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PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 17 Oct 2019, 8:57 AM

 

PublicInvest Research Headlines - 10 Jul 2019

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Economy

US: Declining job openings point to cooling labor market. US job openings fell in May, pulled down by declines in the construction and transportation industries, potentially flagging a slowdown in employment growth in the months ahead. The Job Openings and Labor Turnover Survey, or JOLTS report from the Labor Department on Tuesday also showed a sharp drop in hiring in May, but layoffs remained low. After hitting an all-time high of 7.6m in late 2018, job openings have been flat this year, suggesting some cooling in the labor market. (Reuters)

US: Powell heads to Congress with rate cut in play, risk on his mind . Jerome Powell is likely to leave Federal Reserve interest-rate cuts firmly on the table when he appears before Congress this week, even though the latest US jobs report dialed down the urgency to ease borrowing costs. (Bloomberg) 

US, China: US exempt some medical, electronic devices from China tariffs . The Trump administration will exempt 110 Chinese products, from medical equipment to key capacitors, from hefty tariffs, it said on Tuesday, offering relief to some US firms which have said the taxes harm their bottom lines. The relatively narrow exemption list will provide relief from 25% tariffs the US slapped on USD34bn of Chinese imports on July 6, 2018, one of the first salvos in a bilateral trade battle that has roiled global supply chains and cost billions. The retroactive exclusions are effective as of that date, and extend for a year from Tuesday. (Reuters)

EU: Europeans call for urgent meeting of Iran nuclear deal parties . European powers accused Iran on Tuesday of “pursuing activities inconsistent with its commitments” under a 2015 nuclear deal and called for an urgent meeting of the parties to the agreement to discuss Tehran’s compliance. Britain, Germany, France, Russia, China and Iran are the remaining parties to the deal - known as the Joint Comprehensive Plan of Action (JCPoA) - which was abandoned by the United States last year. The Joint Commission, chaired by the European Union’s top diplomat Federica Mogherini, is made up of the remaining parties to the deal and was created to monitor implementation and address any issues. “Iran has stated that it wants to remain within the JCPoA. It must act accordingly by reversing these activities and returning to full JCPoA compliance without delay,” the European countries said. (Reuters)

UK: Seeks Brexit concessions, saying Dublin has the most to lose . The UK is hoping Ireland will back down on its Brexit stance, as a senior minister warned the government in Dublin that it risks losing most from Britain leaving the bloc without a deal. Brexit Secretary Stephen Barclay held talks in Brussels on Tuesday with Ireland’s European commissioner, as the Irish government said the current Brexit deal was the only viable way to avoid a hard border with Northern Ireland, and hinted that a no-deal exit risked installing new border infrastructure on the island -- something it wants to avoid. The EU also recognizes that no-deal is in neither side’s interest, that no-deal particularly, if one looks at the asymmetric impact across Europe, particularly impacts Ireland,” Barclay told reporters in Brussels. “The impact of no-deal is greater to the Irish economy than it is to the UK so the EU wants to avoid no-deal just as the UK wants to avoid no-deal.” (Bloomberg)

Japan, South Korea: Raise stakes in dispute over forced labor. Japan and South Korea raised the stakes in a dispute that threatens to disrupt global supplies of smartphones and chips, with South Korea denouncing Japanese reports it had transferred a sensitive chemical to North Korea. At the root of the diplomatic row between the two US allies is compensation demanded by Seoul for South Koreans forced to work for Japanese firms during World War Two. It worsened last week when Japan said it would tighten curbs on exports of three materials crucial for advanced consumer electronics because trust with South Korea had been broken over the forced labor dispute. (Reuters)

India: Modi needs more than tax breaks to make India an investment hub. India wants to attract "mega investments” in manufacturing with tax incentives, but it will need more than that to compete with Southeast Asian peers who are gaining from a shift in global supply chains. Finance Minister Nirmala Sitharaman outlined plans in her budget last week to offer income and indirect tax breaks to global technology companies to set up factories in India to make everything from semiconductors to solar panels. The government also wants to organise a global summit to attract investors. (Bloomberg) 

Markets

Aeon Credit: Government sues over unpaid taxes. Aeon Credit Service (M) is being sued by the government to recover unpaid taxes. Aeon Credit had received a writ of summons, together with a statement of claim from the government, to pay taxes due for the years of assessment 2010 to 2016. The matter is in relation to the RM96.8m in additional taxes and penalties that the Inland Revenue Board had demanded from the company for the assessment period, which it announced back in 2017. The matter has been fixed for case management at the Shah Alam High Court on July 23. (The Edge)

Barakah: Petronas suspends unit's licence for three years. Petroliam Nasional has suspended its licence issued to Barakah Offshore Petroleum's unit over the non-performance of a contract. It said its unit PBJV Group SB (PBJV) received a notification of suspension of the licence from the national oil company. “The letter from Petronas indicated that there was an adverse report from Petronas Carigali SB (PCSB) pertaining to the non-performance of PBJV in relation to the contract relating to provision of underwater services for PCSB. “Resulting from that, Petronas has decided to suspend PBJV’s licence for a period of three years with effect from the date of the letter,” it said. (StarBiz)

Pensonic: Sells PJ property for RM19.5m. Pensonic Holdings is selling its commercial property in Petaling Jaya, comprising a land plot with buildings, for RM19.5m cash. Part of the sale proceeds will be used to repay borrowings (RM10m) and reduce them to 0.57x from 0.71x as at end-May 2018. Another RM9.2m will be used for working capital. The property comprises a 43,560 sq ft leasehold land, together with a four-storey building and a three-storey annex with built-up floor area measuring 67,035 sq ft. Pensonic igned the sale and purchase agreement with the buyer Chua Trading Company SB. (The Edge)

PUC: Keen to become digital banking player. PUC is keen to explore opportunities to participate in the digital or virtual banking business, said group managing director and chief executive officer Cheong Chia Chou. "We are eager and look forward to Bank Negara Malaysia's announcement on the digital banking framework. Last month, the central bank said the framework was more than 50% ready and on track to be launched by year end, with more than 10 parties having expressed interest to set up digital banks in the country. The digital service company was also open to discussing with more parties to offer its micro-financing service. (The Edge)

Asdion: Proposes RM30.76m share capital reduction. Asdion’s board has proposed to undertake a capital reduction to cancel RM30.76m of its issued share capital, to eliminate the company's accumulated losses. The credit of RM30.76m arising from the exercise will be used to reduce the accumulated losses, while the surplus after the elimination will be used to set off any future losses, or other purposes deem fit. The share capital reduction will enable the company to rationalise its statement of financial position, which may enhance its credibility with bankers, customers, suppliers, and investors. (The Edge)

Focus Point: Plans 1-for-3 bonus issue. Focus Point Holdings proposes a bonus issue of up to 55m shares on the basis of one bonus share for every three existing shares held. The group said that the exercise will provide shareholders with greater participation in the equity of the company in terms of number of shares held and maintaining percentage equity interests. The bonus issue is expected to be completed by the 4Q of the year. (SunBiz) 

Market Update

The FBM KLCI might open flat today after US stocks ended mixed on Tuesday after a late-day rally boosted the S&P 500 and Nasdaq Composite but left the Dow Jones Industrial Average to suffer its third straight loss, a day ahead of congressional testimony by Federal Reserve Chairman Jerome Powell. The Dow Jones Industrial Average fell 22.65 points, or 0.1%, to end at 26,783.49, while the S&P 500 index gained 3.68 points, or 0.1%, to close at 2,979.63. The Nasdaq Composite Index added 43.35 points, or 0.5%, to settle at 8,141.73. On the economic data front, the National Federation of Independent Business released its small business optimism index, which fell to 103.3 in June, from 105 in May. The decline follows gains in the previous four months, and remains above the historical average. The number of US job openings fell slightly to 7.32m in May, though near record highs, while the share of workers who voluntarily left their jobs also ticked slightly lower to 2.5% from a post-recession peak of 2.6%. European stocks were under pressure, closing down 0.5%, led by a 0.9% drop for the German DAX 30 index.

Back home, the FBM KLCI index gained 5.23 points or 0.31% to 1,682.87 points on Tuesday. Trading volume increased to 2.41bn worth RM1.72bn. Market breadth was negative with 401 gainers as compared to 402 losers. The regional markets mostly declined on Tuesday amid dampened expectations on the Fed cutting rates this month. Mainland China shares mostly continued to fall after losses on Monday. At the closing bell, the Shanghai composite edged down 0.18% to close at 2,928.23. Hong Kong’s Hang Seng index fell 0.68% in its final hour of trade. In Japan, the Nikkei 225 rose 0.14% to close at 21,565.15, while the Kospi in South Korea tumbled 0.59% to close at 2,052.03.

Source: PublicInvest Research - 10 Jul 2019

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