KUALA LUMPUR (Nikkei Markets) -- Singapore shares fell Thursday as concerns over prospects of banking sector added to the renewed global trade worries that triggered Asia-wide selldown. Malaysia also buckled under pressure.
The Straits Times Index ended Thursday 1.3% lower at 3286.32 largely due to steep decline in shares of DBS Group Holdings due to weaker-than-expected second-quarter earnings. The FBM KLCI meanwhile closed down 0.6% at 1778.13 in broad-based decline.
The outlook for Singapore lenders remains cloudy due to rising uncertainty and the flattening yield curve, said CMC Markets Analyst Margaret Yang. "Recent property cooling measures might also drag on loan growth in the months to come," she said.
DBS Group, Southeast Asia's biggest bank by assets, reported a 20% year-on-year rise in net profit for the second quarter at 1.37 billion Singaporean dollars ($1 billion). That fell short of analysts' expectations for net profit of around 1.44 billion Singaporean dollars.
Investors, already concerned about U.S. President Trump's latest salvo in the ongoing trade spat with China, also sold United Overseas Bank and Oversea-Chinese Banking Corp. The three banks accounted for over 40% of the index' weightage.
Trump reportedly instructed his administration to increase the tariffs on the next proposed block of $200 billion of Chinese imports from 10% to 25% in a bid to "encourage" China to come to the negotiation table.
Meanwhile, the U.S. Federal Reserve kept its interest rates unchanged on Wednesday. It also did little to alter expectations for two more rate hikes this year, underscoring instead the strong rate of U.S. economic activity at the end of its two-day policy meeting.
Gains will likely be muted as trade concerns weigh on investor sentiment, said Mohd Faruk Abdul Karim, head of investment of Muamalat Invest in Malaysia. "I'm going into the market cautiously, sticking to small-and-mid cap stocks for now."
Both Singaporean and Malaysian benchmarks weren't showing the correct real time value due to technical glitches at index provider FTSE Russell that lasted about one hour from opening, although trading in stocks weren't affected.
DBS Group ended 1.6% lower while United Overseas Bank and Oversea-Chinese Banking Corp. fell 2.1% and 2.2% respectively.
Apple supplier Hi-P International plunged 9.5% after reporting an almost 19% on-year fall in net profit for the second quarter. AEM Holdings retreated further, down 2%, amid caution from analysts about upcoming headwinds and significant earnings volatility due to trade war concerns.
State-linked rigbuilder Malaysia Marine and Heavy Engineering Holdings fell 9.4% after second-quarter net losses widened sharply to 49.48 million ringgit ($12.15 million), weighed by increased work costs. MISC, which owns a 66.5% stake in Malaysia Marine, lost 2.7%.
DRB-HICOM, an industrial conglomerate, advanced 3.6% on plans to sell its 97.4% shareholding in waste management firm Alam Flora to Malakoff Corp. for 944.61 million ringgit. Malakoff, which mainly derives profit from power generation business, fell 8.2%.
Poly Glass Fibre (M) slipped 4.4% after the company said disclosed a fire incident at its warehouse in Prai, Penang.
- Alexander Winifred and Joannah Perez