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Asia300

Singapore, Malaysia shares slip as Fed rate bets hurt region

SINGAPORE (NewsRise) -- Shares in Singapore and Malaysia fell on Thursday, as hawkish comments from Federal Reserve officials ahead of U.S. economic growth numbers kept expectations of further rate increases alive.

The Nikkei Asia300 Index was down 0.3%, headed for its first decline in three days after a mixed session on Wall Street. The S&P 500 edged higher, the Dow Jones Industrial Average posted moderate losses after Fed officials Eric Rosengren and John Williams signaled the possibility of more than two rate increases in the rest of 2017. The Fed's dot plot after its latest policy review indicated only two more rate increases this year.

The final reading for U.S. fourth-quarter gross domestic product is due later Thursday amid hopes an earlier estimate of 1.9% growth will be revised upward after a spate of upbeat data sets. Market sentiment in recent sessions has been focused on the collapse of President Donald Trump's healthcare bill, with investors taking it as a sign that his other policies may face similar hurdles.

A quiet day in Asia reflects the "the lack of a strong theme," said Jingyi Pan, a market strategist at IG, adding that the market's reception to hawkish comments by Fed officials had been low. "I am excited for the final reading to U.S. fourth-quarter GDP, which should serve as a reminder to focus on the economic conditions in the country."

Singapore's FTSE Straits Times Index slipped 0.4% to 3,173.24, retreating from 20-month highs. Real estate stocks led losses on the index Thursday, with CapitaLand and City Developments shedding at least 1.3%. Wilmar International fell 0.8% after DBS Group Research said it sees the company's sugar production dropping in 2017 due to damage by tropical cyclone Debbie to Queensland, Australia's sugarcane plantations.

Rig builder Sembcorp Marine added 2.4% after Brent crude prices rose over 2% overnight following a smaller-than-expected increase in U.S. crude inventories.

UOL Group fell 0.3% to S$7. The developer said it increased shareholding in associate United Industrial Corp by 180,000 shares at about S$3.1 a share.

Singapore Exchange slipped 0.1%. The city-state's bourse operator has held talks about possible tie-ups with overseas exchanges, including Nasdaq and CME Group, Bloomberg reported, citing unnamed people familiar with the matter.

The FTSE Bursa Malaysia KLCI fell less than 0.1% to 1,749.25, its second consecutive decline. Genting Malaysia led losses with a 2.6% slide. Broadcaster Astro Malaysia Holdings ended unchanged at 2.81 after falling as much as 1.1% intraday following a 29% decline in fourth-quarter profit. Nomura cut its price target on the stock to 2.81 ringgit, citing a limited upside in a challenging environment.

"We believe market is overbought at this juncture, hence upside could be capped around 1,760," said Loui Low Ley Yee, analyst at Hong Leong Investment Bank.

AirAsia rose for a fourth day, adding 1% Thursday, amid ongoing expectations of a special dividend after a media report suggested the carrier may divest its leasing unit. The euphoria is "unwarranted," as proceeds for shareholders may be limited to 0.17 ringgit a share, UOB Kay Hian said, downgrading the stock to "hold."

South Korea's KOTAM or Korea Transportation Asset Management is in talks to buy a stake in AirAsia's aircraft leasing unit in a deal which could value the unit at $900 million, Reuters reported last Friday, citing sources. UOB said the deal is a positive from the risk management perspective.

--Nimesh Vora and Kevin Lim

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