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PublicInvest Research

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PublicInvest Research Headlines - 4 Nov 2020

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Economy

US: Factory orders jump slightly more than expected in Sept . New orders for US manufactured goods showed a significant increase in the month of Sept, according to a report released by the Commerce Department. The Commerce Department said factory orders jumped by 1.1% in Sept after rising by a revised 0.6% in Aug. Economists had expected factory orders to surge up by 1.0% compared to the 0.7% increase originally reported for the previous month. The report said orders for durable goods spiked by 1.9%, while orders for non-durable goods rose by 0.3%. Shipments of manufactured goods increased for the fifth consecutive month, rising by 0.3% in Sept following a matching uptick in Aug. (RTT)

US: Construction spending rises less than expected in Sept . Construction spending in the US increased by less than expected in the month of Sept, the Commerce Department revealed in a report. The report said construction spending rose by 0.3% to an annual rate of USD1.414trn in Sept after climbing by 0.8% to USD1.410trn in Aug. Economists had expected construction spending to jump by 1.0%. The weaker than expected growth in construction spending came as an increase in spending on private construction was partly offset by a drop in spending on public construction. The Commerce Department said spending on private construction climbed by 0.9% to an annual rate of USD1.075trn, with a spike in spending on residential construction more than offsetting a slump in spending on non-residential construction. (RTT)

EU: Italy said to ready USD1.8bn in relief as shutdowns loom . The Italian government is readying new relief funding of at least EUR1.5bn (USD1.8bn) for businesses affected by coming shutdowns to combat the spread of Covid-19, people familiar with the matter said. Italy’s latest decree, expected to be announced by Prime Minister Giuseppe Conte, will include restrictions for a wide range of businesses in the country’s hardest-hit regions, including much of the industrial north, according to the people, who asked not to be named discussing confidential deliberations. (Bloomberg)

UK: BoE to counter double-dip contraction risk with fresh stimulus on lockdowns . The Bank of England (BoE) looks certain to fire another burst of monetary stimulus this week as new coronavirus lockdowns leave the economy facing a 3Q of decline in 2020. Any doubt that governor Andrew Bailey and his colleagues might delay boosting their bond-buying programme when they meet this week was effectively erased with Prime Minister Boris Johnson’s announcement of a month long-closure of non-essential shops and hospitality venues in England. That’s changed the outlook for the last three months of the year, forcing several economists to revise their forecasts. Output fell in the first half before starting to recover, though the BoE estimates it was still about 10% below its 2019 level at the end of the 3Q. (Bloomberg)

China: To halt key Australian imports in sweeping retaliation . China has ordered traders to stop purchasing at least seven categories of Australian commodities, ratcheting up tensions with a key trading partner in its most sweeping retaliation yet. Commodities traders in China won’t be able to import products including coal, barley, copper ore and concentrate, sugar, timber, wine and lobster, according to people familiar with the situation. The government has ordered the halt to begin on Friday, one of the people said, asking not to be identified as the information is sensitive. The notice was verbally relayed to major traders in meetings in recent weeks, one of the people said. Iron ore, Australia’s biggest export to China, won’t be included in the halt, the people said. The order represents a dramatic deterioration in ties, which have been strained since Australia barred Huawei Technologies Co Ltd from building its 5G network in 2018 on national security grounds. (Bloomberg)

China: Xi says economy can double as China lays out ambitious plans . Chinese President Xi Jinping said the economy can double in size by 2035 and the country can reach high-income status in the next five years as the Communist Party outlined ambitious plans for the nation’s future. “It is entirely possible to reach the high-income country status by current standards by the end of the 14th Five-Year Plan, and to double the total economic output or per capita income by 2035,” Xi said in a speech to the party’s Central Committee, according to state media Xinhua. Based on a rough estimate, doubling economic output by 2035 would mean an annual growth rate of nearly 4.7%, said Hong Hao, chief strategist for Bocom International in Hong Kong. “This is ambitious, as the Chinese economy is already of significant size.” This new target is similar to the current goal to double the country’s gross domestic product and income from 2010’s levels by 2020, as well as building a ‘moderately prosperous society’ by the end of this year. (Bloomberg)

Australia: Cuts key rate; unveils asset purchase program . As the economic recovery is expected to be bumpy, Australia's central bank unveiled a package of measures to support job creation and underpin growth. The policy board of the Reserve Bank of Australia headed by the governor Philip Lowe decided to lower its key cash rate by 15 bps to a record low of 0.10%. The bank also decided to cut the target for the yield on the 3-year Australian Government bond to around 0.1% and to purchase AUD100bn government bonds of maturities of around 5 to 10 years over the next six months. Further, the bank will reduce the interest rate on new drawings under the Term Funding Facility to 0.1% and cut the interest rate on Exchange Settlement balances to zero. (RTT)

Markets

Prestariang: To develop, implement Selangor Kerjaya Program. Prestariang has secured a letter of award from Menteri Besar Selangor Inc (MBI) to develop and implement a skill training and job placement programme in the state. The value of the three-year contract would be approximately RM50m based on the agreed work programme. The contract has commenced on Nov 1 with a two months of mobilisation period. (StarBiz)

Country Heights: Sarawak govt ends 26-year-old hill resort JV. Country Heights Holdings JV with the Sarawak Land Custody and Development Authority (LCDA) has been terminated over claims that the property developer had failed to address contract breaches. The JV was terminated on a unilateral basis by the LCDA, over allegations that it neglected or refused to remedy alleged breaches of the agreement. (The Edge)

Scomi Group: Faces suspension from next Monday. Trading of shares in Scomi Group will be suspended from next Monday unless the group manages to issue its annual report for the FY20 by Friday. That includes the annual audited financial statements together with the auditors' and directors' reports, for public release by Oct 30 as required by the listing rules. (StarBiz)

MAHB: Eyes double freighter flights at KLIA in next 10 years. Malaysia Airports Holdings (MAHB) is targeting to double the current number of freighter flights at the KLIA in the next 10 years following the commencement of operations of the new e fulfilment hub, Cainiao Aeropolis eWTP Hub, Malaysia. With the growth in cargo volume, the airport was looking at improved airline connectivity with new routes. (StarBiz)

Parlo: Plans RM25.8m private placement to fund migrant worker biz, debt repayment. Parlo plans to raise RM25.84m via a private placement to fund its migrant workforce-related services business, and to repay bank borrowings. The group is placing out up to 72.8m new shares, representing 20% of its total issued shares, to third-party investors to be identified at an issue price to be fixed. (The Edge)

LTKM: Found guilty of raising margins on eggs. LTKM has been found guilty of raising the margins of its egg prices under Section 14(1) of the Price Control and Anti-Profiteering Act 2011, and has been fined RM25,000 in default of five months in jail. The subsidiary has also been ordered to pay RM9,600 to repurchase 30,000 eggs seized by the ministry as forfeit to the government. (The Edge)

F&N: 4Q net profit up 26.4%, aided by lower spending, one off gain. Fraser & Neave Holdings (F&N) net profit jumped 26.4% to RM85.99m for its 4Q ended Sept 30, from RM68.03m reported previously due to prudent cost controls on overheads and lower advertising and promotions spending as well as a gain on disposal of its “Teapot” trademark . Revenue for the period slipped 2.2% to RM953.7m from RM975.09m previously. (SunBiz)

Frontken: 3Q net profit up 12% to RM21.34m on improved revenue, profit margin. Frontken Corp’s net profit for the 3QFY20 rose 12.03% to RM21.34m, from RM19.05m a year ago, underpinned by improved revenue and better profit margin, in what the firm described as its best-ever quarterly performance. Its revenue for 3QFY20 grew 8.89% to RM94.79m, from RM87.05m a year ago. (The Edge)

Market Update

The FBM might open higher today after US stocks rallied and the yield on long-term Treasuries hit the highest level since June as Americans headed to the polls on Tuesday, with investors placing bets on post-election economic stimulus. Election day kicked off with Democratic challenger Joe Biden leading Republican incumbent Donald Trump in national polls, but with tight races expected in battleground states. The blue-chip S&P 500 share index closed 1.8% higher in New York, having been up by as much as 2.4% earlier following gains across Europe and Asia. The Nasdaq Composite rose 1.9%. The IHS Markit final US manufacturing index rose to 53.4 in October versus an initial reading of 53.3. And the Institute for Supply Management’s more closely watched manufacturing activity index climbed to a 13- month high of 59.3 last month from 55.4 in September. Readings over 50 indicate growth. The pan-European Stoxx 600 Europe rose 1.6%, while London’s FTSE 100 stock index gained 1.4%.

Back home, the FBM KLCI closed down 5.01 points or 0.34% at 1,461.45 while Bursa Malaysia’s index for small market capitalisation (small cap) stocks rose 2.21% as investors weighed Bank Negara Malaysia’s (BNM) decision to maintain interest rates during an event-heavy week, which will see markets bracing for Malaysia’s Budget 2021 announcement besides the US presidential election. In the region, the Hang Seng was up 1.96% while China's Shanghai Composite rose 1.42% and Japan's Nikkei 225 added 1.39%.

 

Source: PublicInvest Research - 4 Nov 2020

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