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Author: PublicInvest   |   Latest post: Tue, 24 Nov 2020, 10:34 AM

 

PublicInvest Research Headlines - 12 Aug 2020

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Economy

US: Producer prices climb 0.6% in July, much more than expected. Partly reflecting a notable increase in prices for services, the Labor Department released a report showing US producer prices climbed by more than expected in the month of July. The Labor Department said its producer price index for final demand rose by 0.6% in July after dipping by 0.2% in June. The rebound in producer prices reflected the largest increase since October of 2018 and exceeded economist estimates for an uptick of 0.3%. Energy prices showed another substantial increase during the month, spiking by 5.3% in July after soaring by 7.7% in June. Meanwhile, the report said food prices fell by 0.5% in July after plunging by 5.2% in the previous month. Excluding food and energy prices, core producer prices still climbed by 0.5% in July after falling by 0.3% in June. Economists had expected core prices to inch up by 0.1%. The much bigger than expected increase in core prices came as prices for final demand services also rose by 0.5% in July following a 0.3% drop in June. (RTT)

EU: Investor confidence highest since February – Sentix. Euro area investor confidence rose for a fourth straight month in August to its highest level since February this year, as the assessment of the current economic situation improved and expectations were remained positive, survey data from Sentix. The investor confidence index rose to -13.4 from -18.2 in July. Economists had forecast a score of -15.1. The current situation index of the survey climbed to - 41.3 from -49.5 in the previous month. The latest reading was the highest since March. "After all, such a low index level means that the third quarter is still in recession," Sentix said. "Nonetheless, the recovery is progressing." The expectations sub-index slightly eased to 19.3 from 19.5 in July. "Expectations remain stably positive, meaning that the economic recovery should continue," Sentix said. (RTT)

EU: German ZEW economic confidence improves in August. Germany's economic confidence improved notably in August, survey data from the ZEW - Leibniz Centre for European Economic Research showed. The ZEW Indicator of Economic Sentiment increased unexpectedly to 71.5 in August from 59.3 in July. The score was forecast to fall to 58.0. Meanwhile, the current conditions index dropped 0.4 points to -81.3 in August, while it was expected to rise to -68.8. "Hopes for a speedy economic recovery have continued to grow, but the assessment of the situation is improving only slowly," ZEW President Achim Wambach, said. Financial market experts' sentiment concerning the economic development of the Eurozone improved, with the corresponding indicator climbing 4.4 points to a current level of 64.0 point. (RTT)

UK: Employment declines most since global financial crisis. UK employment declined the most since the global financial crisis of 2009 as the coronavirus pandemic took its toll on the labor market, data from the Office for National Statistics showed. As the lockdown and social distancing to curb the spread of the Covid-19 weighed on job creation, employment declined by 220,000 from the previous quarter to 32.92m in the 2Q20. The employment rate dropped 0.2 ppts to 76.4% in the 2Q20. In July, about 730,000 fewer people were in paid employment when compared with March, data showed. The number of people out of work decreased 10,000 sequentially to 1.34,m in the three months to June. The unemployment rate was largely unchanged at 3.9%, while the rate was forecast to rise to 4.2%. The government's furlough program reduced the number of people looking for work. But the jobless rate is set to rise with the gradual withdrawal of the program. (RTT)

UK: Retail sales rise despite fewer High Street visits. Retail sales rose again in July, but shops are still trying to make up lost ground, industry body figures suggest. They show the number of visits to High Streets is still down significantly as people shop online instead. The British Retail Consortium (BRC) said some retailers continue to struggle due to the coronavirus crisis, and it made a fresh call for government help with rents. The housing ministry said landlords and tenants should "find solutions that work for both parties". Retail sales rose for the second consecutive month in July, the BRC said, up 3.2% compared with the same month last year. But the picture for retailers was mixed. Food sales continued to be strong, while furniture and homeware sales also did well as people "increasingly invest in their time at home", the BRC-KPMG retail sales report found. (BBC)

China: Bank lending declines in July. China's bank lending declined more-than-expected in July, data from the PBoC revealed. Banks extended CNY992.7bn loans in July. Economists had forecast bank lending to fall to CNY1.2trn from CNY1.81trn in June. The broad money supply M2 climbed 10.7% annually in July, which was slower than the 11.1% rise economists' had forecast. Iris Pang, an ING economist, said "With such unexpectedly small credit growth, we believe China's central bank has used actions rather than words to tell the market that it won't be easing any more this year." Tightening monetary policy is only expected when the economy is overheating, and it is unlikely to happen in 2020, the economist added. (RTT)

Singapore: Narrows 2020 GDP forecast range as economy sees record quarterly slump in 2Q. Singapore has narrowed its economic forecast for 2020 to a contraction between 5% and 7%, the Ministry of Trade and Industry (MTI) said, as the economy posted its worst quarterly performance in the 2Q20 amid the Covid- 19 pandemic. The earlier projection made in May was for the economy to shrink between 4% and 7%. Since then, the outlook for the Singapore economy has “weakened slightly”, MTI said in its report. “Notwithstanding the narrowing of the forecast range, there continues to be significant uncertainty over how the Covid-19 situation will evolve in the coming quarters, and correspondingly, the trajectory of the economic recovery in both the global and domestic economies,” it added. MTI said many of Singapore’s key final demand markets are seeing worse-than-projected economic disruptions in the 2Q20. (CNA)

Markets

MAHB: Passenger traffic in July up over 3-fold. Total passenger numbers at Malaysian airports increased more than three-fold to 1.3m with aircraft movements doubling to 22,600 in July 2020, according to Malaysia Airports Holdings (MAHB). MAHB attributed this mainly to domestic travel by locals since the government has opened up domestic tourism, and is a reflection of improved sentiment and confidence in the public to resume air travel locally. There has also been an increase in cargo capacity offered by airlines, resulting in higher aircraft movements. (Bernama)

Boustead: Confirms GBP6.4m suit against former board members, but writ not yet served. Boustead Holdings confirmed that it has filed a suit at the High Court against its former managing director Tan Sri Che Lodin Wok Kamaruddin and five former directors, seeking GBP6.4m (RM35.4m). However, it pointed out that the writ is yet to be served. (The Edge)

Inix: Buys factory from "kingmaker" of medical rubber glove sector. Inix Technology is buying a factory building in Sendayan, Negri Sembilan from Lyglan Properties SB. "Thereafter, Inix and Lyglan would establish a JV company to develop the business of rubber gloves production," he added. Inix will invest RM22.7m, accounting for 65% of the JV company's equity, and Lyglan will invest RM12.2m as per its 35% stake. (Business Times)

Time Dotcom: Inks agreement with Thai associate to develop data centres in Thailand. Time Dotcom has inked a definitive agreement with 49%-owned Thai-listed associate Symphony Communication Public Co Ltd to develop a data centre business in Thailand. This follows approval from Symphony’s shareholders for Symphony to invest in a 49:51 JV with Time for the business, which was first proposed on June 5. (The Edge)

Pestech: Unit to debut on Cambodia stock exchange tomorrow. Pestech International said its wholly-owned subsidiary Pestech (Cambodia) PLC will make its debut on the Cambodia Securities Exchange (CSX). Pestech said the CSX gave its final approval for the listing and quotation of the subsidiary’s shares on the exchange’s Main Board. Upon listing, Pestech (Cambodia) is expected to be worth about USD60m (RM251.8m) in terms of market capitalisation. (The Edge)

Titijaya: Eyes gloves in next medical move. Titijaya Land said it is in the midst of proposing a diversification into healthcare products, including glove supply, in response to a query by Bursa Securities on the sharp jump in its share price recently. It is also “in the midst of discussion with a local producer for the aforesaid supply”. “As at the date of this announcement, there is no material development pertaining to the Sinomach Agreement,” Titijaya said. (The Edge)

Kanger: Seals deal to venture into glove sector. Kanger International may venture into medical examination gloves operations. It said it had received a formal expression of interest (EOI) from a company in Dubai to set up a medical examination gloves operations in Malaysia. Kanger said it had received the EOI, dated August 9 from Constellation Holdings Ltd. (Business Times)

Market Update

The FBM KLCI might open lower today as US stocks stumbled in late trade Tuesday, giving up early gains to end lower as a selloff in tech shares continued and investors assessed the outlook for the economy amid a slowing in the number of new coronavirus cases and a lack of progress toward additional coronavirus aid from Washington. The Dow Jones Industrial Average finished with a loss of 104.53 points or 0.4%, at 27,686.91. The blue-chip gauge was up more than 300 points at its session high. The S&P 500 ended 26.78 points lower, a loss of 0.8%, at 3,333.69. The Dow and the S&P 500 both snapped seven-day winning streaks. The tech-heavy Nasdaq Composite dropped 185.53 points, or 1.7%, closing at 10,782.82. In Europe, the pan-European Stoxx 600 Europe Index and the FTSE 100 each rallied 1.7%.

Back home, the FBM KLCI closed down 6.92 points or 0.44% at 1,564.74 while trading volume across Bursa Malaysia rose to another record peak at 27.8bn securities against a confluence of factors including global crude oil and equity price gain

In the region, China’s CSI 300 index fell 0.9%, while Hong Kong’s Hang Seng Index rose 2.1% and Japan’s Nikkei 225 Index advanced 1.9%.

Source: PublicInvest Research - 12 Aug 2020

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