PublicInvest Research

Author: PublicInvest   |   Latest post: Tue, 11 May 2021, 9:26 AM


PublicInvest Research Headlines - 9 Nov 2020

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US: Employment jumps more than expected, unemployment rate drops to 6.9%. Employment in the US increased by more than expected in October, according to report by the Labor Department. The report said non-farm payroll employment jumped by 638k jobs in October after surging up by a revised 672k jobs in September. Economists had expected employment to increase by 600k jobs compared to the addition of 661,000 jobs originally reported for the previous month. The stronger than expected job growth came as notable job gains in leisure and hospitality, professional and business services, retail trade, and construction more than offset a steep drop in government employment. The Labor Department also said the unemployment rate dropped to 6.9% in October from 7.9% in September. The unemployment rate was expected to slip to 7.7%. The notable decrease in the unemployment rate came as the household survey showed employment spiked by 2.24m in October, while the labor force grew by 724k persons. (RTT)

US: Wholesale inventories unexpectedly rise 0.4% in September. A report released by the Commerce Department showed an unexpected increase in US wholesale inventories in September. The Commerce Department said wholesale inventories rose by 0.4% in September after climbing by 0.5% in August. Economists had expected inventories to edge down by 0.1%. The unexpected increase in wholesale inventories came as inventories of non-durable goods advanced by 0.7%, while inventories of durable goods inched up by 0.1%. Meanwhile, the report said wholesale sales crept up by 0.1% in September after jumping by 1.2% in August. A 0.7% increase in sales of durable goods was partly offset by a 0.5% decrease in sales of non-durable goods. The inventories/sales ratio for merchant wholesalers subsequently came in at 1.31 in September, unchanged from the previous month. (RTT)

EU: Germany’s industrial production growth improves. Germany's industrial production growth accelerated in September, albeit at slower than expected pace ahead of new restrictions imposed to contain the coronavirus, data by Destatis showed. Industrial output climbed 1.6% MoM, bigger than the revised 0.5% rise seen in August but slower than economists' forecast of 2.7%. Excluding energy and construction, production in industry was up 2.0% in September. Within industry, production of intermediate goods showed an increase of 1.4%. Output of consumer goods advanced 3.0% and that of capital goods by 2.2%. Production in the automotive industry grew 10% MoM. Outside industry, energyproduction was down 2.5%, while construction output grew 1.5%. Data showed that annual fall in industrial production came in at 7.3% in September. However, this was slower than the 8.7% fall logged in August. Compared with February, the month before restrictions were imposed in Germany, production were 8.4% lower in seasonally and calendar adjusted terms. (RTT)

UK: House price inflation highest since mid-2016. UK house prices increased at the fastest pace since mid-2016, data released by the Lloyds Bank subsidiary Halifax and IHS Markit showed. House prices increased 7.5% YoY in three months to October, the strongest rise since June 2016. Prices had advanced 7.3% in three months to September. On a monthly basis, house price inflation slowed to 0.3% from 1.5% in September. Russell Galley, MD of Halifax, said for the first time in history, average house price exceeded GBP250k. "This level of price inflation is underpinned by unusually high levels of demand, with latest industry figures showing home-buyer mortgage approvals at their highest level since 2007, as transaction levels continue to be supercharged by pent-up demand as a result of the spring/summer lockdown, as well as the Chancellor's waiver on stamp duty for properties up to GBP500k," Galley added. With a number of clear headwinds facing the housing market, Halifax expects to see greater downward pressure on house prices moving into 2021. (RTT)

China: October exports surge, imports rise amid global recovery. China exports grew at the fastest pace in 19 months in October, while imports also rose, official data showed, as China’s economy continued to recover after being hit hard by the coronavirus crisis. Exports in October rose 11.4% YoY, beating analysts' expectations of a 9.3% increase and quickening from a solid 9.9% increase in September. The surge in exports pushed the trade surplus for October up to USD58.44bn, compared with the poll's forecast for a USD46bn surplus and a USD37bn surplus in September. China's trade surplus with the US widened to USD31.37bn in October from USD30.75bn in September. China's exports have stayed largely resilient amid the Covid-19 global pandemic, as strong demand for medical supplies and reduced manufacturing capacity elsewhere worked in China's favour. "Exports growth quickened further and significantly exceeded expectations, indicating a relatively strong momentum," said Bank of Communications in Shanghai. China's exports could stay strong in the rest of 2020 as domestic firms resume production faster than global rivals and sell more Covid-19 related goods such as face masks, it said. (Reuters)

Singapore: Economic rebound not likely ‘vibrant,’ PM Lee says. Singapore’s economy is unlikely to pick up in a “very vibrant sort of way very soon” as key export markets in Europe and the US face renewed coronavirus outbreaks, Prime Minister Lee Hsien Loong said. While many sectors have shown improvement since lockdown measures were relaxed, some such as aviation, transport and tourism are likely to remain in “suspended animation” for some time because of second waves in other parts of the world, Lee said. For Singapore, the government needs to balance an easing of restrictions as it runs the risk of cases shooting up again, he said. “We can’t simply relax the current restrictions, and hope that Covid19 cases will remain low,” Lee said. “The more we open up and resume normal activities, the more likely it is that we will have new cases, including from overseas, either from visitors or returning Singaporeans.” The island nation’s economy contracted 7% in the third quarter from a year ago and the overall unemployment rate climbed to its highest level since 2004. (Bloomberg)


Solarvest: To venture into Taiwan market. Solarvest (Taiwan) Corporate Limited has entered into a share sale agreement with Hsinking Co Ltd to acquire 306,000 ordinary shares or 51% of Tailai Energy Co Ltd for TWD3.06m (RM445,230). Taiwan-based Tailai is principally a renewable energy service provider. Solarvest said the proposed acquisition serves as a platform for it to venture into the Taiwan market for the solar industry, which is in-line with its business strategy for expanding its operations in the overseas market. “The Taiwanese government have, in year 2016, approved a plan to gradually achieve the target of producing 20% of Taiwan’s energy from renewable sources by year 2025. (SunBiz)

LKL, AT Systematization: Ink deal to market and distribute gloves. LKL International has inked an agreement with AT Systematization to market, sell and distribute natural rubber latex gloves and nitrile gloves. In a joint statement, the firms said the agreement is for an initial period of one year from the agreement date and renewable thereafter, in line with the expected commencement of AT subsidiary’s glove manufacturing in early December 2020. (The Edge)

Techfast: Signs LOI for RM1.14bn diesel gas oil supply contract. Techfast Holdings announced that it has signed a letter of intent (LOI) to supply up to 6.45m barrels of diesel gas oil worth an estimated RM1.14bn. The company told the bourse that its subsidiary Fast Energy SB (FESB) signed the LOI with Zillion Oil Timor LDA, under which FESB will supply up to 6,436,800 barrels of diesel gas oil. The LOI is for three years, starting Jan 1, 2021 until Dec 31, 2023. (The Edge)

Westports: Achieves new container volume record. Westports Holdings has achieved a new container volume record by handling 23,183 twenty-foot equivalent units (TEUs) in a single vessel - the CMA CGM Antoine de Saint Exupery between Nov 4-6. Westports deployed 9 ship-to-shore cranes to perform the feat on the 400-meter long vessel. Westports’ team worked around the clock and achieved extremely high overall vessel productivity levels by attaining 286 vessel gross moves per hour (VGMPH) in the 46 hours of operations, it stated. (SunBiz)

Mr D.I.Y.: Expects e-commerce platform to grow significantly. Mr D.I.Y Group (M) expects its e-commerce platform to grow significantly as more Malaysians have become comfortable with the use of technology and mobile apps. Vice president of marketing Andy Chin said e-commerce had taken on a greater role in the lives of Malaysians as more people began embracing online shopping during the MCO imposed by the government early this year. (Bernama)

Pentamaster: 3Q net profit falls 30% on lower revenue. Pentamaster Corp’s net profit for the 3Q ended Sept 30, 2020 fell 30% to RM15.04m from RM21.48m a year ago, due to lower revenue. Revenue dropped 15.42% to RM105.42m from RM124.63m, the group said in a bourse filing. The lower net profit, it said, was also in line with the expected credit losses allowance on trade receivables amounting to RM5m during the quarter. With the on-going threat of COVID-19 impacting world economies and the continuous infection wave crippling the socioeconomic aspect, the group said 2020 has been highly disruptive. (The Edge)

Market Update

The FBM KLCI might open higher today after US stocks notched their best week since April despite losing steam on Friday as the Presidential election appeared to be nearing a result and investors pocketed some profits after a five-session winning streak. Wall Street’s blue-chip S&P 500 index, which was flat on Friday, gained 7.3% over the week. The Nasdaq Composite, which has enjoyed some of the largest gains since polling day, was also little changed on Friday but has risen 9% over what has been a turbulent week for traders in both equities and government bonds. Better than expected employment data in the US on Friday made little impact on stock markets, but it did prompt selling of US Treasuries and send yields sharply higher. American employers added 638,000 jobs in October, more than the 600,000 forecast by economists, and the unemployment rate fell below 7% for the first time since March. The Vix index, a measure of expected volatility in the US stock market over the next month, dipped to 25 on Friday but remained above its long-run average of 20. By Friday, Democratic challenger Joe Biden had pulled ahead in key states including Pennsylvania and Georgia and appeared on the brink of victory. But the Republican incumbent, Donald Trump, claimed without evidence that Democrats were trying to “steal” the election by counting illegal ballots. European bourses ended Friday mostly in the red, paring back what still amounted to the continent’s best weekly performance since June. The region-wide Stoxx Europe 600 closed down 0.2% and Frankfurt’s Xetra Dax slid 0.7% but London’s FTSE 100 rose 0.1%.

Back home, the FBM KLCI closed 18.15 points or 1.21% higher, making it the third consecutive day of gains, as investors evaluate Malaysia's Budget 2021 announcement while awaiting the results of the US Presidential election. Across Asia, Japan’s Nikkei 225 increased 0.91%, South Korea's Kospi rose 0.11% while Hong Kong’s Hang Seng was up 0.07%.

Source: PublicInvest Research - 9 Nov 2020

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