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PublicInvest Research

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

 

PublicInvest Research Headlines - 10 Jul 2020

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Economy

US: Jobless claims at better-than-expected 1.3m, total getting benefits falls to 18m. Weekly jobless claims were lower than expected last week as workers slowly returned to their jobs in the wake of rising coronavirus cases. Claims for the week ended July 4 totalled 1.31m, compared with the 1.39m expected from economists surveyed by Dow Jones. The total marked a decrease of 99,000 from a week earlier, according to the Labor Department. The four week moving average of claims, which smooths volatility in the weekly numbers, fell 14,000 to 1.43m. Continuing claims fell sharply, dropping 698,000 from a week earlier to 18.06m. The previous week’s total itself was revised down by 530,000. (CNBC)

US: Is battling two recessions, not just one. The US is in a very odd situation. Even as the official unemployment rate falls, the health of the underlying labour market is deteriorating as the coronavirus pandemic drags on. The country is in the middle of two simultaneous downturns, a short-term seizure caused by fear of coronavirus and a longer-term slump that will look more like a traditional recession. Unfortunately, the latter is just beginning. (Bloomberg)

EU: German exports rebound in May. Germany's exports grew for the first time since the coronavirus pandemic hit the economy in March. Exports grew 9% MoM in May, reversing a 24% decline in April. Nonetheless, shipments were expected to grow at a much faster pace of 13.8%. At the same time, imports climbed 3.5% after falling 16.6% a month ago. Economists had expected a 12% rise. As a result, the trade surplus rose to a seasonally adjusted EUR7.6bn from EUR3.4bn in April. This was also above economists' forecast of EUR5.2bn. On a yearly basis, exports plunged 29.7% and imports decreased 21.7% in May. On an unadjusted basis, the trade surplus decreased sharply to EUR7.1bn from EUR20.7bn prior year. The current account balance showed a surplus of EUR6.5bn versus EUR13.3bn surplus seen in the same period last year. (RTT)

EU: Europe’s next big rescue idea, public stakes in small firms. European policy makers who frantically assembled plans to help their economies weather the coronavirus lockdowns are starting to focus on how to prevent cascading bankruptcies that could derail the rebound. The next big idea gaining traction among officials and economists is potentially taking stakes in small and medium-sized businesses, in contrast to early efforts that relied heavily on loans to keep corporations afloat. Equity support in itself isn’t new as banks were bailed out during the global financial crisis and Germany still holds a more than 15% stake in Commerzbank. Such intervention would thrust the state into an even-deeper role in managing the economy, and would inevitably lead to accusations of picking winners and losers. (Bloomberg)

UK: We must watch interest rates and debt costs – Sunak. British finance minister Rishi Sunak said it was important to be alert to possible changes in interest rates, adding it was likely the cost of servicing debt would be included in the government’s future budget rules. He stressed that they are able to borrow now at record low rates, that enables them to carry a higher degree of debt. However, he stressed that it will be important they remain alert to changes in those interest rates, which is why, if they think about their future fiscal framework, it is likely and probably sensible that they have some notion of the interest cost as part of that. (Reuters)

UK: Housing market recovery underway – RICS. The UK housing market showed signs of a recovery as buyer demand, sales and fresh listing improved noticeably following the lockdown related falls, according to the residential market survey results published by the Royal Institution of Chartered Surveyors (RICS). A net balance of 61% of survey respondents reported a rise in buyer enquiries in June, which was a strong rebound from -94% registered in May, data showed. At the same time, new instructions being listed onto the sales market rose firmly with the net balance reaching 42% compared to -22% in May. The survey's gauge of newly agreed sales moved into positive territory for the first time since February. (RTT)

China: Producer prices extend declines but recovery signs emerge. China’s factory gate prices fell for a fifth straight month in June as the coronavirus pandemic weighed heavily on industrial demand, although signs of a pickup in some parts of the sector suggest a slow economic recovery remains intact. The PPI in June fell 3.0% from a year earlier, China’s National Bureau of Statistics (NBS) said in a statement, slower than a 3.2% fall tipped by a Reuters poll of analysts and a 3.7% decline in May. However, in a sign of potential improvement in the manufacturing sector, PPI rose 0.4% from the previous month, turning around from a 0.4% decline in May. (Reuters)

Japan: BOJ downgrades economic assessment of all 9 regions. The BOJ downgraded economic assessment of all nine regions for the second straight time, citing the impact of the novel coronavirus. According to the latest quarterly Regional Economic Report, all nine regions reported that the economic situation is worsening. Nine regions namely Hokkaido, Tohoku, Hokuriku, Kanto-Koshinetsu, Tokai, Kinki, Chugoku, Shikoku, Kyushu Okinawa reported that their economy had either deteriorated or had been in a severe situation. (RTT)

South Korea: Tries to cool home prices without derailing recovery. South Korea’s government is preparing new regulations to curb excessive house price gains that have fuelled public discontent over inequality and property speculation. Affordable housing has been one of President Moon Jae-in’s key policy objectives since taking office in May 2017 with a vow to improve the living standards of a wider range of people. Yet a mismatch of supply and demand in popular neighbourhoods and widespread investment purchases have seen prices soar in Seoul. (Bloomberg)

Markets

KPJ Healthcare (Neutral, TP: RM0.95): Sees gradual recovery in its healthcare services this year. KPJ Healthcare expects to see a gradual recovery in terms of the number of patients seeking its healthcare services towards year-end, and remains optimistic on its long-term outlook, barring any second wave of the COVID-19 pandemic.KPJ’s Chairman said KPJ’s occupancy rate improved to 40% in June this year from 31% in May and about 20% in April. He said Malaysia had been very quick in dealing with the pandemic, and KPJ is now focusing on ensuring the safety of its patients and employees. (NST)

UEM Edgenta: Unit secures up to RM284m worth of hospital services deals from Singapore govt. UEM Edgenta’s unit has secured contracts estimated to be worth up to RM284.02m to provide hospital support services to the Ministry of Health of Singapore’s restructured hospitals. The final value of the contracts is subject to actual manpower resources deployed, but is estimated to be no less than RM264.5m, according to UEM Edgenta. The duration of the contracts ranges from two years and three months, to three years and three months, with options to extend for another three to five years. (The Edge)

Destini: To supply non-proprietary aircraft parts to RMAF . Destini has accepted a letter of award from the Ministry of Defence (Mindef) for the supply of non-proprietary aircraft parts for the Royal Malaysian Air Force (RMAF). The contract would allow Destini to participate in parcels of bidding should RMAF require any non-proprietary aircraft parts. "The contract has a combined ceiling of approximately RM121m,” it said. This contract will reinforce Destini status as the main contractor to Mindef, where it has been providing its services to the various branches of the RMAF. (StarBiz)

Yinson: To sell minority stake in FPSO subsidiary for RM208m. Yinson has proposed the disposal of a minority interest in a subsidiary that operates a FPSO vessel in Brazil for USD49m (RM208.91m). The group said its unit would sell a stake in Yinson Boronia Consortium Pte Ltd, which holds contracts from Brazil's Petrobras for the provision of the Marlim 2 FPSO, to Kawasaki Kisen Kaisha Ltd. Completion of the transaction is subject to final acceptance of the FPSO as well as the FPSO achieving stable operations which is expected to be met in 2023, said Yinson. (StarBiz)

Advance Synergy: Disposes of land in Switzerland for RM27m. Advance Synergy is disposing of a piece of freehold land in Switzerland for RM26.77m. Proceeds from the disposal would be used for the group's working capital. The group said it is selling the land to hotel and catering service provider Postresidenz am See AG. Advance Synergy expects to record a net gain of RM2.42m following the sale of the land, which is located in the ski resort of Arosa. (The Edge)

Matrix Concepts: Post higher net profit in FY20. Matrix Concepts Holdings (MCH) net profit decreased 16% to RM55.58m in 4QFY20 on higher expenses. It noted that the improved bottom line was achieved on the back of the group reporting its record- high revenue of RM1.28bn from increased progress billings of its residential and industrial developments in Negeri Sembilan. Despite the challenging property market, the group continues to enjoy a strong take-up of its residential properties. (NST)

Market Update

  • The FBM KLCI might open weaker today as US stocks closed mostly lower Thursday, but off the low of the day, as investors sought safety in technology and tech-related investments amid rising cases of coronavirus in states like Arizona and Florida. A 7-2 Supreme Court decision ruling that a New York prosecutor could have access to President Donald Trump’s tax returns, also was parsed by Wall Street. The Dow Jones Industrial Average closed 361.19 points, or 1.4%, to end at 25,706.09, but had been down by as many as 544 points at the day’s low. The blue-chip index was weighed down by component Walgreens. The S&P 500 index lost 17.89 points, or 0.6%, at 3,152.05, after touching an intraday low at 3,115.70. The Nasdaq Composite Index resumed its advance following a stint in negative territory, with the tech-laden index closing up 55.25 points, or 0.5%, at 10,547.75, marking its second record in a row and its 26th of 2020. In European equities, the Stoxx Europe 600 index closed 0.8% lower, and London’s FTSE 100 fell 1.7%.

    Back home, the FBM KLCI ended marginally lower on a lack of fresh catalysts to prop up the market. The benchmark index closed 0.25 point or 0.02% lower at 1,583.25, after moving between 1,579.90 and 1,590.63. In the region, China’s benchmark CSI 300 Index gained 1.4%, extending its weekly rally. Hong Kong’s Hang Seng Index rose 0.3%

Source: PublicInvest Research - 10 Jul 2020

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