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Nikkei Markets

Singapore shares fall on week amid trade war fears, Malaysia edges higher

Straits Times Index and KLCI drop 2% and 0.6% on Friday

KUALA LUMPUR (Nikkei Markets) -- Singapore shares suffered their biggest weekly decline since early February, primarily on account of Friday's tumble after the U.S. and China looked to impose import tariffs on each other.

Malaysian equities declined on Friday too, but ended higher for the week as heavyweight Public Bank scaled record highs.

U.S. markets suffered their biggest decline in six weeks after President Donald Trump moved towards imposing tariffs on $60 billion of Chinese imports, penalizing Beijing for what he called were serious intellectual property abuses. The presidential memorandum signed by Trump for the levy of the tariffs provided a 30-day consultation period, which begins when the list of targeted goods is published.

In response, China announced plans to impose tariffs on $3 billion worth of U.S. imports and urged the U.S. to pull back from the brink of a trade war between the world's two biggest economies.

Fears of a trade war and its implications on world economic outlook led to a selloff in markets across Asia on Friday. Benchmark indexes for Hong Kong and Japan declined 2.5% and 4.5%, respectively. The Nikkei Asia300 Index of companies outside Asia dropped 2.3%.

"(While the impact today is dramatic), a 30-day comment period means there is an opportunity for dialogue and a negotiated solution," said Michael McCarthy, chief market strategist at CMC Markets. "A key question for markets is whether trade barriers are aimed only at China or if this is the first salvo in an as yet undeclared trade war."

Singapore's Straits Times Index declined 2% to 3,421.39 on Friday, taking its losses for the week to 2.6%. All but two of STI's 30 constituents closed lower in Friday's trading. Lenders were the biggest contributors to losses for the day and week. DBS Group Holdings shed 2.6% on Friday, Oversea-Chinese Banking Corp. dropped 2.9% and United Overseas Bank lost 2.7%. For the week, they were down 3%, 3.2% and 2.6% respectively.

Malaysia's FBM KLCI index declined 0.6% to 1,865.22 on Friday, trimming its weekly advance to 1%. Hong Leong Bank paced losses on the KLCI on Friday, closing 2.6% lower, as 25 of 30 companies on the gauge ended in the red. Public Bank edged 0.2% lower on Friday, but rose 4.3% for the week amid optimism over its loan growth.

With exports accounting for 71% of Malaysia's gross domestic product, U.S. trade protectionism is the "main" source of vulnerability for Malaysia's economy, Nomura Securities said Friday. "We estimated its ultimate exposure to the U.S. - including via intermediate goods to China for assembly into final products destined for the U.S. - at 10% of GDP, about half of which is in electronics products," the Japan-based investment bank said.

In major movers on Friday, Singapore's Noble Group dropped 32% after reports that it is being sued by Indonesian coal producer PT Atlas Resources for compensation of more than $260 million.

In Malaysia, IHH Healthcare rose 0.2% after signing a deal with state investment fund Khazanah Nasional that provides it the right of first offer to acquire Prince Court Medical Centre.

The potential acquisition "presents a good opportunity for IHH to increase its presence in Malaysia as currently the company has no other greenfield or brownfield plan to expand in Malaysia except of the extensions of several existing hospitals," MIDF Amanah Investment Bank analyst Noor Athila Mohd Razali said.

Eversendai Corp. jumped 13.3% after the company told analysts and reporters it expects to secure a charter contract for its liftboat, the Vahana Aryan, in three months.

United Malacca, a plantation company, dropped 1.4% after third-quarter earnings fell 40.2%, missing analyst expectations. Increased fresh fruit bunch production in the current fiscal year will not translate into higher profit due to heightened costs of production for newly-matured palms, TA Securities analyst Angeline Chin said.

-- Alexander Winifred & Joannah Perez

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