KUALA LUMPUR (Nikkei Markets) -- Malaysia stocks slipped Thursday amid heightened caution ahead of next year's budget announcement, while Singapore shares extended gains mimicking other Asian markets as lenders rose led by Oversea-Chinese Banking Corp.
The Straits Times Index ended 1.4% at 3060.85. OCBC rose 3.8% in Singapore thanks to better-than-expected third-quarter earnings. In Malaysia, the FBM KLCI closed 0.1% lower at 1706.92. Dialog Group fell 1.2%, weighing on other oil and gas services firms.
Investors are concerned Malaysia will revise existing tax rates and introduce new taxes, said Pheim Asset Management Chief Executive Leong Hoe Kit. "The government has revenue issue and we can safely say that whatever measure they are doing on expenditure side will not cover the shortfall."
Malaysia's Finance Minister Lim Guan Eng is scheduled to announce the 2019 federal budget in parliament on Friday. Analysts expect the government to focus on cutting expenditure and boosting revenue partly through new taxes, while pausing efforts to shrink the fiscal deficit.
Most Asian equity benchmarks started November on positive note with the Nikkei Asia300 Index rising 1.1% as Wall Street continued to recover from recent losses. The Nasdaq Composite added 2% on Wednesday amid uncertainty over U.S.-China trade relations.
China will take more timely steps to support its economy, the Communist Party's Politburo was cited as saying by state news agency Xinhua. Authorities will stabilize employment, finance, foreign trade and investment, it said.
The comments come days after a number of Chinese regulators voiced their confidence in China's economy and its stock market, following a slew of disappointing economic data.
Meanwhile a decline in oil prices weighed on Malaysian oil and gas services firms. Sapura Energy and Reach Energy fell 1.5% and 2.5% respectively as Brent, the global benchmark for crude oil, fell 1% to $74.30 a barrel.
Beverage manufacturers fell after Malaysia's Deputy Prime Minister Wan Azizah Wan Ismail said the government is weighing a tax on sweet beverages. Fraser & Neave Holdings fell 1% while Nestle (M) lost off 0.2%.
Kenanga Investment Bank fell 4% after it shelved a plan to acquire Inter-Pacific Securities' stockbroking business-related assets, liabilities and contractual arrangements. Industrial conglomerate UMW Holdings lost 1.1% after aborting its proposal to acquire MBM Resources.
OCBC, Singapore's second-largest bank, reported its net profit rose 12% to S$1.25 billion ($904.4 million) in the third quarter, backed by a 9% gain in net interest income from increased loan volume and six basis points expansion in net interest margin.
City Developments advanced 3.7% in Singapore. The property developer was among the companies which bought back the most of their shares in October at 700,000 units for a total S$5.78 million.
- Alexander Winifred and Joannah Perez