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Singapore investors turn cautious, Axiata weighs on Malaysian telecom stocks

SINGAPORE (NewsRise) -- Singapore stocks snapped a two-day rally on Friday as investors turned cautious ahead of the weekend after U.S. President Donald Trump once again accused China of manipulating the yuan's exchange rate. The drop in oil prices also sapped confidence, hurting offshore marine stocks.

The FTSE Straits Times index ended the day 0.7% lower at 3,117.03. Still, the index was up 0.3% for the week, having hit an 18-month high on Thursday.

In Malaysia, disappointing earnings from some major companies damped sentiment. The FTSE Bursa Malaysia KLCI index lost 0.4% to slip below the 1,700 mark to 1,698.35, its lowest level in two weeks.

There is still "a lot of uncertainty in the global macro environment, with Trump as well as elections in the EU. It's hard to put a finger on these developments," said Shekhar Jaiswal, head of research at RHB Research Institute in Singapore.

In an interview with Reuters on Thursday, Trump declared China the "grand champions" of currency manipulation, contradicting earlier remarks by Treasury Secretary Steven Mnuchin.

Trump's comments nudged most Asian bourses lower as investors took a breather to await developments.

The Singapore market could see some rotational play now that the earnings season is over, Jaiswal said, adding that RHB's preferred blue chips include United Overseas Bank, City Developments and Keppel Corp.

UOB fell 0.7% to S$21.70, declining alongside rivals DBS Group and Oversea-Chinese Banking Corp., as investors took money off the table. Banks have been among the top blue-chip performers in Singapore this year despite concerns about bad debts.

Shares of Sembcorp Marine, the world's second-largest builder of offshore rigs, fell 4.1% to close at S$1.74 while majority shareholder Sembcorp Industries dropped 2.7% to S$3.27 despite posting better-than-expected results for the fourth quarter ended December.

Sembcorp Industries said on Thursday that its net profit for the period more than doubled from a year ago to S$147.5 million in the absence of provisions by its offshore and marine unit.

Shares of Keppel Corp., the world's biggest rig builder, ended unchanged at S$6.95. Keppel Corp. benefits from having a large property arm that has accounted for the bulk of earnings in recent quarters.

Commodities firm Noble Group plunged 17% to 22.5 Singapore cents, prompting a query from the Singapore Exchange.

Noble Group subsequently pointed to a post released by Iceberg Research, which questioned the company's reported book value. The people behind Iceberg are unknown, but its commentaries on Noble Group over the past two years have contributed to a sharp decline in the stock.

In Malaysia, Axiata Group lead declines for the second straight day after reporting a loss for the October-December quarter and slashing its dividend, dragging other telecom stocks lower. Axiata slumped 5.3% to 4.29 ringgit, adding to Thursday's 5.6% fall.

Mobile phone operator Maxis shed 1.4% to 6.29 ringgit while DiGi.Com lost 0.8% to 5.02 ringgit.

Tan J. Young, an analyst with Hong Leong Investment Bank, said the bank has lowered Axiata's earnings-per-share estimates for FY17 and FY18 by 6.9% and 11.6%, respectively, following its results, and cut the target price on the stock to 4.65 ringgit from 5.28 ringgit.

Casino operator Genting Malaysia, amongst the best performers on the KLCI this year, fell 3.5% to 5.28 ringgit.

The company late Thursday said that net profit for the October-December quarter rose four-fold to 1.69 billion ringgit aided by the sale of a stake in Genting Hong Kong. It declared a special dividend of 7.3 sen per share for the year and said it remains cautious about the near-term outlook for the leisure and hospitality industry although it continues to be positive in the long term.

Genting Bhd., which owns a stake in Genting Malaysia and which also reported results Thursday, rose 0.3% to 9.11 ringgit. Net profit for the fourth quarter more than tripled to 1.14 billion ringgit, helped by one-off gains, the company said, and declared a special dividend of 6.5 sen per share.

IHH Healthcare slipped 3.9% to 5.91 ringgit after it reported a 42.51-million ringgit loss for the fourth quarter on account of exchange rate losses as against a net profit of 415.8 million a year ago.

IJM Corp. fell 1.8% to 3.36 ringgit after its net profit dropped 46% to 138.36 million ringgit in the third quarter ended December.

--Nimesh Vora and Kevin Lim

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