Author: PublicInvest |
Publish date: Tue, 30 Sep 10:09
Economy
Global: The world economy’s twin giants are exerting conflicting pressures.
As US growth accelerated in the 2Q to the fastest rate since 2011,
China’s economy waned, with manufacturing and lending data pointing to a
weakening in activity. A resurgent US and retreating China is the
reversal of a trend that dominated in the wake of the financial crisis.
Economists at JPMorgan Chase & Co. say it is set to endure. When
gauging international effects from the two economic powerhouses, they
identified two developments to watch. Firstly, an upturn in US spending
on capital equipment should offset the effect of some of China’s
slowdown on emerging nations. Such spending is on track to grow by
double digits again this quarter, helping out the likes of Taiwan and
Singapore. Secondly, global inflation as low as 1% in the current
quarter, partly fostered by a drop in Chinese commodity imports, should
help boost purchasing power, underpinning consumer demand. (Bloomberg)
US: Consumer spending climbs as job gains boost wages.
Consumer spending rebounded in Aug as employment gains revived
household earnings growth and encouraged Americans to return to shops
and car dealerships. The 0.5% increase in purchases was more than
forecast and followed little change in July. Incomes advanced, rising
0.3% last month as wages and salaries climbed the most in three months.
The pickup in spending that accounts for almost 70% of the economy will
help put the expansion on firmer footing as the housing market shows
signs of fatigue. (Bloomberg)
US: Fed's Evans repeats call for patience in raising interest rates.
The Federal Reserve should be "exceptionally patient" in removing
monetary policy accommodation, delaying interest-rate hikes until it is
confident the US economy can withstand them and only raising rates
slowly once it starts, a top Fed official said on Monday. In remarks
that largely repeated those he made last Wednesday, Chicago Federal
Reserve Bank President Charles Evans detailed to a group of economists
the reasoning behind his call for restraint on rate increases, even if
the result is inflation temporarily breaching the Fed's target of 2%.
(Reuters)
EU: Draghi devaluing euro cheers ECB as prices seen fading.
Mario Draghi’s strategy for reviving the euro area looks like
devaluation. While the European Central Bank president says the exchange
rate isn’t a policy target, officials aren’t secretive about their
approval of the currency’s almost 10% slide. The depreciation increases
the cost of imports and boosts exporters’ competitiveness, aiding the
effort to revive inflation that data tomorrow will probably show is the
weakest since 2009. A gauge of economic confidence published today
slipped to the lowest since Nov. (Bloomberg)
UK: Consumer confidence slips on cloudier outlook.
British consumer morale edged down from a recent nine-year high this
month as households became slightly less upbeat about the outlook for
the economy and their personal finances. Sept's decline was driven by a
fall in four of the index's five main components, with the biggest drops
coming in household expectations for their personal finances and the
general economy over the next 12 months. (Reuters)
EU: Sentiment worsens in Sept, inflation expectations fall.
Euro zone economic sentiment deteriorated in Sept to levels last seen
in late 2013 and inflation expectations among households and producers
alike continued to fall. The index was weighed down by less optimistic
consumers, retailers and industry. The only sectors where sentiment
improved slightly in Sept were services and construction. (Reuters)
Japan: Economy takes another hit as spending, factory output fall.
Annual household spending in Japan fell for a fifth straight month in
Aug and factory output unexpectedly declined, highlighting the
challenges policymakers face to revive an economy reeling under the
strain of a sales tax hike. The one bright spot came in data showing the
jobless rate fell in Aug, while the availability of jobs stayed at a
22-year high, suggesting that improvements in the job market will ease
some of the pain on households. Household spending fell 4.7% in Aug from
a year earlier, data by the internal affairs ministry showed. Although
the Bank of Japan is in no mood to deploy additional easing anytime
soon, a run of soft data is raising doubts about the central bank's
conviction that inflation will reach its 2% goal by around mid-2015.
(Reuters)
Japan: Jobless rate falls to 3.5% in Aug. Japan's
jobless rate shrank to 3.5% in Aug and the availability of jobs held
steady at the highest in 22 years, reflecting recent improvement in the
labor market. The seasonally adjusted unemployment rate fell to 3.5%
from July's 3.8%, internal affairs ministry data showed on Tuesday.
Economists' median forecast had pointed to a flat reading at 3.8%. The
jobs-to-applicants ratio was 1.10 in Aug, unchanged from the previous
month when the ratio climbed to its highest since June 1992, according
to data from the labor ministry. (Reuters)
Markets
QL Resources (Outperform, TP: RM3.85): Starts buying
up Lay Hong shares. QL Resources, which launched a voluntary takeover
offer for poultry-related Lay Hong, bought 544,700 Lay Hong shares last
Friday. The company announced that it acquired the shares at RM3.46
each. Last week, QL Resources – which had then owned 26.81% of Lay Hong –
made the takeover offer after its nominee did not get re-elected to Lay
Hong’s board, being its second-largest shareholder. At RM3.46, this was
four sen below the offer price of RM3.50 a share. (StarBiz)
Cypark (Outperform, TP: RM3.20): Q3 earnings up 23% to
RM12m. Environment technology company Cypark Resources posted a 23%
jump in earnings to RM12.1m from RM9.9m in the Q3 ended July 31, 2014
compared to the same quarter a year earlier. This was in tandem with the
24% improvement in revenue to RM66.6m from RM53.7m previously. EPS
inched up to 6.7 sen from 6.13 sen. In the three quarters to-date, the
company’s earnings were up 24% to RM33.5m from RM27m, as revenue
registered a growth of 14% to RM186.9m from RM163.9m. (StarBiz)
SKP Resources: To buy Tecnic to create major plastic parts maker? Low-profile
Datuk Gan Kim Huat is consolidating his businesses in two listed
companies, SKP Resources and Tecnic Group, in a move that will pave the
way for the establishment of a major plastic parts manufacturer.
Yesterday, the share prices of SKP and Tecnic climbed to all-time highs
of 71 sen and RM5.08, respectively, before both stocks were suspended,
“pending a material announcement”. It is learnt that the merger and
acquisition exercise could involve cash and the issuance of new SKP
shares. Gan and his family own about 67% in SKP and 69% in Tecnic,
formerly known as STS Tecnic. (StarBiz)
Alam Maritim: Get contracts extension to build RM75m barge and tug.
Alam Maritim Resources has received a two-year extension to provide one
accommodation barge and one anchor handling tug (AHT) to ExxonMobil
Exploration and Production Malaysia Inc (EMEPMI) for a total contract
sum of RM75.2m. Its wholly-owned subsidiary Alam Maritim (M) SB had
received a letter of extension from EMEPMI, exercising its option to
extend the existing charter party contracts. It said the contracts are
for charters of two years effective from Oct 12, 2014 to Oct 11, 2016.
The contracts were expected to contribute to its earnings and net
tangible assets for the FYE Dec 31, 2014 and beyond. (StarBiz)
Berjaya Corp: Q1 earnings decline to RM8.3m. Berjaya
Corporation’s reported earnings of RM8.28m in the Q1 ended July 31, 2014
compared with RM53.4m a year ago when there was a gain of RM94.7m from
the sale of Berjaya Singapore Hotel. BCorp said its revenue rose 23% to
RM2.5bn from RM2.0bn. Pre-tax profit was RM200.3m compared with
RM261.0m. EPS were 0.24 sen versus 1.13 sen. Elaborating on BGroup’s
pre-tax profit, it said it was impacted due to the hotels and resorts
segment. (StarBiz)
Genetec: Gets RM41.9m job. Genetec Technology has
secured a RM41.9m worth of orders from clients in the electronic,
automotive and pharmaceutical industries. The group said it had bagged a
RM15.9m job from its electronics client, RM25.6m from its automotive
clients and RM400,000 from its pharmaceuticals clients. The group said
the orders would contribute positively to its earnings for the FYE Mar
31, 2015. (StarBiz)
MARKET UPDATE
US stocks closed lower as protests in Hong Kong weighed on global markets.
However, key US indices managed to recoup some losses after declining
nearly 1% at the opening. At the closing, Dow Jones Industrial Average
(DJIA) fell 0.25%, while S&P 500 and Nasdaq declined 0.25% and 0.14%
respectively. Energy stocks such as Exxon Mobil and Chevron led the
decline in DJIA and S&P 500, and casino stocks such as Las Vegas
Sands and Wynn were also hit. While the protests in Hong Kong unsettled
investors, the concerns were unlikely to persist unless the situation
escalates further. Until the commencement of earnings season, investors
will focus on economic data that influence Federal Reserve’s stance and
timing of interest hike. Economic data showed improved US consumer
spending in August with purchases increasing 0.5% and personal income
rising 0.3%, but pending home sales index dipped 1% in August.
Over in Europe, markets closed lower amid weak European economic data and Hong Kong protests.
Euro zone economic sentiment index fell to 99.9 in September from 100.6
in August, while inflation expectations declined with consumer
inflation expectations falling to 4.0 in September from 6.6 in August.
Key European indices such as UK’s FTSE 100, France’s CAC 40 and
Germany’s DAX fell 0.04%, 0.83% and 0.71% respectively.
Asian markets closed mixed with more markets ending lower; in
particular Hong Kong’s Hang Seng Index (HSI) was hit the hardest,
declining 1.9% or 449 pts, amid pro-democracy protests in Hong Kong.
HSBC and AIA were the biggest drags on HSI, accounting for 99 pts drop
in the index. Retailing and property counters were also hit hard.
Elsewhere, Japan’s Nikkei 225 gained 0.50% and China’s Shanghai
Composite index added 0.43%. Australia’s S&P/ASX 200 and Korea’s
KOSPI fell 0.93% and 0.25% respectively. Asean markets closed mixed with
Indonesian and Malaysian markets closing higher but Singapore and Thai
markets ended lower.
Back home, FBM KLCI gained 5.84pts or 0.32% to close at 1,846.34.
The local market opened relatively flat yesterday and even moved into
the negative territory during 10.00-10.45am in tandem with weakness in
regional markets. However, the local market managed to turn around and
ended near the day-high. The last-minute spike in FBM KLCI was led by a
jump in heavyweights such as CIMB (+2.9%) and Maxis (+1.9%). Despite the
positive closing of KLCI, the overall market breadth was negative with
436 losers, 371 gainers and 353 counters traded unchanged. Market
trading volume remained healthy with 2.60bn units traded (trading value
of RM1.88bn).
On the corporate front, SKP Resources and Tecnic Group have been suspended from trading
(pending material announcement) and fuelled market talks on a possible
merger between the two companies which have a common major shareholder.
SBC Corporation has entered into a heads of agreement with HPL Hotels
& Resorts to negotiate the sale of a hotel in Singapore for an
indicative price of RM180m to RM200m. Companies reporting their
quarterly results included Gamuda, Berjaya Corp, Kim Loong Resources and
Crescendo.
Source: PublicInvest Research - 30 Sep 2014
