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Nikkei Markets

Malaysia, Singapore shares gain amid mixed Asian markets

Banking stocks lift benchmark indices as investors bet on higher interest rate

SINGAPORE (Nikkei Markets) -- Malaysia and Singapore shares rose Wednesday in mixed Asian markets as investors shrugged off geopolitical concerns and bet on banking stocks in a rising interest rate environment.

The FBM KLCI ended 0.5% higher at 1858.26, while the Straits Times Index rose 0.2% to 3533.05 thanks to heavyweight banking stocks. The top three banks in Singapore make up 42% of STI's weighting. In Malaysia, top lenders account for 30% of the KLCI's weighting.

Investor sentiment is at "all-time high" in Malaysia, said Inter-Pacific Asset Management Chief Executive Lim Tze Cheng. "Although current valuation is considered fair, a premium will be given soon on rising optimism in economy."

Fears of inflation quickening resurfaced as the 10-year US Treasury note moved back above 3%, while April U.S. retail sales showed a solid, albeit slower, gain - data that give the Federal Reserve reasons to be more aggressive in hiking interest rates.

North Korea cancelled talks with its southern neighbour to protest joint military drills between Seoul and the U.S., according to news reports. The reclusive regime also said it will reconsider a Jun. 12 meeting with President Trump if Washington insists on Pyongyang relinquishing nuclear weapons.

The rising rate scenario buoyed Southeast Asia's top five banks. DBS Group Holdings added 0.1%, while United Overseas Bank rose 0.1%. Oversea-Chinese Banking Corp. added 1.0%. In Malaysia, Malayan Banking (Maybank) rose 0.6%, while CIMB Group Holdings ended 1.5% higher.

Meanwhile, property stocks suffered after survey results by Singapore's Urban Redevelopment Authority showed developers sold slightly more private homes in April compared to March, but such sales fell 54% from a year earlier.

City Developments closed 2.1% down, while UOL Group fell 2.9%. CapitaLand lost 1.1%.

"We maintain an overweight rating on property development as we expect newsflow on new launches to act as share price catalyst," CGS CIMB said in an investor note. "Singapore-listed developers are trading at an average 37% discount to revalued net asset value."

Flag carrier Singapore Airlines added 0.2% after reporting a 7% on-year rise in the group's total number of passengers carried for April.

In Malaysia, glove maker Hartalega Holdings climbed 1% after its fiscal fourth-quarter net profit grew nearly by a third from the year earlier period. Software firm Prestariang jumped 14% after its net profit doubled in the first quarter.

--Joannah Perez and Alexander Winifred

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