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Equities

Singapore, Malaysia stocks post weekly gains as robust global data cheers investors

Banks lead index gains in both markets

KUALA LUMPUR (Nikkei Markets) -- Singapore and Malaysia stocks rose this week, as equities worldwide started the New Year on a positive note amid robust economic data.

The Singapore's Straits Times Index rose 2.5% this week, and the FTSE Bursa Malaysia KLCI index advanced 1.2%. On Friday, the Singapore gauge slipped 0.3% to 3,489.45. The Malaysian benchmark climbed 0.8% to 1,817.97, the highest since May 2015.

The strong weekly performance for both the markets came after upbeat economic data from around the world. While the December factory activity out of the U.S. and China exceeded expectations, the Eurozone manufacturing purchasing managers' index (PMI) in the month hit a record high. Meanwhile, the IHS Markit's Global PMI for December reached seven-year highs. The data signaled that the upturn in global growth accelerated at the end of last year.

The rising optimum on global growth outlook boosted U.S. markets to record highs and triggered a rally in Asia. The Nikkei Asia300 Index of companies outside Japan posted a weekly advance of 3.2%. Japanese markets, returning on Thursday after the New Year break, rallied 4%.

Out of the 30 stocks on the Singapore benchmark, 25 ended higher. Lenders led the charge with DBS Group Holdings climbing 5.9% and Oversea-Chinese Banking Corp. rallying 4.5%.

"We expect the re-rating on Singapore banks to continue on the back of accelerating loan growth, upside potential to net interest margin, and lower provisions," DBS Group Research said in a note.

UOL Group, up 4.3% since last Friday, led property developers higher for the week after data showed that private home prices rose for the second consecutive quarter.

CapitaLand, which said Friday it was selling equity interests in 20 mall-owning companies in China for $1.1 billion, rose 3.4% this week.

On Friday, DBS dropped 0.7%, OCBC and UOL ended unchanged, and CapitaLand lost 0.3%.

Contract manufacturer Venture Corporation, scheduled to replace Global Logistic Properties on the Straits Times Index, was up 6% for the week. On Friday, however, it slipped 1.2%.

In Malaysia, international investors poured in 785.1 million ringgit ($196.38 million) into the stock market this week through Thursday, up almost sevenfold from last week.

Speculation of the dissolution of parliament next week as the nation prepares for national elections that must be called before August heightened investor interest. The number of shares changing hands crossed five billion for three consecutive sessions through Friday. This helped send exchange operator Bursa Malaysia's share price up by 5.1% this week.

"We may anticipate the KLCI to rally toward 1,820-1,830 as soon as uncertainty over the general election is removed," Hong Leong Investment Bank's head of retail research Loui Low said.

The week's advance on the KLCI was paced by lenders. CIMB Group Holdings and Hong Leong Bank, Malaysia's second- and fourth-largest banks by market capitalization, advanced 2.4% and 1.2% this week amid expectations of a profit-boosting rate hike that could happen as early as this month. The Bursa Malaysia Finance index ended Friday on a three-year high.

On Friday, Nomura Securities said it expects Bank Negara to raise rates by 25 basis points on Jan. 25, ahead of Malaysia's general election to be held "sometime between March and May." A 25 basis-point increase could raise banks' net profit by 2%-3%, Hong Leong Investment Bank said.

The week's best-performing blue chip was industrial conglomerate Sime Darby, with gains of 25.3%.

"Investors are optimistic on earnings from Sime Darby's industrial business," CIMB's Malaysia head of research Ivy Ng said.

On Friday, CIMB rose 2.3%, Genting Malaysia added 2.7%, and Sime Darby advanced 3.4%.

State-linked Axiata Group jumped 4.2% on Friday after Bloomberg reported that the telecom company could list its tower unit, Edotco Group, in an initial public offering to raise at least $500 million.

Oil and gas service company Bumi Armada rallied 7.8% after saying that it anticipates final acceptance for the Olombendo and Kraken floating production storage and offloading units in the first quarter.

This development "will be the culmination of an extended, and much longer-than-expected, construction and commissioning process for the two assets," CIMB said in a note to investors.

PUC, an advertising and e-payment services firm, rose 1.5% to a record 0.33 ringgit. Its Chief Executive Cheong Chia Chou said the company plans to launch e-wallet services in the first half of the year, Nikkei Markets reported Friday.

Rail and energy company Scomi Group plunged 5.6% after shareholders of Scomi Energy Services, its separately-listed unit, rejected a re-merger proposal, throwing a restructuring plan into disarray. Scomi Group had announced plans in August to delist Scomi Energy, and another unit, Scomi Engineering, and merge it with the group company.

--Alexander Winifred and Joannah Perez

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