PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 27 Nov 2020, 11:04 AM


PublicInvest Research Headlines - 29 Jun 2020

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US: Consumer spending rebounds; falling income, surging Covid-19 cases loom. US consumer spending rebounded by the most on record in May, but the gains are not likely to be sustainable, with income dropping and expected to decline further as millions lose their unemployment checks starting next month. The Commerce Department said consumer spending, which accounts for more than two-thirds of US economic activity, jumped 8.2% last month. That was largest increase since the government started tracking the series in 1959. Consumer spending tumbled by a historic 12.6% in April. Economists polled by Reuters had forecast spending rising 9.0% in May. Spending was boosted by the reopening of many businesses after being shuttered in mid-March. Consumers stepped up purchases of motor vehicles and recreational goods. They also boosted spending on healthcare, and at restaurants, hotels and motels. (Reuters)

EU: ECB’s Schnabel warns euro-area inflation could dip below zero. Euro-area inflation could dip below zero in coming months, ECB Executive Board member Isabel Schnabel said on Saturday as she rolled out a vehement defense of the institution’s monetary stimulus. Schnabel said the ECB’s decision this month to beef up its emergency purchase program to counter the coronavirus crisis was motivated by concerns that weak price dynamics would become entrenched, endangering the entire currency union. “Inflation could remain at close to 0% well into the next year, and even negative inflation rates are possible,” Schnabel said. (Bloomberg)

EU: Eurozone money supply growth accelerates. Eurozone money supply and credit to the private sector logged faster growth in May, the ECB said Friday. The monetary aggregate M3 grew 8.9% YoY, which was faster than April's revised 8.2% increase and economists' forecast of 8.6%. Similarly, growth in narrow measure, M1, improved to 12.5% from 11.9% in April. M3 figure reflects  financial distress and precautionary savings rather than economic strength, Peter Vanden Houte, an economist at ING said. "So for the time being, the information content of monetary aggregates is ambiguous to say the least and reflects weakness rather than strength." The annual growth rate of credit to the private sector increased to 4.9% in May from 4.4% in April, data revealed. (RTT)

EU: Italy consumer confidence rises in June. Italy's consumer confidence and business confidence improved in June, survey results from the statistical office ISTAT showed on Friday. The consumer confidence rose to 100.6 in June from 94.3 in May. Economists had forecast a score of 97.5. The business confidence increased to 65.4 in June from 57.2 in the previous month. The economic sentiment index rose to 87.2 in June from 72.9 in the prior month. The manufacturing confidence index increased to 79.8 in June from 71.5 in May. (RTT)

China: Industrial profits increase for first time since Nov. The profits of Chinese industrial enterprises rebounded in May for the first time since Nov 2019, signaling the economy is continuing to recover from the coronavirus shutdowns. Industrial profits rose 6% to CNY582.3bn (USD82bn) last month from a year earlier, data from the National Bureau of Statistics showed Sunday. That compared with a decline of 4.3% in April. Profits contracted 19.3% in the first five months of the year to CNY1.84trn, and were down 39.3% at state-owned enterprises and 11% at private companies. (Bloomberg)

Japan: Tokyo overall inflation rises 0.3% on year in June. Overall consumer prices in the Tokyo area were up 0.3% on year in June, the Ministry of Internal Affairs and Communications said on Friday. That missed expectations for an increase of 0.6% on year and was down from 0.4% in May. Core CPI, which excludes volatile food prices, was up 0.2% on year - in line with expectations and unchanged from the May reading. On a seasonally adjusted monthly basis, overall inflation was down 0.1% and core CPI was flat. (RTT)

Japan: BOJ likely to cut economic forecasts on Covid-19. The BOJ is likely to lower its economic projections again next month as the heavy impact of the coronavirus pandemic on the domestic and global economies becomes clearer. The IMF said earlier this week that it sees the world economy shrinking 4.9% this year, sharply lower than its April view, with Covid-19 seen causing a deeper global recession and a slower-than-expected recovery. “There are significant uncertainties over the outlook for the economy,” BOJ Governor Haruhiko Kuroda said Friday. (Bloomberg)

Singapore: Industrial production falls unexpectedly in May. Singapore industrial production dropped unexpectedly in May, data from the Economic Development Board showed on Friday. Industrial production decreased 7.4% YoY in May, after a 13.6% increase in April. Economists had forecast a 6.6% rise. Excluding biomedical manufacturing, industrial output declined 10.4% annually in May, following a 2.8% fall in the prior month. Among clusters, transport engineering logged the biggest fall of 40.7% annually in May. General manufacturing decreased 26.9% and chemicals fell 13.5%. Precision engineering and electronics decreased 5.3% and 1.0%, respectively. (RTT)


Minetech: Inks MoU for Kazakhstan O&G venture. Minetech Resources has entered into an MoU with Hadid Oil & Gas LLP to establish a joint strategic collaboration in potential business opportunities in the field O&G, construction as well as other sectors upon mutual agreement. The MoU will provide both parties the opportunity to explore and establish collaboration as well as to leverage on each other’s experience, local presence and strength. On the collaboration, Hadid Group commented that Kazakhstan has greater opportunities to offer to Malaysian companies, especially in the O&G industry. (The Sun Daily)

APM: Partners Hyundai to produce car seats in Indonesia. APM Automotive’s unit in Indonesia is teaming up with Hyundai to manufacture and supply automobile seats and related components. The JV is to support Hyundai’s automobile manufacturing plant in Cikarang, Indonesia, which is expected to be fully operational in the 2H21. The plant will produce 150k units of vehicles a year, half of which would be exported to neighbouring countries in Southeast Asia. (The Edge)

AT Systemisation: Seals deal to acquire industrial glove maker for RM22m. AT Systemisation (ATS) is acquiring an industrial glove maker Pearl Glove SB (PGSB) for RM22m cash. It said the immediate outlook for PGSB’s existing business, as a trusted OEM/ODM manufacturer of safety gloves is extremely positive as the demand for the industrial safety gloves increases proportionately with improving workplace health and safety practices globally. Presently, PGSB has gloves manufacturing facilities located in Sungai Petani, Kedah. (The Edge)

Guan Chong: Allocates RM120m in capex for new plant in Côte d'Ivoire. Guan Chong has allocated EUR25m (c.RM120m) in capex this year for the ongoing construction of its new cocoa ingredients plant in Côte d'Ivoire. The new plant is expected to grow the group's cocoa grinding capacity to 310,000 MT per year, compared to 250,000 MT per year currently. Furthermore, the expansion will place Guan Chong closer to a key raw material source, grant easier access to the key European consumer market, and provide the group significant cost savings. (The Edge)

Leong Hup: Eyes RM500m revenue from Baker’s Cottage by 2024. Leong Hup International (LHI) expects to record revenue growth of RM500m per year for The Baker’s Cottage (TBC) by 2024. ED and group CEO Tan Sri Lau Tuang Nguang said the group’s plans to expand TBC’s store network going forward. “The group also plans to expand the business to other countries that we are in, however, it depends on the pandemic situation and performances for this year,” he said. Lau said the acquisition of TBC has allowed the company to move downstream and open up a new revenue stream for its poultry products. (Bernama)

Mynews: Posts first quarterly loss as Covid-19 takes toll. Mynews Holdings posted a net loss of RM2.33m in 2QFY20. In contrast, the company posted a net profit of RM7.95m in the previous corresponding quarter. Quarterly revenue fell 7.14% YoY to RM123.49m. “The Covid-19 pandemic had been the major contributing factor to the total loss before tax of RM3.49m. This loss included RM2.8m incurred by the FPC (food processing centre) when production output was adversely affected due to fluctuation in sales. (The Edge)

Market Update

The FBM KLCI might open in the red as US stock indices closed at their lowest levels in about two weeks Friday, after Texas and Florida were forced to backtrack on reopening their economies as coronavirus cases rose further and a record number of new cases were reported nationwide. Meanwhile, investors were also parsing the results of the Federal Reserve’s bank stress tests which resulted in a cap on dividends and stock buybacks. The Dow Jones Industrial Average closed 730.05 points, or 2.8%, lower at 25,015.55; and the S&P 500 index retreated 74.71 points, or 2.4%, to close at 3,009.05, with the S&P’s financial sector sinking 4.3%, and the energy sector ended 3.5% lower. All 11 sectors of the S&P 500 closed deep into negative territory on Friday. Meanwhile, the tech-heavy Nasdaq Composite Index lost 259.78 points to reach 9,757.22, a fall of 2.6%. In Europe, the Stoxx Europe 600 index fell 0.4% to close at 358.32 and London’s FTSE 100 closed up 0.2% at 6,159.30.

Back home, the FBM KLCI marched into its fourth consecutive trading day of losses, bucking the trend of its regional peers, amid falls in key index-linked stocks like Top Glove Corp Bhd and Hartalega Holdings Bhd. The benchmark index closed 1.06 points or 0.07% lower at 1,488.14, after moving between 1,483.05 and 1,495.57. Across Asia, Japan's Nikkei 225 rose 1.13% and South Korea's Kospi grew 1.05%. In China, the Hong Kong Hang Seng Index fell 0.93% while the markets in China were closed for a holiday.

Source: PublicInvest Research - 29 Jun 2020

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