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Nikkei Markets

Singapore stocks rise to two-month highs on China's surprise bank reserve ratio cut

Malaysian equities little changed

KUALA LUMPUR (Nikkei Markets) -- Singapore shares jumped to more-than-two-month highs on Wednesday as China's surprise cut in banks' reserve requirement boosted risk appetite. Malaysian equities ended little changed.

Singapore's Straits Times Index advanced 1.7% to 3,557.82, the highest since Jan. 29. Malaysia's FBM KLCI ended almost unchanged at 1,879.32, a day after closing at its highest level since November 2014.

Regional markets were buoyed by the unexpected cut in lenders' reserve requirement by the Chinese central bank. Late Tuesday, the People's Bank of China reduced the amount of cash banks need to set aside as reserves by 100 basis points, saying it was seeking to reduce funding costs and help ease conditions for businesses.

The cues out of Wall Street were also positive with the S&P 500 Index rising more than 1% to its highest level in a month on the back of upbeat earnings and better-than-expected economic data. Both the U.S. March housing and industrial output data exceeded expectations.

On the STI, banks were the biggest contributors to the index's biggest jump in almost two weeks. DBS Group Holdings and Oversea-Chinese Banking Corp. rose by at least 2.2% each and United Overseas Bank climbed 3%.

Rig builders Keppel Corp. and Sembcorp Marine advanced by 1.4% or more as Brent crude continued to cling near the highest level in three years.

Banyan Tree Holdings, which late Tuesday announced increasing its stake in subsidiary Laguna Resorts & Hotels to 86.3%, declined 0.8%.

Ascott Residence Trust rose 0.9%. The real-estate investment trust reported on Wednesday a distribution per unit of 1.28 Singapore cents (0.98 U.S. cent) for the quarter ended March 31, up 9% from a year earlier.

In Malaysia, analysts cited investor caution and profit taking as the reason for the market's quiet performance. The index's rally to more-than-three-year highs on Tuesday came amid optimism surrounding Malaysia's national polls due on May 9.

"Investors want to wait for more clarity on the outcome of the election," said Pong Teng Siew, a director at Inter-Pacific Securities. "As of now, everything is so volatile."

Out of the 30 stocks on the KLCI, 14 ended lower and five were unchanged.

IHH Healthcare fell 0.2% after its takeover target Fortis Healthcare said it received a bid from China's Fosun International. IHH is already competing with India's Manipal Health Enterprises and a group comprising Hero Enterprise Investment and Burman Family Office for Fortis. Analysts at Nomura Securities and Maybank Investment Bank said a bidding war for Fortis could boost offer prices, and IHH will have to pay more for the Indian hospital operator if it secures a deal.

Hotel-to-gaming conglomerate Genting rose 0.8%, while unit Genting Malaysia added 0.9%.

"We expect the casino segment's earnings to rise 27% on-year in 2018, led by a sharp improvement in luck factor and steady improvement in volumes," UOB Kay Hian Securities wrote in a note to investors.

Bumi Armada dropped 5% after client Erin Petroleum Nigeria requested a shutdown of its Armada Perdana vessel, citing a force majeure event. UOB analyst Kong Ho Meng flagged a potential impairment on the asset, which has an estimated value of between 200 million ringgit ($51.4 million) and 300 million ringgit.

Marine logistics company Hubline rose 8.7% amid speculation the company could secure a sizeable contract from state-owned Petroliam Nasional between September and October. Company officials did not immediately respond to request for comment.

T7 Global jumped 7.2% after securing contracts worth 63 million ringgit from firms including Murphy Sarawak Oil Co.

--Alexander Winifred & Joannah Perez

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