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PublicInvest Research Headlines - 19 Nov 2020

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Economy

Global: Debt to hit record USD277trn by year end on pandemic spending splurge - IIF. Global debt is expected to soar to a record USD277trn by the end of the year as governments and companies continue to spend in response to the Covid-19 pandemic, the Institute of International Finance said on Wednesday. The IIF, whose members include over 400 banks and financial institutions across the globe, said debt ballooned already by USD15trn this year to USD272trn through Sept. Governments - mostly from developed markets - accounted for nearly half of the increase. Developed markets’ overall debt jumped to 432% of GDP in the 3Q, from a ratio of about 380% at the end of 2019. Emerging market debt-toGDP hit nearly 250% in the 3Q. (Reuters)

US: Housing starts beat expectations in Oct. US homebuilding increased more than expected in Oct, suggesting the housing market continues to be sustained by historically low mortgage rates even as the economic recovery shows signs of strain amid a resurgence in new Covid-19 infections. Housing starts rose 4.9% to a seasonally adjusted annual rate of 1.53m units last month, the Commerce Department said on Wednesday. Data for Sept was revised up to a 1.46m-unit pace from the previously reported 1.41m. Economists polled by Reuters had forecast starts increasing to a rate of 1.46m units in Sept. (Reuters)

EU: Eurozone Oct price decline confirmed. Eurozone consumer prices decreased for a third straight month in Oct, and core inflation remained unchanged, final data from Eurostat confirmed on Wednesday. The harmonized consumer price index fell 0.3% YoY, same as in Sept. The flash estimate released on Oct 30 was confirmed. On a MoM basis, prices rose 0.2% in Oct. Core inflation, which excludes prices of energy, food, alcohol and tobacco, was 0.2% in Oct, same as in Sept. The core CPI edged up 0.1% from the previous month. Prices in the food, alcohol and tobacco increased 2.0% after a 1.8% rise in Sept. Service costs rose 0.4% after a 0.5% increase in Sept. Non-energy industrial goods prices dropped 0.1% following a 0.3% fall in Sept. Energy prices decreased 8.2%, same as in the previous month. (RTT)

EU: New car sales drop by 7.1% YoY in Oct - ACEA. European car registrations dropped in Oct after rising slightly a month earlier, industry data showed on Wednesday, as social restrictions to curb a second wave of coronavirus across Europe took a toll on the industry. In Oct, new car registrations dropped by 7.1% YoY to 1.13m vehicles in the European Union, Britain and the countries of the European Free Trade Association (EFTA), figures from the European Automobile Manufacturers’ Association (ACEA) showed. Europe’s five largest markets all posted negative results. Sales in Spain and France fell by 21% and 9.5% respectively. (Reuters)

UK: Inflation picks up a bit more than expected in Oct. British inflation picked up a little more than expected in Oct as much of the country re-entered coronavirus lockdowns, official data showed on Wednesday. Consumer prices rose 0.7% in annual terms, after a 0.5% rise in Sept. A Reuters poll of economists had pointed to a reading of 0.6%. (Reuters)

Japan: Oct exports fall 0.2% YoY - MOF. Japan's exports fell 0.2% in Oct from a year earlier, Ministry of Finance data showed on Wednesday. The result compared with a 4.5% decline expected by economists in a Reuters poll. It followed a 4.9% fall in Sept. Imports fell 13.3% in the year to Oct, versus the median estimate of a 9.0% drop. The trade balance came to a surplus of JPY872.9bn (USD8.4bn), versus the median estimate of a JPY250bn surplus. (Reuters)

Australia: Westpac leading index signals record rebound in growth. Australia's leading index signaled above trend growth in both the Sept and Dec quarters, Westpac said Wednesday. The sixmonth annualized growth rate in the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, rose to +3.25% in Oct from -0.47% in Sept. This was the first positive, above trend, growth rate since Nov 2018 and also the strongest seen since the early 1980s. However, Westpac said the momentum will slow in 2021 as the sharp initial improvement in activity due to the easing of domestic restrictions ends. (RTT)

Australia: Wage prices add 0.1% on quarter in 3Q. Wage prices in Australia were up a seasonally adjusted 0.1% on quarter in the 3Q of 2020, the Australian Bureau of Statistics said on Wednesday - shy of expectations for an increase of 0.2%, which would have been unchanged from the 2Q reading. On a yearly basis, wage prices rose 1.4% - again missing forecasts for 1.5% and slowing from 1.8% in the three months prior. Private sector wages were up 0.1% on quarter and 1.2% on year, while public sector wages gained 0.2% on quarter and 1.8% on year. Wage gains from health care and social services offset losses among administrative and support services. (RTT)

Markets

Eita: Proposes bonus issue with free warrants. Eita Resources has proposed the issuance of bonus shares, together with free warrants, to reward its shareholders. The bonus issuance will be on the basis of one bonus share for each existing share held on an entitlement date to be announced. Free warrants will be on the basis of one free warrant for every three existing shares held. The plans will involve the issuance of up to 130m bonus shares and 86.67m warrants. The exercise price of the warrants has been fixed at 70 sen each. (The Edge)

Asia Poly: Buys 30% stake in acrylics manufacturer GB Plas for RM15m. Asia Poly has inked a heads of agreement to acquire a 30% stake in GB Plas SB for RM15m. It said the agreement was signed with GB Plas' MD Gooi Chin Hooi who is currently its largest shareholder. Gooi currently holds a 65% stake in GB Plas. Asia Poly said both parties shall conduct due diligence in regard to the proposed acquisition, and the corporate exercise is expected to be completed by 1Q21. GB Plas is one of the world's leading manufacturers and exporters of extruded acrylic and plastic sheets. (The Edge)

Petronas Dagangan: Sees recovery in 3Q. Petronas Dagangan (PDB) saw gradual recovery from the impact of Covid19 and MCO, recording a pre-tax profit of RM288.3m in 3QFY20 compared to RM317.7m a year ago. "It is an improved performance for PDB since March 2020, with sales volume recording a 34% QoQ increase, mainly contributed by higher volume in Mogasand Diesel, as nationwide activities gradually picked up from pandemic-related restrictions." In the commercial segment, PDB said Jet A1 had seen an increase in volume as domestic travel recovered. Its non-fuel income had also grown as Kedai Mesra become a more convenient shopping option during this pandemic, PDB said. (NST)

Petronas Chemicals: 3Q net profit falls to RM471m. Petronas Chemicals’ (PChem) net profit for 3QFY20 fell to RM471.0m, from RM553.0m registered in 3QFY19. Revenue slipped 6% to RM3.46bn from RM3.67bn previously, largely due to lower product prices. PChem said the overall average prices for the group decreased YoY, which is in tandem with declining crude oil price arising from the Opec+ fallout and softer demand following the Covid-19 pandemic. However, it said the group recorded higher plant utilisation of 90% with 81% in 3QFY20, mainly due to lower level of statutory turnaround activities, and correspondingly, production and sales volumes increased. (Malay Mail)

Automotive (Neutral): October vehicle sales up 5.2% YoY to 56,670, second-highest monthly sales this year. Malaysia's vehicle sales rose by 5.2% YoY to 56,670 vehicles in October. The Malaysian Automotive Association (MAA) said that the country's vehicle sales inched up by 0.4% MoM. This made October's sales figure the second highest this year after July, which saw 57,552 units sold. The MAA explained that the higher YoY and QoQ sales were due to new model launches and ongoing aggressive promotional car campaigns by car companies. However, MAA said November vehicle sales are expected to be lower than those seen in October. (The Edge)

MARKET UPDATE

The FBM KLCI might open lower today tracking US stocks which fell for a second-straight day, even after European shares built on a record-breaking rally this month, on concerns of the surge in Covid-19 cases against the recent vaccine breakthroughs that will help the global economy get back on its feet. The S&P 500 slumped 1.2%, extending Tuesday’s slide, as losses picked up in afternoon trading shortly after New York City announced it was closing schools again. The tech-heavy Nasdaq Composite closed 0.8% lower. In Europe, the region-wide Stoxx 600 index rose 0.4%, adding to gains that have put it on course for its strongest month in data going back to the late 1980s. The UK’s FTSE 100 also closed 0.3% higher after another jolt of positive news on a potential vaccine.

Back home, the FBM KLCI fell 0.33% or 5.4 points to 1,604.75, after moving between 1,595.09 and 1,611.58. Market breadth was negative with losers thumping gainers 731 to 473, while 457 counters were unchanged. Elsewhere in Asia, Tokyo's Nikkei 225 fell 1.1%, while Seoul's Kospi added 0.26%. Hong Kong’s Hang Seng Index gained 0.49%, while the Shanghai Stock Exchange Composite Index rose 0.22%.

Source: PublicInvest Research - 19 Nov 2020

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