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Nikkei Markets

Singapore shares plunge to 16-month low, Malaysia also falls

Banks, palm oil producers suffer as Indonesian rupiah sinks to all-time low

KUALA LUMPUR (Nikkei Markets) -- Singapore shares plunged to its 16-month low Wednesday, while Malaysia entered its longest losing streak in three months as companies with high exposure to Indonesia suffered sharp selldown.

The Straits Times Index ended down 1.7% at 3156.28, while the FBM KLCI closed 1% lower at 1795.50 as the Indonesian rupiah fell to an all-time low against the U.S. dollar, further eroding investors sentiment already roiled by a rout in emerging market equities and currencies amid worries over global trade row.

"I'm taking profits and expect some further correction while awaiting more developments," said Mohd Faruk Abdul Karim, head of investment of Muamalat Invest in Malaysia. Further, the U.S-China trade relation remains cloudy, he said.

Apart from the steep depreciation in Indonesian rupiah, other currencies such as the Turkish lira, South African rand and their Asian counterparts have also declined, adding pressure on sentiment toward emerging markets assets in recent weeks.

Markets have also been fretting over Washington's next move in the Sino-American trade war, with a deadline for public comments on proposed U.S. tariffs on an additional $200 billion of imports from China expiring on Thursday.

U.S. President Donald Trump has said he will introduce the tariffs soon after. If implemented, the duties will be the third round of levies imposed by the Trump administration since July.

Plantation companies listed in Malaysia and Singapore were among the hardest hit on Wednesday. Golden Agri-Resources, which manages oil palm estates spanning 502,847 hectares in Indonesia, plunged 3.3%. IOI Corporation fell 0.7% while Sime Darby Plantations was 0.4% lower.

Malayan Banking (Maybank) and CIMB Group Holdings, both of which own major operations in Indonesia, fell 1.2% and 3.8% respectively.

Axiata Group declined 3.7%. The Malaysian telecom giant controls XL Axiata, Indonesia's second-largest mobile phone operator by subscribers.

Singaporean automotive wholesaler company Jardine Cycle & Carriage, which also has significant exposure in Indonesia, slid 5%.

Bucking the trend, Malaysian construction firm Pesona Metro Holdings added 2.9% after securing a contract worth 264.30 million ringgit.

In economic news Malaysia's central bank kept the benchmark overnight policy rate unchanged at 3.25% on Wednesday, flagging immediate downside risks from the heightened trade tension. The caution comes despite better-than-expected external trade data for July released earlier in the day.

In Singapore, private sector economists kept their growth forecast for Singapore intact at 3.2% despite increased concerns stemming from protectionism in the U.S., according to a quarterly central bank survey released on Wednesday.

- Alexander Winifred and Joannah Perez

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