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Nikkei Markets

ASIA MARKETS: Singapore, Malaysia Shares Fall After Selloff In U.S. Technology Stocks

By Kevin Lim and Nimesh Vora
Nikkei Markets
SINGAPORE (Jun 30) -- Singapore and Malaysia shares fell Friday as a selloff in U.S. technology stocks and rising global bond yields marred demand for regional risk assets.

Technology heavy Nasdaq Composite slumped 1.4% overnight to a seven-week low, pacing a broader decline in U.S. stocks. The Dow Jones Industrial Average and S&P 500 each lost almost 0.8%. Technology stocks have been in focus in recent weeks amid concerns over high valuations and the possible fallout on the broader market in case of a deeper correction in such equities.

Recent hawkish commentary from central banks of major economies, which sent bond yields higher, also damped demand for stocks. The U.S. 10-year bond yield rose to a one-month high on Thursday. European and British borrowing costs for 10 years are now at their highest level in more than three months. The U.S Federal Reserve, which increased interest rates earlier this month, remains on course for one more hike this year.

"International markets continued to adjust for a 2018 outlook where other central banks join the Fed in gradually reducing monetary stimulus," said Ric Spooner, the chief market analyst at CMC Markets. "U.S. stocks were among the casualties with selling pressure on high PE technology stocks, leading market declines that saw both the NASDAQ and S&P 500 breaking below recent chart support levels."

Singapore's FTSE Straits Times Index climbed down from one-month highs, losing 1% to close at 3,226.48. For the week, however, the index ended 0.5% higher, primarily helped by a rally in banking stocks on rising bond yields.

DBS Group Holdings fell 0.6% on Friday, but managed a 1.9% gain for the week. Oversea-Chinese Banking Corp. added 1.2% in the five-day period and United Overseas Bank advanced 0.9%. On Friday, OCBC slipped 1.5% and UOB declined 1.7%.

Rig builder Keppel Corp. was another stock to fall on Friday, but closed higher for the week. Brent crude oil prices are up over 4% this week through Thursday. Keppel fell 1.1% on Friday, trimming its advance this week to 1%.

Agribusiness giant Wilmar International was down 3.8% at S$3.35 on Friday after Morgan Stanley downgraded stock to "equal-weight" from "overweight" and slashed the target price by over 20% to S$3.09. "Declining palm oil prices could pressure upstream PBT, and a glut in refining capacity in Indonesia and Malaysia could erode any potential downstream margin gains from lower feedstock costs given lower palm oil prices," it said.

UOL Group fell 3.5% after Nomura cut the developer to "reduce" from "neutral," according to Reuters. Other developers also fell Friday with City Developments dropping 2.1% and CapitaLand declining 1.1%.

The FTSE Bursa Malaysia KLCI slipped 0.4% to 1,763.67 on Friday to a one-month low. The 30-stock gauge has been down 0.9% since last Friday, marking its second consecutive weekly decline.

Genting Malaysia was among the major losers on Friday, falling 1.4% to extend its decline this week to 5.7%. Astro Malaysia dropped 3.8% on Friday and by 4.5% for the week.

Seacera Group advanced 4.2% on Friday after a senior company official said the ceramic tile maker is in talks with several companies to jointly develop a township in 501 acres that is expected to support the company's revenue.

Hai-O Enterprise rallied 4.9% to a record high of 4.09 ringgit after better-than-expected fiscal fourth results. Net profit jumped over 63%. Kenanga Research increased earnings estimate for fiscal year 2018 and increased its target price to 4 ringgit from 3.64 ringgit.

LB Aluminium sank 9% after the aluminium extrusion maker said Friday that fiscal fourth-quarter net profit slumped 76.40% mainly due to an under provision of deferred taxation in the previous year.

A better-than-expected China manufacturing data did little to lift the gloom over regional markets. China's official Purchasing Managers' Index rose to 51.7 in June, up from 51.2 previous month and ahead of 51.0 reading forecast in Reuters poll. Services PMI also increase to 54.9 from 54.5.

- By Kevin Lim and Nimesh Vora; Kevin.Lim@nikkeinewsrise.com; +65 6331 6250
- Edited By Vipin Nair
- Send Feedback to feedback@nikkeinewsrise.com
- Copyright (c) 2017 Nikkei NewsRise Asia Pte Ltd

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