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Nikkei Markets

Singapore, Malaysia equities advance on hopes US-China trade spat will abate

Press Metal, Telekom Malaysia, Yangzijiang Shipbuilding among major gainers

KUALA LUMPUR (Nikkei Markets) -- Stocks in Singapore and Malaysia rose Monday amid hopes that the current trade tussle between the U.S. and China's will not escalate further.

Malaysia's FBM KLCI index rose 0.7% to 1,849.71. Singapore's Straits Times Index edged higher by 0.2% to close at 3,449.96.

U.S. index futures rose and most regional markets advanced as U.S.-China trade relations remained at the center of attention. Over the weekend, President Donald Trump struck a more reconciliatory tone. In a Twitter post, Trump said he and his Chinese counterpart will "always be friends" no matter the trade disagreements, and Beijing will take down the trade barriers as it was the "right thing to do."

"We believe negotiation and de-escalation will likely be the endgame" for U.S.-China trade frictions, analysts at Morgan Stanley wrote in a Sunday note to investors. For Malaysia - the most exposed among regional economies to the proposed U.S. tariffs - the impact will be limited in case of an escalation as the affected segments make up just 0.8% of the nation's gross domestic product, Morgan Stanley said.

For Malaysian equities, analysts said a slowdown in investor activity ahead of the national elections marked a buying opportunity. The KLCI has been range-bound since February as several investors have stayed on the sidelines to ride out the political event.

"While market volumes have been lackluster caused by the market's expectations of an earlier election, we view the current lull as an opportunity to accumulate Malaysia," CLSA's head of Malaysia research A.C. Tan said.

On the KLCI, Press Metal Aluminum Holdings jumped 13.8% in its biggest single-day advance this year. Press Metal - Southeast Asia's largest integrated aluminum producer- has been one of the hardest hit Malaysian stocks by the U.S. tariff threats, shedding more than 20% year-to-date.

State-linked Telekom Malaysia added 1.7% after UOB Kay Hian Securities upgraded the stock to 'buy,' highlighting the company's attractive dividend yield of close to 5%. Valuations have also turned attractive after Telekom's more-than-10% drop this year, analyst Chong Lee Len said.

Hong Leong Bank and parent Hong Leong Financial Group both advanced 0.5%. Loan growth could rebound after Malaysia's elections, rising 4%-6% over 2018 to 2020 after a sluggish 0.3% increase so far this year, TA Securities said.

Information technology firm My E.G. Services slumped 5.7%. CIMB Investment Bank downgraded the stock to 'hold' after its more than 30% rally this year.

"We believe at current share price levels, most of the good news has already been reflected in its share price and we do not see any positive catalyst surprises over the next few months for the stock," analyst Nigel Foo said.

Ni Hsin Resources, a cookware manufacturer, jumped 9.7% after revealing it had accumulated a 7.3% stake in Caely Holdings over the past year. Ni Hsin said Friday it intends to seek representation on Caely's board. Shares of Caely advanced 8%.

On the STI, automotive company Jardine Cycle & Carriage and Yangzijiang Shipbuilding Holdings were the day's top performers, adding at least 2.6% each.

CapitaLand ended unchanged. On Monday, the company said its serviced residence unit, The Ascott, had forged strategic partnerships with Chinese, Japanese, and Thai developers to manage apartments currently under development.

ComfortDelGro was also little changed. The transport operator is expanding into the non-emergency patient transportation business with an A$30 million ($23 million) through the acquisition of one of Australia's largest private providers of non-emergency patient transport services.

Water and energy company Hyflux rose 4% after it was awarded a contract to design, manufacture, and supply a seawater reverse osmosis desalination package in Iran for a project value of 68.7 million euros ($84 million).

--Alexander Winifred & Joannah Perez

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