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PublicInvest Research

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

 

PublicInvest Research Headlines - 28 Sept 2020

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Economy

US: Business spending digging out of deep hole, outlook uncertain. New orders for key US-made capital goods increased more than expected in Aug and shipments raced to their highest level in nearly six years, suggesting a rebound in business spending on equipment was underway after a prolonged slump. The show of confidence by businesses in the report from the Commerce Department on Friday also bolstered expectations for a sharp turnaround in economic activity in the 3Q, thanks to government money, after it was hammered by the Covid-19 pandemic in the 1H of the year. But fiscal aid is running out and new coronavirus cases are rising in the country, clouding the 4Q picture. Orders for non defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 1.8% last month to the highest level since July 2018. (Reuters)

US: Durable goods orders rise 0.4% in Aug, much less than expected. After reporting sharp increases in new orders for US manufactured durable goods over the past few months, the Commerce Department released a report on Friday showing durable goods orders climbed much less than expected in the month of Aug. The Commerce Department said durable goods orders rose by 0.4% in Aug after soaring by an upwardly revised 11.7% in July. Economists had expected durable goods orders to surge up by 1.5% compared to the 11.4% spike that had been reported for the previous month. Excluding a 0.5% increase in orders for transportation equipment, durable goods orders still climbed by 0.4% in Aug following a 3.2% jump in July. Ex transportation orders were expected to shoot up by 1.5%. (RTT)

EU: Eurozone M3 growth eases in Aug. Eurozone money supply increased at a slower pace in Aug and credit to the private sector logged a steady growth, the ECB reported Friday. The broad monetary aggregate M3 expanded 9.5% on a yearly basis, slower than the revised 10.1% increase seen in July. M3 was expected to grow 10.2%. Likewise, annual growth rate of the narrower aggregate M1, which comprises currency in circulation and overnight deposits, decreased to 13.2% from 13.5% in July. As regards the dynamics of credit, credit to euro area residents climbed 8%, following a 7.6% rise in the previous month. Credit to general government rose to 16.5% from 15.5% a month ago. Credit to the private sector increased at a steady pace of 5% in Aug. (RTT)

EU: Italy's consumer sentiment at 7-month high. Italy's consumer confidence strengthened to a seven-month high in Sept as households' assessment of current and future economic situation improved further, survey results from the statistical office ISTAT showed on Friday. The consumer confidence index rose to 103.4 in Sept from 101.0 in Aug. This was the highest score since Feb. Among sub-components, the current economic situation index rose to 94.9 from 90.5 and that for future economic situation climbed to 109.5 from 105.6. The current personal climate index came in at 107.1 versus 104.9 a month ago and that for future personal financial situation stood at 100.2 compared to 98.1 in the previous month. The Economic Sentiment Indicator also improved to the highest since Feb. (RTT)

UK: Budget deficit widens to record high. The UK budget deficit widened to the highest on record in the financial YTD period reflecting the impact of the coronavirus pandemic on the public finances, with the furlough schemes alone adding GBP56bn to borrowing as subsidies paid by the central government. Data from the Office for National Statistics showed that during April to Aug, public sector net borrowing was estimated to have been GBP173.7bn, which was GBP146.9bn more than in the same period last year and the highest borrowing in any April to Aug period since records began in 1993. In Aug alone, public sector net borrowing excluding public sector banks, increased by GBP30.5bn from last year to GBP35.9bn in Aug. (RTT)

China: Industrial profits grow for fourth straight month. Profits at China’s industrial firms grew for the fourth straight month in Aug, buoyed in part by a rebound in commodities prices and equipment manufacturing, the statistics bureau said on Sunday. China’s recovery has been gaining momentum as pent-up demand, government stimulus and surprisingly resilient exports propel a rebound. Industrial firm profits grew 19.1% YoY in Aug to CNY612.8bn (USD89.8bn), the statistics bureau said. That compares with a 19.6% increase in July and is the fourth straight month of profit growth. However, industrial firms’ profits still face external pressures as rising tensions between Washington and Beijing cloud the global trade outlook. Reuters)

Japan: Finance Minister urges G7 to pressure China to abide by debt relief initiative. Japanese Finance Minister Taro Aso said on Friday that China’s participation in a debt relief initiative dubbed “DSSI” was insufficient and that the Group of Seven (G7) advanced economies must put more pressure on Beijing to abide by it. Aso voiced the need to extend the debt relief programme for poor developing countries beyond its current year-end deadline. Aso said the G7 finance chiefs also discussed responses to the coronavirus pandemic during the teleconference. (Reuters)

Singapore: Industrial production rises most in 5 months. Singapore industrial production grew at the fastest pace in five months in Aug driven by strong expansion in electronics output, data from the Economic Development Board showed Friday. Industrial output grew 13.7% on a yearly basis in Aug, reversing a 7.6% fall in July. Economists had forecast an annual growth of 4.6%. This was the first growth in four months and marked the fastest expansion since March. Excluding biomedical manufacturing, output grew 15.3% from last year. On a monthly basis, industrial production growth accelerated to 13.9% from 2.3% a month ago. Output was expected to advance 2.6%. Data showed that all expect the transport engineering and general manufacturing industries clusters registered annual growth in Aug. (RTT)

Markets

Tiong Nam: To invest RM200m for new warehouses, fleet expansion. Tiong Nam Logistics Holdings is investing RM200m in capex, which will go towards the construction of three new warehouses, the expansion of its truck fleet and for the logistics business. The group said 90% of its capex will be used for the construction of a 190k sqft warehouse in Senoko, Singapore, as well as two other warehouses in Pasir Gudang and Kempas, Johor, which are currently in the planning stage. The three warehouses are expected to be completed in FY22. Meanwhile, the remaining 10% of its allocation is earmarked for two smaller warehouses and related support buildings to be located in Johor, as well as new trucks for the logistics business. (The Edge)

Parlo: Finds niche in Myanmar’s workforce. The company is banking on becoming a solution provider to the 10m-strong diaspora of Myanmar workers in various parts of the world. The services that Parlo will be providing range from travel and logistics arrangements to electronic identification (e-ID) and e wallets to ease money transfer of the millions of Myanmar workers globally. Parlo signed an agreement with Myanmar based Diamond Palace Group of Companies Ltd and Agensi Pekerjaan Seaview Hectare SB to provide employment agency related services to supply workers from Myanmar to employers around the world. (StarBiz)

Destini: Announces RM78m share placement to fund projects. Destini is planning to raise RM78.19m via a private placement of up to 277.26m shares to fund working capital for both new and existing projects. The RM78.19m in proceeds is derived from an indicative price of 28.2 sen per share. Of the proceeds, RM50m would be used for working capital for new projects. The group said it has tendered for three projects with a total estimated value of RM3.5bn for its maintenance, repair and overhaul and oil and gas segments. (The Edge)

United Malacca: Halts JV ops in Sulawesi to address environmental issues raised by NGOs. United Malacca (UMB) is halting the operations of its 60%-owned JV PT Wana Rindang Lestari (WRL) in Sulawesi, to address environmental issues highlighted by NGOs. It said NGOs had highlighted environmental issues surrounding the operations of WRL, which has a business licence to source timber products in the regencies of Tojo Una-Una and Morowali in Sulawesi. "UMB has decided to stop work in Sulawesi until environmental concerns raised by the NGOs are addressed. Throughout this process, UMB will engage with the JV partner, PT Sinar Kemilau Cemerlang, to discuss the next course of action. (The Edge)

NTPM: 1Q net profit leaps thanks to lower material and overhead costs. NTPM Holdings’ net profit for 1QFY21 skyrocketed to RM14.64m, from RM503k in 1QFY20. It said the sharp rise in its quarterly net profit was mainly due to lower raw material costs, such as virgin pulp and waste paper prices, and overhead costs in 1QFY21. However, its revenue declined by 3% YoY to RM179.29 million, owing to lower sales for its tissue paper products. “The group will continuously take proactive measures to meet the changing environment and take necessary action to maintain sustainable growth in revenue and profitability. We are looking into ways to widen our customer base and expand our distribution channel.” (The Edge)

Market Update

The FBM KLCI might open higher today as US stocks on Friday were ending a choppy week on a high note, which was helping the technology-laden Nasdaq Composite Index wipe out a more than 1% weekly drop in the final hour of trading. The Nasdaq Composite Index on Friday afternoon was up 2.3% on the day, which was putting it in position to notch a weekly gain of about 1.2%, an accomplishment for the benchmark which had begun the session in a 1.1% hole. The moves on the day highlight a volatile period for stocks as investors fret about the lack of further stimulus from Washington to help out-of-work Americans during the COVID-19 crisis, viewed as a key pillar to helping equities take another leg higher from the financial and public health crisis that reached a peak for the stock market in March. Rising cases of coronavirus and a looming 2020 presidential election also contributed to the turbulence. The Dow Jones Industrial Average, meanwhile, was up 1.3%, while the S&P 500 index was up 1.6%. European markets finished mixed with the FTSE 100 gained 0.34%, while the DAX led the CAC 40 lower. They fell 1.09% and 0.69% respectively.

Back home, the FBM KLCI rose as market sentiment was boosted by Malaysia’s retention on the FTSE Russell World Government Bond Index (WGBI) watch list, and on continued buying interest in rubber glove stocks. The KLCI closed 8.34 points 0.56% higher at 1,509.14 after staying in positive territory throughout the day, moving between 1,505.05 and 1,516.00. In the region, the Nikkei 225 gained 0.51%, while the Hang Seng led the Shanghai Composite lower. They fell 0.32% and 0.12% respectively.

Source: PublicInvest Research - 28 Sept 2020

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