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Nikkei Markets

Malaysia shares rebound to cap May's loss at 6.9%

Singapore shares fall in final hour selling rush to extend monthly loss to 5.1%

KUALA LUMPUR (Nikkei Markets) - Malaysian shares rebounded on Thursday to cap monthly loss of 6.9% as signs of easing political woes in Italy encouraged investors to hunt for stocks battered by a global equities rout a day earlier. Singapore shares ended lower following heavy selling in the final hour of trading that extended May's loss to 5.1%.

The FBM KLCI rose 1.2% to close at 1740.62 thanks to gains in industrial stocks. The Straits Times Index, meanwhile, edged 0.5% lower at 3,428.18. Both the Malaysian ringgit and Singaporean dollar edged higher against the U.S. dollar.

In Malaysia, "the foreign selloff is giving an opportunity for local investors and government funds to pick up from here at lower prices," said VCB Capital's Chief Executive Mohammad Amir Mokhtar. "The market's going to bounce back to 1870 points, and possibly hit 1900 levels."

Foreign investors have been exiting Malaysian assets after a shock May 9 election victory of the opposition coalition clouded prospects of policy continuity.

Foreign investors have sold net 609.2 million ringgit ($153.10 million) worth of Malaysian shares on Wednesday, bringing total net outflow to about 4.7 billion ringgit month-to-date, according to stock exchange data.

U.S. equities recovered overnight, with the Dow Jones Industrial Average and the S&P 500 Index climbing 1.3% each after Italy's president met with the anti-establishment Five Star Movement and the right-wing League to discuss forming a new coalition government to avoid fresh election.

Concerns that a snap election could turn into a de facto referendum on Italy's role in the E.U. have spooked investors this week. The yield of U.S. Treasury climbed on Wednesday, while the Japanese yen edged 0.1% lower against the U.S. dollar on Thursday morning.

Still, there are political risks in Italy, said DBS Bank's rates strategist Eugene Leow. "Even if the two political parties are able to form a government, it is unclear how the likely populist policies are going to gel with Germany," he cautioned. "In short, market turbulence may not be over just yet."

Italy, the euro zone's third-largest economy, has been struggling to establish a stable government since elections in March. Analysts have said the ongoing crisis could snowball into potentially dangerous fiscal situation given that Italy is heavily indebted.

In Malaysia, Hong Leong Bank rose 3.1% after reporting a 21% surge in fiscal third-quarter net profit that came in above street forecasts. Parent company Hong Leong Financial Group added 2.2%.

Steel fabricator Eversendai Corp. advanced 4.4% after posting a 74% jump in first-quarter net profit helped by higher contribution from the oil-and-gas segment.

Construction company Protasco plunged 7.9% after swinging into a net loss in the first quarter.

In Singapore, Hutchison Port Holdings Trust was the biggest index loser, ending the day down 6.8%.

StarHub meanwhile fell 3.5% to its lowest since August 2011 on news its television subscribers could be losing up to seven popular lifestyle channels following a gridlock with Discovery.

Sembcorp Industries dropped 0.3% on the day it announced its plan to acquire UK Power Reserve, the U.K.'s largest flexible distributed energy generator, for 216 million pounds ($287.6 million). Rig-builder Keppel Corp fell 0.6%.

--Alexander Winifred and Joannah Perez

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