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Nikkei Markets

Singapore shares rebound amid broader Asian gains

Overnight Wall Street rally helps, Trump- Kim Jong Un meeting support sentiment

SINGAPORE (Nikkei Markets) -- Singapore shares recovered Friday tracking most Asian peers following an overnight Wall Street rally after a benign inflation print signaled the Federal Reserve may not need to hasten the pace of interest rate increases.

U.S. consumer prices rose 0.2% in April, lagging market expectation of 0.3%. Core inflation also came in below estimates at 0.1%.

Oil prices were steady as investors weighed the potential impact of renewed U.S. sanctions on Iran. On Friday, the U.S. Treasury imposed fresh sanctions against six individuals and three companies for operating a currency exchange network that it said had funnelled millions of dollars to the Iranian Revolutionary Guard's elite Qods Force.

This comes two days after President Donald Trump's decision to pull the U.S. out of a 2015 landmark nuclear deal between the country, Iran and five other world powers that lifted international sanctions in exchange for Tehran limiting its nuclear program.

Market sentiment was also lifted by news that Trump and Kim Jong Un have agreed to meet in Singapore on Jun. 12, bolstering hopes for peace on the Korean peninsula.

The Straits Times Index rose 0.92% to close at 3,570.17 for the day. For the week, it added 0.7%.

"From a valuation standpoint on trailing long-term price multiples, we believe the index still holds upside headroom due to a supportive macro backdrop, good earnings growth outlook witnessing upgrades, and dividend yield support of over 3.7%, which is amongst the highest in Asean," Maybank Kim Eng said in a client note on Friday. "An additional plus factor for the STI total returns and dividend yields for U.S. dollar-based investors would be the expectation for a relatively stable and potentially appreciating Singapore dollar in 2018."

The house is overweight on financials, property developers, industrials, consumer & gaming, and technology.

On Friday, casino and resorts operator Genting Singapore, which had previously reported a 19.92% rise in net profit in the first quarter to S$217.2 million ($162 million), surged 10.34%.

Lenders United Overseas Bank and DBS Group Holdings also helped lift the index with 2.28% and 2.18% respective gains.

Data released by the Department of Statistics on Friday showed Singapore retail sales easing on-year in March due primarily to a fall in motor vehicle sales.

Auto distributor Jardine C&C shrugged off the news, and bounced back from Thursday's loss, edging 2.83% higher.

Singapore Post added 2.25%. On Friday, it said it swung to a net profit of S$23.9 million ($17.8 million) for the fourth quarter ended Mar. 31, helped by the absence of impairment charges.

Agribusiness company Wilmar International lost 1.56%, a day after it reported that net profit in the first quarter fell 40.6% to $203.3 million on-year, dragged by a difficult operating environment in its tropical oils segment and losses in its sugar business.

Diversified engineering company Singapore Technologies Engineering shed 2.02% despite reporting an 18% rise in first-quarter net profit to S$117.7 million on Friday. Revenue grew 9% to S$1.65 billion, it added.

Home-grown technology hardware maker Creative Technology fell 1.2% on the day it announced its third-quarter net loss narrowed to $3.76 million from $4.61 million a year ago. Revenue declined 6% on year to $15 million "due to the uncertain and difficult market conditions which continued to affect the sales of the group's products," it said.

Malaysian markets were still shut for special public holiday through Friday following Wednesday's shock national election outcome that marked the return of nonagenarian Mahathir Mohamad to power, who led the opposition coalition to victory.

--Joannah Perez

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