Singapore shares extend gain on DBS rally; Malaysia stocks fall
SINGAPORE (Nikkei Markets) -- Singapore shares rose to a new 21-month high on Wednesday, helped by a rally in DBS Group Holdings as brokerages raised their target price for the stock after the city-state's largest bank posted better-than-expected earnings.
Malaysia stocks slipped from two-year highs amid caution ahead of the U.S. Federal Reserve's policy decision due later in the day.
Singapore's FTSE Straits Times index rose 0.8% to 3,237.81, adding to Tuesday's over 1% advance. Turnover was low with shares worth S$1.2 billion ($877 million) changing hands, as markets in Japan, South Korea and Hong Kong were shut. Banking stocks contributed the most to the last two days' advances as earnings from DBS and United Overseas Bank have alleviated concerns over bad loans. DBS added 4.9% to S$20.83, also a 21-month high, after at least two brokerages increased the target price on the shares.
"Non-performing loan formation and specific provisions have peaked and uncertainties from exposure to the oil & gas sector have diminished," UOB Kay Hian said in a note, raising the DBS target price to S$23.30 from S$21.50 and keeping its "buy" call on the stock. CIMB also raised the target price, saying "better sentiment is driving DBS's share price."
United Overseas Bank, whose earnings exceeded estimates last week, rose 1.9%. Oversea-Chinese Banking Corporation added 2% to hit a 20-month high.
Sembcorp Marine fell 0.6% and Keppel Corp. slid 0.2% after Brent crude prices slipped to a five-month low overnight.
Sembcorp Industries dipped 0.3%. After market hours, it reported a 11.3% increase in net profit for the first quarter.
StarHub rose 0.4%. The company posted a 21% decline in profit for the March quarter after market hours.
Water treatment specialist Hyflux jumped 8.2% after Straits Times reported that foreign buyers are looking to buy a stake in its Tuaspring's power and desalination plant.
Comfortdelgro Corp. dropped 2.2%. It late Tuesday said the Chief Executive Officer of its taxi business had stepped down.
The FTSE Bursa Malaysia KLCI slipped 0.3% to 1,772.51 as investors awaited the outcome of the Fed meeting later in the day. While the U.S. central bank will most likely keep the interest rate on hold, investor focus will be on its outlook for the U.S economy and a roadmap for future rate increases, especially after the gross domestic product growth slowed to a three-year low in the first quarter.
"The likelihood of the Fed moving in the May meeting currently hangs low, down at 12.8% according to Bloomberg's implied probabilities, but what to watch for will be an update to the Fed's thoughts," Jingyi Pan, a market strategist at IG, wrote in a note. "Certainly, the bout of softer economic data would deserve the attention from the Fed though it may not significantly deviate it from their current interest rate lift-off path."
At its March meeting, the Fed raised interest rates by a quarter percentage point and saw two more rate increases in 2017.
Leisure and hospitality major Genting Malaysia slipped 2.2% to 5.86 ringgit. Affin Hwang Investment Bank downgraded the stock to "hold" from "buy," saying the stock was fairly valued after a 33% year-to-date rally. It raised the target price to 6 ringgit from 5.60 ringgit on stronger visitations factor. Its biggest shareholder Genting dropped 0.5%.
Westports Holdings fell 2.8%, among the worst performers on the KLCI on Wednesday.
MISC added 0.3% ahead of its first-quarter earnings on Thursday. Petronas Gas was the top performer with a 1% advance.
--Nimesh Vora and Kevin Lim
--Nikkei Markets is a real-time financial news service for South East Asia's markets published by Nikkei NewsRise Asia Pte Ltd, a Nikkei and NewsRise joint venture company. Nikkei Markets provides wide companies coverage in the region, including the Nikkei's Asia300 companies.