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Nikkei Markets

Singapore, Malaysia shares rebound as US-China trade war fears ebb

Singapore's Straits Times Index snaps four-day losing streak

KUALA LUMPUR (Nikkei Markets) -- Shares in Singapore and Malaysia rose on Tuesday, boosted by an overnight rally on Wall Street amid reports of trade talks between the U.S. and China.

Singapore's Straits Times Index advanced 0.8% to 3,439.35 and Malaysia's FBM KLCI index edged 0.1% higher to 1862.45, rising for the first time in five days and three days, respectively.

The S&P 500 Index jumped by the most in over one-and-a-half years overnight, buoyed by reports that the U.S. and China were involved in trade talks, allaying some concerns of a damaging trade war between the two. Bloomberg on Monday reported, citing a person familiar with the matter, that U.S. Treasury Secretary Steven Mnuchin and China's vice premier in charge of economic policy Liu He are working on a mutually agreeable way to reduce the trade deficit. Earlier, the Wall Street Journal had reported that Mnuchin and Liu were leading talks between the two nations in search for trade solutions.

Michael McCarthy, chief market strategist at CMC Markets, said that "the trade hurricane was downgraded to a storm" and investors appeared to have "edged away from pricing the worst case global trade war scenario."

For the Malaysian benchmark gauge, Kenanga Investment Bank said considering "the global market is sensitive towards the outcome of the trade discussion, expect the KLCI to remain volatile over the short-term." It added that investors should "remain cautious and wait for any decisive breakout from 1,880 points, which will likely then see it head towards 1,910."

On the STI, electronics provider Venture Corp. and Capital Mall Trust led advances, adding at least 2% each. DBS Group Holdings, the nation's biggest lender, climbed 1.4%. Over in Malaysia, Petronas Chemicals Group and Sime Darby, up 1.6% each, were the day's top performers.

Among other major movers, Noble Group declined 10%. The Singapore-listed commodity trader issued a defense of its planned restructuring, saying if shareholders vote down the plan it will probably enter insolvency proceedings and existing equity holders risk being wiped out. "If the primary restructuring is not approved by shareholders, the board will have no option but to put the company into insolvency proceedings," the Hong Kong-based company said in a statement, responding to queries from the Singapore exchange.

Malaysia's IHH Healthcare, Asia's largest healthcare operator, rose 0.5%.

"We find the stock appealing given its regional footprint in home markets like Malaysia, Singapore, Turkey, and India. Also, new ventures in countries such as Hong Kong and China will provide growth impetus for the next 5-10 years," UOB Kay Hian Securities analyst Chan Jit Hoong said.

Plantation company Kuala Lumpur Kepong added 0.3% after saying it would buy a 75% stake in an Indonesian palm oil refinery venture.

Mynews Holdings plunged 5.6%. The convenience store operator's first-quarter net profit dropped 0.3% despite an 18.2% rise in revenue, missing expectations.

Earnings before taxes and interest margin could drop to 7.5% from 8.9% in 2018, due to higher start-up and fixed costs, Maybank Investment Bank analyst Liew Wei Han said.

Comfort Gloves jumped 6.7% to 1.12 ringgit after Hong Leong Investment Bank rated the stock a "buy" with a long-term price target of 1.22 ringgit. "Growing demand from the industrial, healthcare, and food industries could drive revenue growth moving forward," analyst Loui Low said.

WCE Holdings dropped 14.7% after announcing plans to raise up to 417.81 million ringgit ($107.90 million) to fund its West Coast Expressway project. The cost of the project has increased due to higher land acquisition expenses, the company said Monday.

- Alexander Winifred & Nimesh Vora

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