraft. (The Edge)

Eversendai: Signs global strategic partnership with Hyundai E&C. Eversendai and Hyundai Engineering and Construction (Hyundai E&C) have signed a MoU to be global strategic partners in modular construction work. The partnership allows Eversendai and Hyundai E&C to explore business opportunities in the international market for both the construction and energy industries. This includes delivering competitive proposals based on the joint expertise and experience. (NST)

Titijaya: Teams up with Sinopharm to supply PPEs, test kits. Titijaya has inked a five-year agreement with Sinopharm, to be involved in the trading and distribution of medical and hospital equipment, as well as medical industry-related real estate. The collaboration will supply equipment such as PPE, RT-PCR (real time reverse transcription polymerase chain reaction) test kits and other necessary equipment needed to combat Covid-19. Under the agreement, Titijaya will leveraging on Sinopharm’s supply and value chain in China, as well as Sinopharm’s networks. (The Edge)

Bina Puri, Key Alliance: Teams up to develop BIS for construction sector. Bina Puri has teamed up with Key Alliance Group to develop building information systems (BIS) for companies in the construction sector. Bina Puri said it will provide “our expertise and knowledge in the construction sector and our actual worksites to help develop the BIS” under the agreement it signed. The collaboration is in line with its move towards adoption of technology, added Bina Puri. (The Edge)

OSK: To have fewer property launches this year. OSK is planning fewer property launches for this year amid the challenging market sentiment, with the projects having a combined GDV of RM311.9m. “We foresee FY20 to remain challenging for the property development division due to the lacklustre property market with continued challenges in the ability of purchasers to obtain end-financing, amidst concerns of a property supply overhang,” said Group MD. (The Edge)

Unisem: Reports third straight quarterly loss amid lower sales volume. Unisem continues to be loss making in the 1QFY20, no thanks to lower revenue, higher interest expenses, and as tax provisions more than tripled. It posted a net loss of RM2.82m in 1QFY20, compared to a net profit of RM6.05m in 1QFY19, as revenue declined 10% YoY to RM273.35m, due to lower sales volume recorded at its plant in Indonesia. (The Edge)

Automotive (Neutral): Vehicle sales down 59% to 22,478 units in March. Vehicle sales volume fell almost 60% YoY to 22,478 units in March 2020 from 54,776 units, according to the Malaysian Automotive Association (MAA). MAA expects no sales in April as MCO was extended until 28 April 2020 and showrooms are closed. Of the 22,478 units sold in March 2020, 20,260 were passenger cars and the remaining 2,218 were commercial vehicles. (StarBiz)

Market Update

The FBM KLCI might open stronger today as US stocks booked significant gains Wednesday, after Federal Reserve Chairman Jerome Powell vowed to mount a robust and protracted fight to offset fallout from the coronavirus pandemic, which he said “will weigh heavily” on economic activity, employment and inflation in the near term. The Dow Jones Industrial Average gained 532.31 points, or 2.2%, to settle at 24,633.86, while the S&P 500 added 76.12 points, or 2.7%, to close at 2,939.51. The Nasdaq Composite advanced 306.98 points, or 3.6%, ending at 8,914.71. Stocks received an early boost after Gilead Sciences Inc.said Wednesday morning that a government-run clinical trial evaluating its experimental drug remdesivir in certain COVID-19 patients met the study’s main goal. The announcement stirred hopes that pharmaceutical companies were making progress toward a treatment of COVID-19, but investors are still awaiting details from the study. The news helped to outweigh the bearish impact of a sharp slump in U.S. economic growth in the first quarter, with gross domestic product shrinking by 4.8% on an annualized basis. Across the Atlantic, the STOXX Europe 600 index finished up 1.8%.

Back home, the FBM KLCI closed up 8.1 points or 0.59% at 1,380.3 after broad-based buying as investors weighed factors including higher crude oil prices and Malaysia corporate financial results against the COVID-19 pandemic’s impact on the world economy. In the region, China’s benchmark CSI 300 index and Hong Kong’s Hang Seng index posted slight gains. Japanese exchanges were closed in observance of the Golden Week holiday.

Source: PublicInvest Research - 30 Apr 2020

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