Economy

Global: Collapse in consumption dragging economic outlook – IMF. A collapse in consumption and other data point to a downward revision of the IMF’s already pessimistic outlook for the global economy given the global coronavirus pandemic, an IMF official said. IMF chief economist Gita Gopinath said economic data gathered since April were confirming the IMF's forecast for a 3% contraction in global economic output, and pointed toward potentially worse scenarios. "If anything, it looks like the outlook will worsen “she told, adding that it would likely” lead to downward revisions." (Reuters)

US: Producer prices plunge more than expected in April. The Labor Department released a report showing US producer prices plunged by much more than expected in the month of April. The Labor Department said its PPI for final demand tumbled by 1.3% in April after edging down by 0.2% in March. Economists had expected prices to drop by 0.5%. The steep drop by the PPI for final demand reflected the largest decrease since the index began in December 2009. (RTT)

US: Fed may take additional steps but not considering negative rates – Powell. Citing the unprecedented speed and scope of the coronavirus-induced economic downturn, Federal Reserve Chair Jerome Powell said the central bank may take additional steps. "At the Fed, we will continue to use our tools to their fullest until the crisis has passed and the economic recovery is well under way," Powell said. However, Powell signalled the Fed remains reluctant to impose negative interest rates. (RTT)

EU: Industrial production falls sharply in March. Eurozone industrial production decreased sharply in March, as several countries went into lockdown to slow the spread of the Covid-19 pandemic, preliminary data from Eurostat showed. Industrial production decreased 11.3% MoM, which was slightly less than the 12.1% slump economists had forecast. In February, output fell 0.1%. Among different industrial groups, durable consumer goods logged the biggest decrease of 26.3%. Capital goods and intermediate goods also logged double-digit declines. (RTT)

UK: Economy plunges into recession amid virus restrictions. The UK economy shrank almost 6% in March as the nation went into lockdown, plunging into what may be its deepest recession in more than three centuries. The slump meant GDP fell 2% in 1Q20, as restrictions to control the coronavirus heaped misery on an already tepid economy. In March during the lockdown saw the dominant services industry shrink by 6.2%. Manufacturing contracted 4.6% and construction lost 5.9%. With all-but essential businesses shuttered, Britain is now almost certainly in a deep recession. The BoE expects a strong rebound in 2021. (Bloomberg)

UK: Retail sales decline at record pace in April – BRC. UK retail sales declined the most since records began in 1995 due to coronavirus lockdown, data published the British Retail Consortium (BRC) showed. Total retail sales plunged 19.1% YoY in April compared to a 2.4% rise in April 2019. This was the worst decline recorded since the BRC started monitoring in January 1995. Meanwhile, like-for-like sales grew 5.7% YoY in April versus a 2% increase in the same period last year. (RTT)

India: To provide USD266m to boost pandemic-hit economy. Prime Minister Narendra Modi said that India would provide INR20trn (USD266bn) in fiscal and monetary measures to support an economy battered by a sweeping weeks-long lockdown to fight the novel coronavirus. In an address to the nation, he said the package was equivalent to 10% of India’s GDP and was aimed at the multitudes out of work and the businesses reeling under the prolonged shutdown. (Reuters)

Markets

AirAsia (Neutral, TP: RM0.78): Studying possibility of increasing airfares. AirAsia is studying the possibility of increasing its airfares in the future, following the implementation of the Conditional Movement Control Order (CMCO). Executive chairman Datuk Kamarudin Meranun said discussions are ongoing to decide if there is an urgent need for AirAsia to increase its airfares in the future. (Bernama)

TEX Cycle: Inks deal to buy Revision Solar. TEX Cycle Technology (M) has entered into a share sale agreement with EFS Revision Energy SB for the proposed acquisition of 500,000 ordinary shares in Revision Solar SB (RSSB) for RM1.85m. RSSB is principally engaged in the provision of equipment and consultancy services related to renewable energy. (The Edge)

Widad: Inks agreement to enter building disinfectant business. Widad Group has inked an agreement to enter the building disinfectant business under its facilities management segment. The group signed the collaboration agreement with Stoika SB which is involved in the distribution of disinfectants, anti-microbial and environmental products in Malaysia. (The Edge)

Kumpulan Powernet: Secures RM208m Nepal hydropower project. Kumpulan Powernet has received a USD48m (RM208.08m) contract from Ghaurishankar Power Development Pvt Ltd to construct a 22.9MW mini hydropower plant in Solukhumbhu, Nepal. Kumpulan Powernet is to complete the works within 36 months from the commencement date or by May 12, 2023, whichever is earlier. (StarBiz)

Green Packet: Teams up with Tencent Cloud to provide eKYC services. Green Packet signed an agreement with Tencent Holdings Ltd to provide e-KYC (Electronic Know Your Customer) services. Under this agreement, the Group will leverage on Tencent Cloud’s facial recognition and machine-learning capabilities to build a localised e-KYC solution in Malaysia through KipleID e-KYC. (The Edge)

Titijaya Group: Disposes of 39m shares in Titijaya Land. Titijaya Group SB, a major shareholder in property developer Titijaya Land, disposed of 39.65m shares. After the disposal of the 3.1% stake, Titijaya Group's stake was reduced to 696.66m shares or 54.78%. Titijaya Land is an urban lifestyle developer with most of its projects in the Klang Valley. (StarBiz)

MyEG: Socso not a direct partner in Labour Departmentendorsed portal to manage Covid-19 screening. My E.G. Services (MyEG) confirmed that it has not entered into any collaboration with the Social Security Organisation (Socso) in relation to the launch of its one-stop portal for employers to manage the Covid-19 screening of their workforce. It was commenting on Socso's statement that it has not established any cooperation with MyEG for the implementation of the Prihatin Screening Programme. (The Edge)

Taliworks: 3Q net profit almost doubles, pays 1.2sen dividend. Taliworks Corp's net profit almost doubled to RM19.68m in the 3QFY18 from RM10.01m a year ago, on higher contributions from the construction and water treatment, supply and distribution divisions. This was further supported by lower cost of operations specifically from lower rehabilitation and maintenance cost incurred in its Langkawi operations. (The Edge)

Market Update

The FBM KLCI might open with a negative bias today after the Dow Jones Industrial Average fell 516.67 points, or 2.2%, to end at 23,247.97, while the S&P 500 index retreated 50.12 points, or 1.8%, ending at 2,820. The Nasdaq Composite Index finished at 8,863.17, off 139.38 points, or 1.6%. Hopes for a swift U.S. rebound from pandemic shocks collided with Powell’s “highly uncertain” near-term outlook for the economy on Wednesday, even as businesses across the nation work to reopen. In U.S. economic reports, the April producer-price index plunged by 1.3%. In Europe, stocks tumbled too. The Stoxx Europe 600 fell 1.9%.

Back home, the FBM KLCI finished 17.2 points or 1.25% higher at 1,397.13, while share trade volume across Bursa Malaysia closed higher at an all-time high of 9.59bn shares, as the spectre of resurgence in the Covid-19 outbreak dictated world stock market sentiment. In the region, China’s benchmark CSI 300 index gained 0.2%, Hong Kong’s Hang Seng closed 0.3% lower and Japan’s Nikkei shed 0.5%.

Source: PublicInvest Research - 14 May 2020