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Nikkei Markets

Singapore, Malaysia equities rebound as concerns over US-China trade war ease

OCBC, UOL, Genting Malaysia among major gainers

KUALA LUMPUR (Nikkei Markets) -- Stocks in Singapore and Malaysia rebounded Thursday after the U.S. indicated readiness to negotiate with China on trade.

Singapore's Straits Times Index advanced 2% to 3,405.65 and Malaysia's FBM KLCI rose 1.1% to 1,836.13, as both the indexes recovered from the 2% decline in the previous session. Stocks that had fallen the most on Wednesday led the charge.

The two Southeast Asian markets bounced back after U.S. equity indexes rose overnight, recovering from losses suffered earlier in the session. The Dow Jones Industrial Average, which had earlier fallen by more than 500 points, closed 1% higher as investors seemed to take the view that the current trade disagreements between China and U.S. were unlikely to escalate. Remarks by President Donald Trump's top economic advisor Larry Kudlow contributed to the optimism.

Kudlow pointed out that the tariffs announced on Chinese imports were merely proposals. More importantly, he appeared to suggest that the tariffs were a negotiating tactic and may not come into effect. His remarks underpinned the overnight recovery on Wall Street as investors took a more sanguine view of the trade tensions.

"The market is betting the tariffs will not likely materialize considering that both parties showed willingness to come to the negotiation table," said Jane Fu, a CMC Markets sales trader.

On the STI, high-tech designing firm Venture Corp. jumped 4.3%, and Oversea-Chinese Banking Corp. added 2.2%. Property company UOL Group climbed 2.5%. The three were among the top losers in the previous session, falling as much as 4.5%.

In other real estate companies, City Developments and CapitaLand rose at least 1.4% each. A flash estimate from portal SRX Property on Thursday showed resale prices of government-built flats rose by 0.8% in March from the previous month.

Agribusiness company Wilmar International rose 0.7%. In a note on Thursday, RHB said that if China's 25% tariff on soybeans imported from the U.S. does take effect, it sees the long-term impact on Wilmar, the second-largest soybean crusher in China, to be negative-to-neutral.

Perennial Real Estate Holdings advanced 0.6%. It signed a joint venture deal with Qingjian Group of Companies, which comprises units of Hong Kong-listed CNQC International Holdings to develop a freehold residential site in Singapore's Toh Tuck Road.

On Malaysia's benchmark gauge, leisure and hospitality company Genting Malaysia, lender AMMB Holdings, and Hong Leong Financial Group rose by at least 5% each, having ended the previous day with losses of up to 6.7%.

For AMMB, Kenanga Investment Bank said valuations had turned attractive following its 14% year-to-date drop through Wednesday. Analyst Ahmad Ramzani Ramli said that the historical low valuations also made AMMB a prime candidate for merger and acquisition.

Inari Amertron, Malaysia's most valuable technology company, jumped 10.5% after falling more than 6% on Wednesday.

"Assuming the U.S. imposes tariffs or taxes on electronics manufacturing services in China, this could prompt fabless companies in the U.S. to look elsewhere for outsourced assembly and test providers like Inari," AmInvestment Bank analyst Lavis Chong said.

Top Glove advanced 4.2% to 9.90 ringgit. RHB Investment Bank upgraded the stock to 'buy' and raised its target price to 12.10 ringgit.

Rival Comfort Gloves dropped 8.5%. Nikkei Markets reported Wednesday that the U.S. Food and Drug Administration had issued an import alert on Comfort's glove products.

Property developer Bertam Alliance plunged 33% after it failed in its attempt to halt stock exchange regulator Bursa Malaysia from classifying it as a financially-distressed company.

Meanwhile, data released on Thursday showed Malaysia's exports fell 2% in February from a year earlier because of fewer working days due to the Lunar New Year festival. Imports were down 2.8% from a year ago.

--Alexander Winifred & Joannah Perez

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