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PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 12 Aug 2020, 2:09 PM

 

PublicInvest Research Headlines - 19 Jun 2020

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Economy

US: Jobless claims drop much less than expected to 1.508m. A report released by the Labor Department showed a continued decrease in first-time claims for US unemployment benefits in the week ended June 13th, although claims fell by much less than expected. The Labor Department said initial jobless claims dropped to 1.508m, a decrease of 58,000 from the previous week's upwardly revised level of 1.566m. Economists had expected jobless claims to tumble to 1.3m from the 1.542m originally reported for the previous week. Jobless claims fell by much less than anticipated but still pulled back further off the record high of 6.867m set in the week ended March 28th. Noting the latest weekly decrease reflects the smallest decline since claims began retreating from their late March peak, economists at Oxford Economics said, "The latest jobless claims data reminds us that significant stress remains in the labor market." The report said the less volatile four-week moving average slid to 1,773,500, a decrease of 234,500 from the previous week's revised average of 2,008,000. (RTT)

US: Leading economic index jumps more than expected in May. After reporting sharp declines in leading US economic indicators in the two previous months, the Conference Board released a report showing its reading on leading indicators rebounded by more than expected in May. The Conference Board said its leading economic index jumped by 2.8% in May after plunging by 6.1% in April and 7.5% in March. Economists had expected the index to climb by 1.7%. The Conference Board noted the rebound by the leading index was primarily due to initial jobless claims pulling back well off the record high set in late March. "The improvements in labor markets, housing permits, and stock prices also buoyed the LEI, but new orders in manufacturing, consumers' outlook on the economy, and the Leading Credit Index still point to weak economic conditions," it said. Itadded, "The breadth and depth of the decline in the LEI between February and April suggest the economy at large will remain in recession territory in the near term." The report said the coincident economic index increased by 1.1% in May following the 10.4% nosedive in April. Meanwhile, the Conference Board said the lagging economic index slumped by 1.9% in May after jumping by 1.7% in April. (RTT)

UK: BoE boosts QE; holds record low rate. The BoE announced additional quantitative easing and left its interest rate unchanged at a record low to combat the sharp recession triggered by the coronavirus pandemic. The Monetary Policy Committee decided to raise the size of the asset purchase programme by GBP100bn to GBP745bn. Eight members voted to raise the QE as they judged that a further easing of monetary policy is warranted to meet its statutory objectives, while Chief Economist Andrew Haldane preferred to maintain the programme at GBP645bn. The MPC expects the programme to reach GBP745bn, around the turn of the year. The committee unanimously decided to hold the interest rate at 0.1%, as widely expected. The bank had altogether reduced the rate by 65bps at two unscheduled meetings in March. The need to continue supporting the economy will undoubtedly fuel further discussion about whether negative rates are on the horizon. (RTT)

China: Pledges continued economic support but warns of liquidity hangover. China will maintain ample financial system liquidity in the 2H of the year as the economy recovers from the coronavirus but will need to consider withdrawing that support at some point, its central bank governor warned. The comments signal policymakers' concerns that the monetary stimulus unleashed in recent months to help firms through the pandemic could add to debt risks in the world's second-largest economy. The pledge on continued support helped China's stocks rally against a broader decline in global markets. Yi said new loans are likely to hit a record of nearly CNY20trn this year, up from CNY16.81trn in 2019, and total social financing could increase by more than CNY30trn. (New York Times)

India: Plans extra tariffs, trade barriers on 300 imported products from China and elsewhere. India plans to impose higher trade barriers and raise import duties on around 300 products from China and elsewhere, as part of an effort to protect domestic businesses. The plan has been under review since at least April and is in line with Prime Minister Narendra Modi's recently announced self-reliance campaign to promote local products. The new duty structures are likely to be gradually outlined over the next three months, said the sources. The government is considering raising import duties on 160-200 products and imposing non-tariff barriers — such as licensing requirements or stricter quality checks — on another 100, according to the officials. (Reuters)

Indonesia: Central bank makes year’s 3 rd rate cut, trim GDP outlook. Indonesia's central bank delivered its third cut to the benchmark rate this year, stepping up support for Southeast Asia's largest economy as it struggles to avoid a recession amid the broadening fallout of the coronavirus pandemic. Bank Indonesia (BI) cut the 7-day reverse repurchase rate by 25bps to 4.25%, the lowest since 2018, as predicted by the majority of economists in a Reuters poll. The move came a few days after the finance minister warned of recession risks, with GDP expected to shrink by 3.1% in the 2Q20 — the first contraction since 1999 — and possibly contract again in the following three months. Governor Perry Warjiyo pledged to keep all of BI's instruments "accommodative" and said there was room for further monetary easing, while trimming BI's outlook for 2020 GDP growth to 0.9%-1.9% from 2.3%. (Reuters)

Markets

Top Glove (Neutral, TP: RM19.30): Worker exploitation claims by British TV ‘highly inaccurate’. Top Glove Corporation has described as “highly inaccurate” claims of worker exploitation made by Britain’s Channel 4 News. It said many of the allegations are historical and that significant improvements have already been made. It has been compliant with local labour laws, and has implemented environmental, health and safety measures for its workers. (The Edge)

AirAsia (Neutral, TP: RM0.78) partners with local hotels to offer flight, hotel combo. AirAsia has partnered with local hotels to offer hassle-free, best price guaranteed deals with bigger savings on SNAP, its flight + hotel combo booking platform. SNAP leverages AirAsia’s extensive network of over 160 destinations, with many being unique and exclusive routes, to provide the best price for flights, while working directly with hotel partners to offer best value room deals. (The Edge)

CIMB (Neutral, TP: RM3.30): CIMB Thai CEO Adisorn Sermchaiwong resigns. CIMB Group Holdings (CIMB) announced that the board of directors of CIMB Thai Bank PCL has accepted the resignation of its president and CEO Adisorn Sermchaiwong. Adisorn has decided to leave the company to pursue other opportunities and will serve his full notice period. An internal candidate has thus been identified to act as interim CEO. (The Edge)

Duopharma: Cashes in on newly listed Korean investee firm, secures RM25m. Duopharma Biotech has secured around RM24.74m after disposing of some 218,688 shares representing a 1.86% stake it held in SCM Lifescience Co Ltd, a biotechnology firm listed in Seoul. The shares were sold via on market trading on Korean Securities Dealers Automated Quotations (Kosdaq), at a total aggregated net selling price of some KRW31,980 (RM113.15) per share. (The Edge)

MISC: Chairman resigns after discussion with PM. MISC Bhd’s chairman Tan Sri Noh Omar has tendered his resignation effective June 17, 2020, following a discussion with Prime Minister, Tan Sri Muhyiddin Yassin. Noh was appointed to chair the group’s board on June 1, 2020. Noh Omar wishes the MISC Board and its management all the best in spearheading the company to greater heights. (SunBiz)

Bina Puri: Has net loss of RM9.16m for Q3 on extra costs due to MCO-related project delays. Bina Puri Holdings posted a net loss of RM9.16m for its 3Q ended March 31, due to additional costs incurred from the delay in the completion of existing projects with extension of time as a result of the two week shutdown from the implementation of the movement control order (MCO). Quarterly revenue came in at RM93.18m, on lower performance from all operating segment due to disruption of operating environment. (SunBiz)

MUI: 3Q loss jumps to RM138.5m after Laura Ashley filed for administration. Malayan United Industries (MUI) saw its net loss widen to RM138.47m in the 3QFY20, seven times the RM19.63m it recorded a year earlier. Quarterly revenue was down 32.6% to RM59.95m from RM88.92m previously. The Movement Control Order (MCO), which was implemented on March 18, has further affected the group’s financial performance. (The Edge)

Market Update

Rising coronavirus cases and disappointing unemployment data weighed on the Dow Jones Industrial Average which slipped 0.2% overnight. The S&P 500 and Nasdaq Composite inched 0.1% and 0.3% higher however. Initial jobless claims benefits rose to 1.51m last week, above expectations. Several states in the US are experiencing a resurgence of infections meanwhile, with Texas, California, Arizona and Florida all reporting its biggest-ever one day increases. European markets were mostly lower. The Bank of England kept benchmark rates steady at 0.1% though expanding its bond buying program by another £100bn. UK’s FTSE 100 fell 0.5% however, as investors expected a larger boost. Germany’s DAX and France’s CAC 40 both fell 0.8%. Asian markets were mixed earlier in the day as coronavirus-related concerns lingered. China’s pronouncement of the latest outbreak being under control helped calm nerves somewhat, helping the Shanghai Composite Index inch 0.1% higher. The Hang Seng Index slipped 0.1%. Japan’s Nikkei 225 dipped 0.5%. Separately, Australia’s unemployment rate in May rose to 7.1%, driving its benchmark S&P/ASX200 0.9% lower. The Asian Development Bank said that developing Asia will “barely grow” in 2020 meanwhile.

Perak Transit has entered into a JV Agreement with Gemas Perunding Sdn Bhd to undertake the business of mining limestone and silica sand in the state of Perak. Top Glove Corp has described as “highly inaccurate” claims of worker exploitation made by Britain’s Channel 4 News, in an investigative report aired on Tuesday.

Source: PublicInvest Research - 19 Jun 2020

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