Author: PublicInvest | Publish date: Fri, 13 Nov 2015, 09:42 AM
Economy
US: Fed officials lay case for Dec liftoff. Federal Reserve officials lined up behind a likely Dec interest rate hike with one key central banker saying the risk of waiting too long was now roughly in balance with the risk of moving too soon to normalize rates after seven years near zero. New York Fed President William Dudley said the decision still required policymakers to "think carefully" because of the risk that the US is facing chronically slower growth and low inflation that would justify continued low rates. (Reuters)US: Fed should wait with liftoff to see firm inflation signs: IMF note. The US Federal Reserve should wait to see firm signs of rising inflation as well as a stronger labor market before hiking benchmark interest rates, an IMF paper said. In a report prepared for the upcoming G20 meeting, IMF staff said spare economic capacity and very low inflation justified keeping monetary policy loose in most major advanced economies. (Reuters)
US: Job openings increased in Sept to 5.5m. Job openings in the US climbed in Sept to the second-highest on record, a sign the labor market continues to strengthen. The number of positions waiting to be filled increased by 149,000 to 5.5m from a revised 5.4m in Aug. (Bloomberg)
EU: Draghi says inflation weakening as Dec decision nears. Mario Draghi signaled that the ECB is ready to boost its stimulus programs next month as inflation wanes and economic prospects worsen. “Signs of a sustained turnaround in core inflation have somewhat weakened,” the ECB president said. (Bloomberg)
EU: EBRD to buy up to EUR250m of Greek bank stakes – source. The European Bank for Reconstruction and Development is set to buy up to EUR250m of equity stakes of Greece's four biggest banks, a person with knowledge of the plans said. The lenders are Alpha Bank, Eurobank, National Bank of Greece and Piraeus Bank that are all at least part owned by Greece's state-backed bank rescue fund. (Reuters)
EU: Production falls more than expected in Sept. Euro zone industrial production shrunk by more than expected in Sept compared to Aug, mainly due to a sharp fall in the output of consumer goods, but it was still higher than a year earlier. (Reuters)
UK: BoE's Haldane sees no need for rate hike any time soon. Britain does not need an interest rate hike in the near future because wage growth has fizzled and the outlook for the global economy is uncertain, the BoE's chief economist said. Andy Haldane also reiterated his view that the Bank's next move might even be a rate cut rather than a rate hike as Britain's economy appeared to be losing momentum. (Reuters)
China: Slump in Oct credit highlight growth challenges. Credit activity in China's financial system dropped to its lowest level in 15 months in Oct, highlighting the challenges the country faces as it seeks to juice investment to reinvigorate growth. (Reuters)
Japan: Machinery orders point to tepid rebound from feared recession. Japan's core machinery orders rose in Sept for the first time in four months, but companies forecast only modest gains in orders in Oct-Dec, a sign the economy's recovery from an expected recession could be slow. (Reuters)
Markets
Supermax: To supply gloves to UK National Health Service. Supermax Corp’s UK unit, Supermax Healthcare Ltd, has been awarded one of the licenses to supply medical gloves to the National Health Service (NHS) over the next four years. Supermax said the publicly-funded NHS covered all hospitals in the UK, consuming about GBP50.0m (RM333.5m) of medical gloves annually. The company said there would be no immediate significant financial impact in the coming quarters from the award, but going forward, it was expected to contribute positively towards the earnings and net assets of Supermax Group for the 2017-2020 financial years. (StarBiz)Stemlife: Cordlife makes conditional takeover offer. Singapore-listed Cordlife Group Ltd, a cord blood-banking firm, has made a conditional takeover offer for Stemlife, Malaysia’s first cord blood-banking firm, at 45 sen per share. The takeover offer was triggered yesterday after Cordlife, already a major shareholder of Stemlife, crossed the 33% threshold with the acquisition of three million shares or 1.21% of the company. (StarBiz)
AZRB: Getrahome secure two Kwasa Damansara projects. Ahmad Zaki Resources (AZRB) and Getrahome SB were the two successful bidders for its residential projects under the Bumiputera developer category in Kwasa Damansara. Master developer Kwasa Land SB said they were the two successful developers among the 21 pre-qualified Bumiputera developers which were invited on May 14 to pitch for the projects. (StarBiz)
Instacom: Wins three contracts worth RM259.3m. Instacom Group, through its various subsidiaries, have clinched three contracts worth RM259.3m. The company said that indirect subsidiary Vivocom Enterprise SB had received two letters of award (LoAs) from CRCC Malaysia for construction works in Klang and Kuala Lumpur. The first construction job, valued at RM195.6m, involves the second package of the proposed IGateway mixed commercial development in Klang. The second one, worth RM34.8m, involves construction works for the second package of the Pavilion Hilltop condominium project in Mont’Kiara. (StarBiz)
OWG: Proposes bonus issue. Only World Group Holdings (OWG) has proposed to undertake a 1-for-5 bonus issue. The leisure and hospitality industry player said the proposed issuance of up to 37.0m bonus shares would be done by capitalising up to RM18.5m from the share premium account of the company. OWG currently has RM19.1m in the account. The entitlement date will be determined at a later date after getting all the relevant approvals for the proposed bonus issue. (StarBiz)
Selangor Dredging: Associate sells London building for RM86m. Chedstone Investment Holdings Pte Ltd, which is 50% owned by Selangor Dredging’s unit SDB International SB, is selling a four-storey building in London for GBP13m (RM86.1m). The company said its consolidated earnings and net asset would increase by RM6m while EPS would rise by 1.4sen for the FYE March 31, 2016, arising from the profit. (StarBiz)
MARKET UPDATE
US markets tumbled as investors readied themselves for the first rate hike in almost ten years following comments by Federal Reserve officials hinting as such. One said “the conditions for liftoff could soon be satisfied” while another said the US central bank should raise interest rates from near zero because emergency policies are not needed with the labor market and inflation near to its goals. Data released overnight showed applications for jobless benefit claims unchanged in the first week of November even as another showed the number of positions waiting to be filled rising by 149,000 to 5.53m in September, highlighting the health of the labor market which in turn solidifies the case for an imminent rate hike. On an separate note, oil prices fell to their lowest in more than two months after US stockpiles rose for a seventh week, extending the global surplus. For the day, both the Dow Jones Industrial Average and S&P 500 slumped 1.4%. The negative tone was set earlier in the day in Europe where markets fell the most in six weeks amid disappointing earnings reports which called to question the strength of the economy. Even comments by European Central Bank President Mario Draghi suggesting that he could add to stimulus measures was insufficient to lift the dour mood prevalent. Italy and Spain led major benchmarks lower, down by 2.4% and 2.3% respectively. UK and France’s indices both fell 1.9% while Germany’s DAX slipped 1.2%. Despite China’s economic difficulties, companies there continue to see healthy earnings growth, record-highs in fact (ie. Tencent Holdings and China Mobile). The Shanghai Composite Index took a breather from last week’s sharp gains however, slipping 0.5%. Meanwhile, the Hang Seng Index jumped 2.4% higher as investors reportedly sold shares on the mainland in favor of Hong Kong-listed ones to take advantage of the valuation differences between the two. It was mostly a mixed bag elsewhere around Asia however, with India and Indonesia’s benchmarks 0.5% and 0.2% higher though Singapore, Thailand and Malaysia’s slipped 0.8%, 0.4% and 0.1% respectively.Supermax Corporation announced the receipt of a license to supply medical gloves to the National Health Service in the UK, a development which is undoubtedly positive as the company will benefit from being able to supply to every hospital there and which sees an annual consumption rate of about £50m. Stemlife has received a conditional takeover offer from its major shareholder Cordlife Group Ltd at 45sen a share, a slight 2.5sen premium to its most recent closing price of 42.5sen however. That said, Stemlife’s share price has been on a gradual incline over the last 3 months, gaining slightly more than 30% in that time. Another to benefit strongly from the strong US Dollar, Inari Amertron reported a healthy 34.8% rise in its 1QFY16 net profit to RM45.5m while revenue grew 24.0% to RM274.9m. WCT Holdings has secured another contract from Petronas, this time round worth some RM315.6m for the engineering, procurement, construction and commissioning of substations.
Source: PublicInvest Research - 13 Nov 2015
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