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=ASIA MARKETS: Singapore, Malaysia Stocks Post Weekly Gains As U.S. Rate Concerns Ease

KUALA LUMPUR (Mar 16) -- Singapore equities advanced this week, boosted by Singapore Telecommunications and easing concerns over the U.S. Federal Reserve’s interest rate increases.

Malaysia shares snapped a two-week losing run, paced by lenders.

Singapore’s Straits Times Index rose 0.8% this week, despite losses on Friday after the nation’s non-oil domestic exports shrank 5.9% on-year in February. The STI fell 0.2% to close at 3,512.14 on Friday.

The benchmark index’s second straight weekly advance came primarily on account of the 1.6% jump at the beginning of the week, its best session in eight months, following a decline in year-on-year growth of U.S. hourly earnings in February. The wage data was closely watched after January’s figures had raised fears the Fed may raise interest rates quicker than expected during this year. There was more encouraging news from the U.S. interest rate point of view as the pace of consumer price increase in the world’s largest economy slowed in February on a month-on-month basis.

Singapore Telecommunications was the biggest contributor to STI’s weekly advance, rising 3.9% since last Friday. RHB Research said in a note on Thursday that following Singtel’s underperformance for the last six to 12 months, “the sell-down offered a good opportunity to accumulate” amid valuations that were below historical averages.

CapitaLand Commercial Trust led the interest-rate sensitive REIT sector higher, up 5.2% this week. Ascendas Real Estate Investment Trust has added 1.5% since last Friday, and Capitaland Mall Trust gained 3%.

On Friday, Singtel advanced 2.1%, CCT added 1.7%, and CMT climbed 1%, while Ascendas REIT ended unchanged.

In Malaysia, the FBM KLCI index rose 0.1% this week. On Friday, it closed almost unchanged at 1,846.39.

Most financials rose this week after Moody’s Investors Service said it expects Malaysia’s bank profits to improve this year, helped by stronger loan demand. Public Bank, the highest weighted stock on the KLCI, advanced 1.6% to a new record 23.02 ringgit. Smaller rival Hong Leong Financial Group rose 2.8% for the week.

The rally in financials eclipsed a 9.7% plunge in shares of Nestle (Malaysia) since last Friday to 131 ringgit. The stock, which had risen more than 60% since the company was included in the KLCI, slumped after hitting 163 ringgit earlier this week, which analysts said indicated a lofty 55 times price-to-earnings valuation.

On Friday, Public Bank edged higher 0.1%, Hong Leong Financial Group added 1.9%, while Nestle (Malaysia) closed unchanged.

Among major movers on Friday, Axiata Group rose 2.3% after Kenanga Investment Bank analyst Cheow Ming Liang said an initial public offering of tower unit edotco could value the company at 8 billion ringgit ($2.1 billion). This would indicate a 113% premium compared with other tower leasing companies in the region, providing further upside to Axiata's valuation, Cheow said.

Press Metal Aluminum Holdings dropped 0.8%. Reuters reported that the U.S. International Trade Commission had made a final finding that imports of aluminum foil from China hurt U.S. producers, a move that locks in place duties of up to 188% on Chinese exporters.

Top Glove Corp., the world’s biggest glove maker by capacity, fell 0.5% as analysts said the stock’s more than 20% rally this year had stretched valuations.

Investors are “underpricing short-term risks such as strong currency headwinds that may eat up profits, potential supply recovery in the Chinese vinyl glove space, and unprecedented sales volumes which could unwind on possible inventory build-ups,” UOB Kay Hian Securities analyst Chan Jit Hoong said.

- By Alexander Winifred and Joannah Perez;; +60320267363
- Edited By Nimesh Vora
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