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Equities

Malaysia stocks advance tracking Wall Street recovery, Singapore shares decline

City-state's banks drag STI lower

KUALA LUMPUR (Nikkei Markets) -- Malaysia shares rose Wednesday, boosted by an overnight rebound on Wall Street that saw the S&P 500 Index jump the most in more than a year.

Singapore equities closed lower, as losses in lenders ahead of earnings by DBS Group Holdings eclipsed the positive U.S. cues.

The Bursa Malaysia KLCI index advanced 1.3% to 1,836.68, recovering from its worst fall in two years recorded on Tuesday.

The KLCI's biggest jump in two-years came after the S&P 500 Index closed 1.7% higher, marking its best session since November 7, 2016. The index had fallen as much as 2% earlier in the session, but stocks managed to claw back losses. Wall Street has come under pressure in recent days as investors nervously eyed 10-year U.S. bond yields hovering just below their highest level in four years. Analysts said that the upside on U.S. borrowing costs may be limited from here, providing relief to global equity markets.

"We believe that yields are currently overpricing (U.S.) inflation risks," DBS Bank said in a note. Valuations and fundamentals will prevent the 10-year yield from crossing the 3% mark on a sustained basis in the coming months, it said.

UOB Kay Hian Securities' head of Malaysian research Vincent Khoo expects KLCI stocks to regain momentum as national elections, which must be held by August, draw near. Khoo said he saw no clear systemic risks that would significantly derail economic growth or dry up liquidity in the financial markets.

On the KLCI, the day's best performer was pay TV operator Astro Malaysia Holdings, which rose 4.4%.

CIMB Group Holdings and Genting Malaysia advanced 3.1% and 2.4%. The two stocks "appeal the most" among large caps, analysts at UOB said.

Shares of exchange operator Bursa Malaysia rose 1.1%. Earlier, it had risen 5% to the highest since 2008, a day after Malaysian and Singaporean authorities announced a cross-border stock trading link between the two neighbors by this year end.

The move could increase trading values, CIMB Investment Bank said in a note to investors. "A 1% increase in the trading value of the equity market would raise Bursa's 2018-2020 net profit by about 0.7%," analyst Wilson Ng said.

Hartalega Holdings, Malaysia's biggest glove maker by market value, rose 6.1% after reporting a 71% surge in third-quarter net profit.

Fraser & Neave Holdings, a unit of the Singaporean property and drinks conglomerate, climbed 0.8%. Analysts remained positive on the stock despite Fraser & Neave reporting a 16.1% fall in first-quarter net profit. The company's Malaysian and Thailand businesses will continue developing new products focused on fulfilling demand for consumer health requirements and affordability, it said Tuesday.

Singapore's Straits Times Index dropped 0.7% to 3,383.77, after rising to 3,460 earlier in the day. The city-state's biggest lender DBS Group fell 1.4%. It will report December quarter earnings before market opens Thursday. United Overseas Bank and Oversea-Chinese Banking Corp., which report earnings next Wednesday, dropped 1.5% and 0.7%.

Real estate companies were among other major losers, with CapitaLand falling 2.5% and City Developments dropping 1.3%.

Singapore Exchange advanced 1.7% after saying that total securities turnover jumped by 53% in January on a month-on-month basis. Singapore Telecommunications, which reports fourth-quarter earnings Thursday, added 0.6%.

SIA Engineering rose 0.6%. The company signed a memorandum of understanding with international technology group Safran to collaborate in the field of data analytics.

Japan Foods Holdings advanced 9.5% after saying third-quarter net profit rose by more than 70%. ESR REIT, which said late Tuesday it had entered into an agreement to sell a property for S$23.9 million ($18 million), added 0.9%.

-- Alexander Winifred & Joannah Perez

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