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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 4 Dec 2020, 10:06 AM

 

PublicInvest Research Headlines - 30 Jul 2020

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Economy

  • US: Fed leaves interest rates unchanged, remains committed to using full range of tools. In a widely expected move, the Federal Reserve announced Wednesday that interest rates will remain at near-zero levels amid the economic hardship imposed by the coronavirus pandemic. The Fed said it decided to maintain the target range for the federal funds rate at zero to 0.25%, where it has remained since an emergency rate cut on March 15. The accompanying statement noted economic activity and employment have picked up somewhat in recent months following sharp declines but remain well below their levels at the beginning of the year. The central bank partly attributed the recent improvement in overall financial conditions to policy measures to support the economy and the flow of credit to US households and businesses. The Fed also reiterated that it remains committed to using its full range of tools to support the US economy in this challenging time. (RTT)
  • US: Pending home sales beat expectations in June. The National Association of Realtors said on Wednesday its Pending Home Sales Index, based on contracts signed last month, rose 16.6% to 116.1 last month. Economists polled by Reuters had forecast pending home contracts, which become sales after a month or two, increasing 15% in June. Pending home sales advanced 6.3% from a year ago. Reports this month showed a surge in homebuilder confidence in July, and an acceleration in home construction and sales of both new and previously owned homes in June. The housing market is being boosted by historically low mortgage rates, offsetting record unemployment triggered by the coronavirus crisis. (Reuters)
  • US: Goods trade deficit narrows as exports rebound. The US’ trade deficit in goods fell sharply in June amid a rebound in exports after several month of decline when the Covid-19 pandemic disrupted the flow of goods. The Commerce Department said on Wednesday the goods trade gap dropped 6.1% to USD70.6bn last month. Exports of goods accelerated 13.9% to USD102.3bn, offsetting a 4.8% increase in goods imports to USD173.2bn. (Reuters)
  • EU: German economy growing by 3% QoQ after pandemic slump – DIW. The German economy is likely growing by 3% in the current quarter when compared to the previous one, partly recovering from the slump caused by the coronavirus pandemic, economic institute DIW said on Wednesday. “The signs are clearly pointing to a recovery, but despite the strong growth, it will probably take two years before the historic slump in spring is made up for,” DIW said. (Reuters)
  • EU: Italy producer prices continue to fall in June. Italy's producer prices continued to fall in June, but the pace of decline softened, data from the statistical office Istat showed on Wednesday. The producer price index declined 4.5% YoY in June, following a 5.3% fall in May. On a monthly basis, producer prices rose 0.5% in June, after a 0.1% fall in the preceding month. In the domestic market, producer prices rose 0.7% MoM and declined by 6.1% from a year ago in June. Producer prices in the foreign market increased 0.1% monthly in June and decreased 0.7% yearly. (RTT)
  • UK: Mortgage approvals bounce back in June, BOE says. British mortgage lending recovered strongly from May’s record low last month and households slowed the pace at which they repaid debt, as the economy began to open up from the coronavirus lockdown in June. Mortgage approvals rose in June to 40,010 from May’s record-low reading of 9,273, BOE data showed on Wednesday, a bigger increase than the rise to 33,900 that was the average forecast in a Reuters poll of economists. Households repaid a net GBP86m of debt in June as the lockdown gave them fewer opportunities to spend, and unemployment has yet to affect many due to a government scheme that has paid the wages of more than 9m employees. This was down from GBP4.5bn in May but less than the net GBP2bn repayment economists had forecast. (Reuters)
  • Hong Kong: GDP continues sharp fall in 2Q. Hong Kong's economy continued to shrink at a sharp rate in the 2Q as the coronavirus pandemic hurt demand, advance estimates from the Census and Statistics Department showed on Wednesday. GDP decreased 9% YoY after a 9.1% slump in the 1Q. In the 4Q of 2019, GDP fell 3%. The economy has now shrunk for four consecutive quarters. The latest decline of GDP was mainly attributable to the continued weak performance in both domestic and external demand, the statistical office said. Compared to the previous quarter, GDP fell a seasonally adjusted 0.1% in the 2Q. (RTT)
  • Japan: To release several growth forecasts for fiscal 2020, 2021 due to Covid-19 – sources. Japan plans to release several scenarios for economic growth in fiscal 2020 and 2021 due to uncertainty over how long the coronavirus pandemic will last, four government sources with knowledge of the matter said on Wednesday. The government will give projections for GDP growth based on two assumptions that the pandemic would either end quickly or be prolonged, an unusual move underscoring the unpredictability policymakers face from the health crisis. GDP is expected to shrink this year under either scenario but it would be smaller than a 5% contraction. Under its most pessimistic scenario for the fiscal year through March 2022, the government expects to see nearly flat, but still positive GDP growth, one of the sources said. (Reuters)
  • Japan: Fitch lowers rating outlook. Fitch Ratings downgraded Japan's sovereign rating outlook citing the sharp economic contraction caused by the coronavirus pandemic. The outlook on 'A' rating was lowered to 'negative' from 'stable'. The agency observed that a downturn in consumer spending and business investment has been exacerbated by a steep decline in exports associated with weak external demand. The economy is forecast to contract 5% in 2020, before rebounding to 3.2% growth in 2021 due partly to the low base effect. However, the economy would not recover to its prepandemic level until the 4Q of 2021, Fitch said. "The Negative Outlook indicates that the higher debt ratio and downside risks to the macroeconomic outlook will nevertheless exacerbate the challenge of placing the debt ratio on a downward path over the medium term," the agency added. (RTT)

Markets

  • Top Glove (Trading Buy, TP: RM26.70): Has petitioned against import ban, US Customs says. Top Glove Corporation has submitted information to prove it did not use forced labour, a US Customs official said, following an import ban on the company. "Top Glove submitted an initial petition to CBP. CBP responded by identifying additional information needs. Dialogue between CBP and Top Glove is ongoing," the CBP said in an email to Reuters. It said it could not specify a timeline for resolving the concerns and will not modify or revoke a 'Withhold Release Order' until it receives proof that establishes the admissibility of the affected merchandise. (Reuters)
  • TNB (Neutral, TP: RM13.28): Increases stake in Jimah Energy to 25%. Tenaga Nasional Bhd (TNB) entered into a sale and purchase agreement with Menteri Besar Negeri Sembilan (Incorporation) (MBINS) for the acquisition of 5% ordinary shares in Jimah Energy Ventures Holdings SB (JEVH) and 5% class B notes issued by Special Power Vehicle for a consideration of RM80m. (Sun Daily)
  • Ta Win: Ta Win, Terengganu state agency to develop ecocycle park at cost of RM2.4bn. Ta Win Holdings has teamed up with Perbadanan Memajukan Iktisad Negeri Terengganu to jointly develop an industrial park at a gross development cost of RM2.4bn in Kemaman, Terengganu. Ta Win said the industrial park aims to integrate the supply chain of nonferrous metal industry that pools industrial players both from the upstream and downstream segments. (The Edge) 
  • TRC Synergy: Eyes additional tenders worth RM1.5bn. TRC Synergy is aiming to secure additional contracts from main contractors to boost the company's performance despite the challenging market environment. The company currently has RM1.5bn in terms of order book, which will last until 2022, and is eyeing another RM1.5bn in terms of tenders to replenish the current order book standing. (The Edge)
  • TCS Group: Bags RM146.3m contract. TCS Group Holdings Bhd's unit TCS Construction SB has bagged a RM146.30m contract from Southern Score SB for main building works of a serviced apartments project. The group said the project, known as the Vista Sentul Residences, will start on Aug 3 and is expected to be completed by Feb 2, 2023. (Bernama)
  • KNM: Bags RM21m contract in Australia. KNM Group Bhd's unit has bagged a contract worth RM20.91m from an Australian oil and gas firm for the supply of air coolers bundles for gas compression stations in Australia. (The Edge)
  • SYF Resources: Injects RM30m into ongoing residential project. SYF Resources said it is injecting some RM30m into one of its residential development projects to expedite the construction progress. The project, Alstonia Residence in Kajang, is being undertaken by Darul Majumas SB, which is 75% owned by the group via its indirect unit SYF Development SB. (The Edge)
  • F&N: Sells Teapot trademark for RM83m to related party. Fraser & Neave Holdings (F&N) has entered into a related-party transaction to dispose of its Teapot trademark for RM83.17m to better leverage on F&N Global Marketing's expertise in managing brands and related intellectual property. (The Edge)

MARKET UPDATE

The FBM KLCI might open higher today as US stocks finished higher Wednesday, after the Federal Reserve left benchmark interest rates unchanged near zero and Fed Chair Powell reiterated his promise to provide support until the threat of the coronavirus to the U.S. economy has passed. A Capitol Hill hearing with top executives of the world’s most powerful technology firms also was a focus, along with wrangling over coronavirus aid and a flood of blue-chip corporate earnings reports. The Dow Jones Industrial Average ended 160.29 points higher, or 0.6%, at 26,539.57, while the blue-chip benchmark lagged behind other equity indexes, with the S&P 500 adding 40 points, or 1.2%, to close at 3,258.44. The Nasdaq Composite climbed 140.85 points, or 1.4%, ending at 10,542.94. Stocks finished mostly lower in Europe, with the Stoxx 600 Europe index down 1% and the U.K.’s FTSE 100 up less than 0.1%.

Back home, the FBM KLCI closed 1.48 points or 0.09% higher at 1,611.42 on a final-hour nudge after volatile trades, which charted a rare V-shaped recovery for Malaysia's equity benchmark. In Asia, China’s CSI 300 index jumped 2.4%, the Shanghai Composite rose 2.1%, Hong Kong’s Hang Seng Index gained 0.5% and Japan’s Nikkei 225 fell 1.2%.

Source: PublicInvest Research - 30 Jul 2020

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Labels: TOPGLOV, TAWIN, TRC, TCS, KNM, SYF, F&N, TENAGA

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