KUALA LUMPUR (Nikkei Markets) -- Malaysian shares fell Wednesday after investors returned from an extended weekend break to markets battered by U.S.-China trade tension and lower palm oil prices further soured sentiment. Singapore gained thanks partly to higher crude oil prices.
The FBM KLCI ended 0.8% lower at 1785.25, its lowest since August 17, in broad-based selldown led by Press Metal Aluminium Holdings. Bursa Malaysia was shut on Monday and Tuesday for public holidays. The Straits Times Index meanwhile closed 0.5% higher at 3124.65.
"There's room for a further correction," said Mohd Faruk Abdul Karim, head of investment of Muamalat Invest in Malaysia, citing steep valuations and lingering fears of a global trade war. "Foreign investors are holding back until things settle down."
Emerging market equities have been under mounting pressure as a trade battle between the U.S. and China heats up, with investors bracing for Washington's next move on proposed tariffs on goods imported from the Asian country.
China has told the World Trade Organization it wants to impose $7 billion a year in sanctions on the U.S., in retaliation to Washington's non-compliance with a ruling on a dispute over American dumping duties initiated in 2013, Reuters reported on Tuesday.
In commodity news, crude oil prices extended gains as Hurricane Florence hurled towards the East Coast of the U.S. Brent, the global benchmark for crude oil, rose 0.2% to $79.21 a barrel, adding to Tuesday's gain of more than 2%.
"Potential supply shortages may continue to influence investor thinking," said CMC Markets Analyst Jonathen Chan in Singapore. "Additionally, the US Department of Energy crude oil inventory report due tonight may lift oil prices if a large reduction in stockpile is confirmed."
Yangzijiang Shipbuilding (Holdings) added 4.6%. Daiwa Capital Markets is bullish on the stock. The house expects the group's mainstay shipbuilding business is likely to benefit from the greenback's strength against the Chinese yuan.
Oil-and-gas services firm Dialog Group rose 2.7% to buck the wider decline in Malaysia. Sapura Energy, another company catering to the petroleum industry, advanced 6% following its plan to sell 50% stake in its upstream unit to an Austrian firm.
Sime Darby Plantations, the world's largest palm oil producer by acreage, fell 1.7% after data showing burgeoning inventory in Malaysia, the world's second-largest producer nation after Indonesia. The most-traded palm oil futures for November delivery fell 1% to 2243 ringgit.
Singapore-listed palm oil producers Golden Agri-Resources and Bumitama Agri declined 3.9% and 1.5% respectively.
In corporate news, commercial and industrial real estate investment trust Ascendas REIT ended unchanged after receiving approval in-principle for the listing and quotation of 178 million new units at an issue price of S$2.54 ($1.84) per new unit.
AirAsia Group, Southeast Asia's largest discount carrier by fleet, fell 6.2% in Malaysia following reports that its Philippines affiliate may delay plans for a $250 million initial public offering to 2019 due to high fuel costs and a weakened exchange rate.
Property developer Naim Holdings slipped 1.8% after announcing a plan to raise up to 159.9 million ringgit through a rights issue.
- Alexander Winifred and Joannah Perez