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PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 7 May 2021, 9:38 AM

 

PublicInvest Research Headlines - 1 Mar 2021

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Economy

US: Consumer sentiment drops less than initially estimated in Feb. Revised data released by the University of Michigan showed US consumer sentiment deteriorated by slightly less than initially estimated in the month of Feb. The report showed the consumer sentiment index for Feb was upwardly revised to 76.8 from the initial estimate of 76.2. The revised reading came in above economist estimates of 76.5 but was still below the final Jan reading of 79.0. All of February's loss was due to households with incomes below USD75,000, with the declines mainly concentrated in future economic prospects. (RTT)

EU: Germany's import prices continue to fall in Jan. German import prices continued to fall in Jan, data from Destatis revealed. Import prices declined 1.2% YoY, but slower than the 3.4% decrease seen in Dec and economists' forecast of -2.1%. The annual fall was largely driven by a 13.1% drop in energy import prices. Excluding energy, import prices were 0.3% higher than in the previous year. On a monthly basis, import price inflation rose notably to 1.9% from 0.6% in Dec. Data showed that export prices grew for the first time in eleven months in Jan. Prices edged up 0.1% annually, reversing a 0.6% fall in Dec. (RTT)

UK: BOE’s Haldane sees risk of Central Bank complacency on inflation. Bank of England Chief Economist Andy Haldane said he sees a risk of UK inflation accelerating more than expected, warning fellow central bankers against being too relaxed about taming the rise in consumer prices. The comments strike a more hawkish tone than other BOE policy makers, who have warned against potential long lasting scars on the economy and labor market by the coronavirus crisis. Haldane has been the most optimistic member of the BOE’s rate-setting committee about the prospect of economic recovery. (Bloomberg)

China: Economy could grow 8-9% this year from low base in 2020, central bank adviser. China’s GDP could expand 8-9% in 2021 as it continues to rebound from the Covid-19 pandemic, Liu Shijin, a policy adviser to the People’s Bank of China said. This speed of recovery would not mean China has returned to a “high-growth” period, as it would be from a low base in 2020, when China’s economy grew 2.3%. China is set to release a government work report on March 5 which typically includes a GDP growth target for the year. (Reuters)

India: Economy grows in Dec quarter. India's economy expanded in the final three months of 2020, thus exiting a severe recession caused by sharp contractions in the previous quarters due to the impact of one of the harshest lockdowns to battle the coronavirus pandemic. GDP grew 0.4% in the three months to Dec, data from the statistics ministry showed. The decline in the Sept quarter was revised to 7.3% from 7.5% and the contraction in the June quarter was revised to a record 24.4% from 23.9%. The GDP estimate for the fiscal year ending March 31 this year was revised to -8.0% from -7.7% projected on Jan 29. In the fiscal year 2019-20, the economy grew 4.0%. (RTT)

India: Central Bank favors retaining inflation target regime. The Reserve Bank of India said that its current inflation targeting regime is effective at containing price-growth and that it recommends the government renew it for another five years. The central bank’s recommendation on flexible inflation targeting, known as FIT, comes after a run of consumer prices above its expected range raised speculation that the government of Prime Minister Narendra Modi would order up a new mechanism to replace the one put in place in 2016. (Bloomberg)

Japan: Jan factory output rises for first time in three months, retail sales drop. Japan’s industrial output rose for the first time in three months in Jan thanks to a pickup in global demand, in a welcome sign for an economy still looking to shake off the drag of the coronavirus pandemic. But retail sales, a key gauge of consumer spending, posted their second straight month of declines in Jan as emergency measures taken in response to the pandemic hit consumption. Official data released on showed factory output advanced 4.2% in Jan, boosted by sharp rises in production of electronic parts and general-purpose machinery and smaller increase in car output. (Reuters)

Markets

Top Glove (Trading Buy, TP: RM7.30): Plans to float shares in Hong Kong to raise RM7.7bn. Top Glove is planning to float new shares in Hong Kong to raise up to RM7.7bn. (The Edge) Comment: The proposed dual primary listing on the Main Board of Hong Kong Stock Exchange (HKEX) involves an issuance of up to 1.5bn new shares, c.19% of Top Glove’s total issued shares. This will raise up to RM7.7bn fresh capital, which will mainly be used to fund for its capacity expansion. We view this development positively, as this move allows Top Glove (i) to enhance investor reach and diversify investor base and (ii) improve trading liquidity on all Bursa, SGX and HKEX. Successful listing on HKEX could also help improve brand awareness for Top Glove. Maintain Trading Buy with a TP of RM7.30.

Vivocom: Secures RM3.8bn sand supply contract. Vivocom Intl Holdings announced a USD934.7m (RM3.79bn) sand contract awarded by the joint-venture contractor undertaking the main reclamation works for the Hong Kong International Airport Three Runway System project. In a statement, the group said the three-year contract was clinched by V Development Group — which will soon merge with Vivocom — via its 97%-owned subsidiary Rain International SB. (The Edge)

GDB: Has tender book of RM1.3bn . GDB Holdings which recorded better performance in the financial year ended Dec 31, 2020 (FY2020) has a tender book of RM1.3bn currently. The construction services firm said it has set a target to win RM500m worth of new jobs this year. Its group managing director Cheah Ham Cheia said GDB’s success in securing new contracts in 2019 and 2020 placed the company favourably to withstand the dampened property market for the next few years. (Bernama)

Datasonic: Bags Home Ministry contract worth RM4.33m . Datasonic Group has bagged a contract worth RM4.33m from the Ministry of Home Affairs. Datasonic said its unit Datasonic Technologies SB had accepted a letter of award (LOA) from the ministry for comprehensive maintenance services of equipment, software and application of the facial live capture (FLC) image system at all issuing and receiving offices of the Immigration Department of Malaysia. (The Edge)

Komarkcorp: Set to be country's largest face mask manufacturer . Komarkcorp plans to become the country’s largest face mask manufacturer by the middle of the year after subsidiary Komark Mask (M) SB received full FDA and Ce certification for its suite of medical masks, which will allow it to export globally. Komarkcorp said it had now mobilised 11 separate mask manufacturing lines and is on track to install a further 15 lines by April this year to bring its current annual capacity of 180m pieces to 420m pieces per year of various types of masks. (Bernama)

DNeX: To appeal MyCC's RM10.3m fine . Dagang NeXchange (DNeX) has been slapped with penalty of RM10.3m for infringement against the Malaysia a Competition Commission (MyCC). The group's wholly owned unit Dagang Net Technologies SB received a notice of finding of an infringement from MyCC pursuant to Section 40 of the Competition Act 2010. "In consultation with our external legal counsels, we will take all necessary and appropriate actions to appeal against the decision," it said. (The Edge)

Market Update

The FBM KLCI might open lower today after rising bond yields blunted US stocks’ market momentum last week despite signs of an improving American economy. On Friday, the Dow Jones Industrial Average fell 469.64 points, or 1.5%, to 3,0932.37, dropping 1.8% for the week. The S&P 500 fell 18.19 points, or 0.5%, to 3,811.15, down 2.45% for the week. The tech-heavy Nasdaq Composite, which has risen farther than its peers since last March and has been particularly driven by momentum traders, suffered a bigger loss last week. It fell 4.9% on the week, its worst percentage loss since the week ended Oct. 29. On Friday, it rose 72.91 points, or 0.6%, to 13,192.35. Government spending and the Federal Reserve’s aggressive monetary policy have supported the stock market during a tumultuous year. But those two sources of stimulus are now fueling inflation bets and sparking a bond selloff. When bond yields were at their lows, they offered investors virtually no returns or even negative returns after inflation. The lack of returns on bonds drove investors to stocks, pushing valuations to their highest point in years. Now that bond yields are rising, those richly valued stocks look less attractive. Stocks in Europe also ended the week lower, with the region-wide Stoxx 600 index closing down 1.6%, taking its losses since Monday to 2.4%. London’s FTSE 100 benchmark shed 2.5% on Friday and Frankfurt’s Xetra Dax slipped 0.7%.

Back home, the FBM KLCI finished 0.24% lower, as broader market sentiment was weighed down by the tech sell-off on Wall Street, and weaker regional performance. At 5pm, the FBM KLCI was down 3.79 points to finish at 1,577.75. Market breadth was negative, with 906 decliners against 316 gainers, while 394 closed unchanged. In the region, Japan's Nikkei 225 tumbled 3.99%, while South Korea's Kospi plunged 2.8%. In China, Hong Kong’s Hang Seng dropped 3.64%, while the Shanghai Stock Exchange Composite Index closed down 2.12%.

Source: PublicInvest Research - 1 Mar 2021

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