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Nikkei Markets

Malaysia, Singapore shares fall as US-China trade woes weigh

Uncertainty over trade row gridlock, Malaysia poll cloud recovery prospect

KUALA LUMPUR (Nikkei Markets) -- Malaysia and Singapore shares fell on Monday as cautious investors ignored overnight Wall Street gains, awaiting cues from an ongoing trade spat between U.S. and China after the sparring economies fail to resolve a deadlock over tariff war.

The FBM KLCI fell 0.7% at 1828.20, while the Straits Times Index ended 0.4% lower to close at 3,532.86. In Malaysia, 27 out of 30 companies of the benchmark index ended in the red, while in Singapore, real estate stocks retreated. The Malaysian ringgit and Singaporean dollar each weakened slightly.

"While the trade tussles between U.S. and China is nothing new, it has escalated to another level since Trump came into power," said Inter-Pacific Asset Management Chief Executive Lim Tze Cheng. "Things look shaky on the surface... there's a lot of uncertainty on direction of ongoing negotiations."

Investors are worried that the continuing trade row between the world's two largest economies could weigh on Malaysia and Singapore, both of which count U.S. and China as their major trading partners.

A two-day meeting between officials from China and the U.S. last week resulted in agreements on some trade issues, China's official Xinhua News Agency reported, but it did not provide further details. U.S. officials, meanwhile, demanded a $200 billion reduction in China's trade surplus, according to reports.

Singapore and China traded merchandize worth 137.1 billion Singaporean dollars last year ($102.5 billion), while Malaysia's two-way trade with China totalled 49.68 billion ringgit. U.S.'s trade with Singapore and Malaysia totalled 79.9 billion Singaporean dollars and 22.12 billion ringgit respectively.

"Global risk appetite may continue to part ways amid a stalemate in the US-China trade talks, which saw the U.S. demanding that China trim its bilateral trade surplus by $200 billion by 2020 and China's pushback with a long list of requests," OCBC Bank said in a note.

Investors also sold off Malaysian assets ahead of general election that is due Wednesday. The incumbent National Front coalition led by Prime Minister Najib Razak is expected to return to power in a hotly contested poll, analysts said.

Property counters CapitaLand and UOL Group, which have substantial China exposure, edged down 0.3% and 0.5%, respectively.

Oversea-Chinese Banking Corp. was the top loser of the day, down 3.5%. Earlier, it reported a net profit of 1.11 billion Singapore dollars ($832.8 million) for the first quarter, a 29% on-year surge that analysts said was below expectations. Its insurance unit Great Eastern Holdings bounced back and closed 0.4% higher after two straight sessions of decline.

StarHub, Singapore's No. 2 telecommunications company, fell 1.3%, following its last week's 13% on-year earnings decline in the first quarter.

ComfortDelGro shed 0.5% on the day it reported its taxi arm had placed an order for 200 new hybrid Hyundai Ioniq cars. The land transport company's 6.05 Singapore cents per share dividend went ex-dividend on May 3.

In Malaysia, Axiata Group declined 0.8% after tower unit edotco announced plans to buy 80% of Tanjung Digital for 140 million ringgit ($35.49 million) in a deal panned by analysts as pricey.

Semiconductor company MMS Ventures lost 2.9% after Chief Executive Sia Teik Keat told local media that revenue could drop 10%-to-15% due to reduced orders.

DiGi.Com rose 0.4%. The company is expected to return to the list of Malaysian Shariah-compliant stocks by the end of May following a biannual review.

--Alexander Winifred and Joannah Perez

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