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Singapore, Malaysia shares slip after US health bill fails

SINGAPORE (NewsRise) - Shares in Singapore fell for the first time in three sessions Monday as the defeat of U.S. President Donald Trump's healthcare bill reignited concerns about his ability to push through his economic agenda.

Malaysian shares edged lower, even as the ringgit posted its best performance in over two months amid ongoing optimism about foreign fund inflows.

Risk sentiment took a hit following Trump's withdrawal of a healthcare bill that was supposed to repeal and replace the Affordable Care Act, as the president failed to garner enough support for the legislation ahead of a vote on Friday. The move raised questions about the new administration's ability to follow through on other proposed economic policies, including tax cuts and boosts to fiscal spending. The S&P 500 Index shed 1.4% last week amid concerns about Trump's fiscal plans, its worst week since the 2016 elections.

"After a 15% post-election rally US stocks are vulnerable to any political shocks. The failure of the Obamacare repeal is not economically significant, but a hostile parliament threatens the positive outlook," said Michael McCarthy, chief market strategist at CMC Markets. "The Republicans demonstrated that they can't agree on the form of a bedrock policy commitment, potentially undermining any hopes for tax cuts and infrastructure spending."

Safe-haven assets gold and the Japanese yen advanced, while U.S. bond yields and the dollar index fell. The Singapore dollar rose 0.4% to 1.3929, the highest level since the outcome of U.S. elections and the Malaysian ringgit added 0.3% to 4.409.

Singapore's FTSE Straits Times index fell 0.5% to 3,126.88. Capitaland paced declines in the real estate pace with a 1.4% loss, while City Developments and UOL Group also lost more than 1% each.

IEV Holdings jumped 6.6% to S$0.07 after the offshore engineering company said its unit was awarded a contract from an "established" oil and gas operator in Malaysia, which will likely impact earnings for 2017 positively.

Imperium Crown added 2.9% after the property developer said it received interest from third parties for three of its properties. The prospective sale price is pegged at 3.32 billion yen ($30.1 million).

The FTSE Bursa Malaysia KLCI ended less than 0.1% lower at 1,744.95 after rising as much as 0.3% earlier. AMMB Holdings and RHB Bank led losses, falling at least 3% each. Genting Malaysia and British American Tobacco Malaysia were among the best performers, adding at least 1.4% each.

Foreign investors continued to pump money into the nation's equity markets. Inflows from overseas investors last week stood at about 1.1 billion ringgit ($244.4 million), the seventh consecutive week of net purchases, according to MIDF Research. In March so far, foreigners have bought 3.3 billion ringgit, helping put the KLCI on course for its best month since March last year.

"While the market has been performing stronger than expected, fundamentals have remained largely unchanged. As such, we believe the recent market rally could be sentiment and liquidity driven," said Chan Ken Yew, head research at Kenanga Research. "Apart from seeing spill-over effects from the strong regional and global markets, the return of foreign investors to the local equity market in a more aggressive way is a pleasant surprise."

Chan reckons that the risk of a short term correction is increasing and prefers to buy on weakness strategy if the index falls back to the 1,670 to 1,705 levels.

AirAsia shares jumped 3.5% to 2.95 ringgit, their best day in over a month. South Korea's KOTAM or Korea Transportation Asset Management is in talks to buy a stake in the carrier's aircraft leasing unit in a deal which could value the unit at $900 million, Reuters reported Friday, citing three people familiar with the matter.

--Nimesh Vora and Kevin Lim

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