KUALA LUMPUR (Nikkei Markets) - Malaysian shares Wednesday suffered their biggest single-day loss since the 2008 global financial crisis, while Singapore stocks too slid amid a global equities rout tracking political turmoil in Italy and raging trade war between U.S. and China.
The FBM KLCI lost 3.2% to end at 1719.28, the lowest since December 2017, while the Straits Times Index was back to its April levels after closing 2.1% lower at 3443.95. Both exchanges were shut on Tuesday for public holiday.
In Malaysia, "Investor sentiment has been impacted by news that the high-speed rail and MRT3 projects have been cancelled," said Apex Investment Services Chief Executive Clement Chew. "The index is now trading below December 2017 lows, [so] there's some value coming back."
Construction firms Malaysian Resources Corp, Gamuda, and YTL Corp were some of the hardest-hit stocks following a unilateral announcement by Malaysia's Prime Minister Mahathir Mohamad to scrap the high-speed rail project that proposed to link Kuala Lumpur with Singapore.
Southeast Asia's largest banks in Singapore and those in Malaysia sank tracking fears over stability in the Eurozone as Italy heads to fresh election as early as July. The political uncertainty over the third-largest economy in the common currency bloc has triggered speculation the vote will be a de facto referendum on Italy's role in the European Union. The euro tumbled to its lowest level on Tuesday. The fate of Spanish Prime Minister Mariano Rajoy, who faces a no-confidence vote, added to investors' worries.
"The timing of this confidence vote and notable rise in Spain bond yields suggest that the markets are beginning to reflect higher political risk premiums," said DBS Bank in a note.
As investors flocked to safe haven assets, the yield on 10-year U.S. Treasury fell to 2.83%.
In Malaysia, YTL Corp., Malaysian Resources Corp. and Gamuda - the project delivery partners for the Kuala Lumpur-Singapore high speed rail project - fell 8.8%, 16.8%, and 23% respectively.
AirAsia Group, Southeast Asia's biggest discount carrier, slid 7.9% to over six-month lows following reports of an investigation into the airline's Indian affiliate. AirAsia India said it "refutes any wrong-doing and is co-operating with all regulators and agencies to present the correct facts."
Malayan Banking, Malaysia's largest bank by assets, fell 4.3%, while close rival CIMB Group Holdings, which reported an 11% increase in first-quarter net profit, shed 2.6%.
In Singapore, DBS Group Holdings dropped 3.2%, while Oversea-Chinese Banking Corp slipped 3.0%. United Overseas Bank closed 3.2% lower. The three banks - the region's largest lenders by assets - account for over 40% of the STI's weightage.
Singapore Exchange lost 1.6%. On Tuesday, the stock exchange operator said it will delay the start of its new Indian stock futures contracts as a court dispute in Mumbai heads to arbitration.
Airport services company SATS slipped 1.3% after reporting a 1.8% decline in fiscal fourth-quarter net profit to 65.4 million Singaporean dollar ($48.7 million) on revenue of 423.5 million Singaporean dollar. For the year, the company's net profit rose 1.4% to 261.5 million Singaporean dollar.
--Alexander Winifred and Joannah Perez