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

 

PublicInvest Research Headlines - 17 Aug 2020

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Economy

US: Business inventories decline further in June. US business inventories declined again in June as sales continued to accelerate amid pent-up demand as establishments reopened after being shuttered to slow the spread of the novel coronavirus. Business inventories fell 1.1% in June after decreasing 2.3% in May, the U.S. Commerce Department said on Friday. Inventories, a key component of GDP, have now declined for six straight months. Economists polled by Reuters had forecast business stocks falling 1.2% in June. (Reuters)

US: Consumer sentiment unexpectedly edges higher in Aug. A preliminary reading released by the University of Michigan on Friday unexpectedly showed a slight improvement in US consumer sentiment in the month of August. The report said the consumer sentiment index inched up to 72.8 in August from 72.5 in July. The uptick surprised economists, who had expected the index to edge down to 72.0. Surveys of Consumers chief economist Richard Curtin noted consumer sentiment in early August remained largely unchanged from both the July reading and the April low of 71.8. (RTT)

US: Industrial production growth slows but matches estimates. Reflecting sharp increases in manufacturing and utilities output, the Federal Reserve released a report on Friday showing a jump in US industrial production in the month of July that matched economist estimates. The Fed said industrial production surged up by 3.0% in July after soaring by an upwardly revised 5.7% in June. Economists had expected production to jump by 3.0% compared to the 5.4% spike originally reported for the previous month. Despite the substantial increases seen over the past two months, the Fed noted production is still 8.4% below its pre-pandemic Feb level. Manufacturing output continued to improve in July, jumping by 3.4% in July after spiking by 7.4% in June. (RTT)

US: Retail sales growth misses estimates amid pullback in auto sales. With a pullback in auto sales partly offsetting strength in other areas, the Commerce Department released a report on Friday showing US retail sales increased by less than expected in the month of July. The Commerce Department said retail sales advanced by 1.2% in July after soaring by an upwardly revised 8.4% in June. Economists had expected retail sales to jump by 1.9% compared to the 7.5% spike originally reported for the previous month. "The more modest 1.2% gain in headline retail sales highlights that the consumer recovery slowed in July, but that is not a huge disappointment given that sales are now back above pre-pandemic levels," said Michael Pearce, Senior US Economist at Capital Economics. (RTT)

EU: Eurozone employment falls most on record. Employment in the euro area declined at a record pace in the 2Q as the imposition of the coronavirus containment measures dragged the currency bloc into a historic recession, flash estimates from Eurostat revealed Friday. Another report from Eurostat showed that the trade surplus nearly doubled in June from the previous month as the growth in exports far exceeded the rise in imports. Data showed that employment dropped 2.8% from the previous quarter, the biggest since the series began in 1995. Employment decreased 0.2% in the 1Q. (RTT)

UK: British trade minister pledges to fight 'unfair' US tariffs - The Telegraph. British Trade Secretary Liz Truss pledged to fight US tariffs on Scotch whisky, calling the “unacceptable and unfair” in an op-ed in the Telegraph on Sunday. "I will fight to consign these unfair tariffs to the bin of history", she said, while accusing the European Union of failing to protect British and Scottish interests. The US government said last week it would maintain 15% tariffs on Airbus aircraft and 25% tariffs on other European goods as part of a long-running trade dispute, although it held off adding some extra tariffs as it had threatened. (Reuters)

Hong Kong: 2Q GDP shrinks 9% YoY, full-year outlook downgraded. Hong Kong’s economy shrank 9.0% in the 2Q compared with a year earlier, the government said on Friday, as the coronavirus pandemic continued to severely hit the city. The 2Q's pace compares with a decline of 9.1% in the previous quarter, and an advance estimate of negative 9.0%. (Reuters)

India: Wholesale prices decline slows in July. India's wholesale prices declined at a softer pace in July, data from the Ministry of Commerce & Industry showed on Friday. The wholesale price index declined 0.6% YoY in July, following a 1.8% decrease in June. Economists had expected a 1% fall. The primary articles price index rose 0.6% annually in July, after a 1.2% fall in the previous month. (RTT)

Markets

Kelington: Gets RM61.8m gas hook up job in Shanghai. Kelington Group has bagged a remeasurement contract worth approximately RM61.8m from a China-based semiconductor foundry company to perform gas hook up works in Shanghai, China. The group said the contract is for two years and that its value is subject to the actual amount of work carried out. (The Edge)

KNM: To supply equipment to SBM offshore for USD4m. KNM Group has received a purchase order to supply PME pressure vessels separators for the Prosperity floating production storage and offloading (FPSO) project based offshore Guyana for a contract sum of USD4.08m (RM17.13m). It has received the purchase order from Single Buoy Moorings Inc (SBM Offshore), a Dutch-based oil and gas company. The supply and delivery duration of the contract is for a period from Aug 13, 2020 until June 1, 2021, KNM said. (The Edge)

Kanger: Invests RM77m on glove factory. Kanger International, which makes bamboo wood products, is setting up a glove manufacturing plant in Ijok, Selangor for about RM77m. Kanger told that it will acquire around five acres in Ijok for RM6.8m. Kanger Glove would spend RM70m to build the plant and install up to eight production lines to produce medical, surgical and/or nitrile gloves, Kanger said. (NST)

Ho Wah Genting: Inks JV deal with US firm to develop, distribute Covid-19 vaccine. Ho Wah Genting (HWGB) today signed a JV agreement with US-based E-Mo Biology Inc (EBI) to undertake Phase 4 clinical trials for a new poliomyelitis virus vaccine (PVV) for Covid-19. The deal will also allow the latter to conduct R&D of vaccines, immunological treatment and diagnostic product development for the Covid-19 virus. Under the JV, HWGB will invest USD1m and be entitled to a 40% of the total net profit, HWGB said. It will also be entitled to exclusive rights for the production, distribution and the sale of the Covid-19 vaccine in Southeast Asia countries. (NST)

Pentamaster: 2Q profit down 13% as telecoms segment drags. Pentamaster’s net profit for 2QFY20 fell 12.94% YoY to RM17.01m. Revenue was down 14.67% YoY to RM103.02m, owing largely to the decline in the telecommunications segment, which was partially offset by higher contribution from the semiconductor and medical devices segment. On prospects, Pentamaster said it is back to a 100% workforce run-rate with "an aggressive production ramp-up". "On a strategic level, the group acknowledged the need to embark on opportunities for potential strategic business collaboration that are synergistic to its business in order to propel the group to the next level. (The Edge)

Duopharma: Local sales boost 2Q earnings. Duopharma’s net profit for 2QFY20 rose 6% YoY to RM14.73m, thanks to local sales, but revenue fell by 1.5% YoY to RM143.33m. An interim dividend of 0.5 sen per share has been declared. Duopharma Biotech group MD Leonard Ariff Abdul Shatar said despite the huge international and domestic uncertainties arising from the Covid-19 pandemic, there has been sustained demand for Duopharma Biotech’s pharmaceutical products from both the private and public health sectors. (The Sun Daily)

Market Update

The FBM KLCI might open flat today as US stocks posted a mixed finished Friday, spending much of the session near unchanged after a weaker-than-expected rise in retail sales underlined lingering questions about the economy’s resilience following its pandemic-induced collapse in the spring. The Dow Jones Industrial Average closed up 34.30 points, 0.1%, at 27,931.02, after flipping positive in the last moments of trade. The S&P 500 fell 0.58 point, or less than 0.1%, to finish at 3,372.85. The Nasdaq Composite shed 23.20 points, or 0.2%, to close at 11,019.30. In Europe, the Stoxx 600 Europe Index closed at 368.07, down 1.2%. The FTSE 100 lost 1.6%, after a similar tumble in the previous session, to close at 6,090.04.

Back home, the FBM KLCI ended down 11.83 points or 0.75% at 1,564.59 with the number of Bursa Malaysia decliners rose sharply to almost 1,000 as investors weighed Malaysia’s worst quarterly economic performance since 1998 and as world markets pulled back after China announced a disappointing set of economic indicators. In the region, China’s CSI 300 index closed 1.5% higher, while Hong Kong’s Hang Seng Index slipped 0.2% and Japan’s Nikkei 225 gained 0.2%.

Source: PublicInvest Research - 17 Aug 2020

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