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Stocks

Malaysian equities fall, dragged down by banking stocks, Singapore shares gain

AMMB Holdings, RHB Bank down after quarterly profit falls

KUALA LUMPUR (Nikkei Markets) -- Malaysian stocks fell Tuesday, dragged down by AMMB Holdings and RHB Bank as the lenders reported a drop in quarterly profit.

Shares in Singapore ended a choppy session with gains, tracking a recovery in most other Asian markets after Chinese equities rebounded.

The Bursa Malaysia KLCI index lost 0.3% to close at 1,714.42, its lowest since Mar.3. As many as 18 of the 30 stocks on the gauge fell.

"Strong headline economic indicators are not translating significantly into domestic growth, and, hence, corporate earnings," said Vincent Khoo, who heads Malaysia research at UOB Kay Hian Securities. Malaysia's gross domestic product grew 6.2% in the July to September quarter, its fastest pace in three years.

A widespread crackdown on errant taxpayers by Malaysia's Inland Revenue Board also damped sentiment, Khoo said.

On Monday, the Board launched the so-called "Operasi Mega," as part of efforts to ramp-up tax collection this year. Companies that have been hit by outstanding tax claims this year include lottery operator Magnum, which is down about 22% over the last 12 months.

Tuesday's loss trimmed the KLCI's year-to-date gains to 4.43%. The MSCI Asia-Pacific index of shares outside of Japan has advanced 27.6% in the same period.

"Foreign investors are probably switching to other markets that have positive momentum," Khoo said.

AMMB Holdings was the top loser on the index on Tuesday, falling 2.6%. The lender reported a 6% drop in second-quarter net profit.

Rival RHB Bank dropped 0.8% after reporting a 3.3% drop in net profit for the third quarter, mainly due to lower fee income. TA Securities downgraded RHB stock to "Hold" from "Buy," flagging rising credit costs and a risk of further deterioration in the bank's asset quality.

IHH Healthcare, Asia's largest hospital operator by market value, ended unchanged after falling as much as 3.5% earlier in the day. Third-quarter net profit plunged more than 50% from a year earlier, weighed by costs incurred at two new hospitals. IHH's multiple expansion plans "may weigh on its near-term profitability," CIMB Investment Bank analyst Ngoh Yi Sin said.

Hibiscus Petroleum fell 5.9% after first-quarter net profit slumped 87% due to the absence of one-off tax credits for its Anasuria Cluster project. Leader Steel Holdings plunged 19.3% after it swung to a net loss in the third quarter.

Apparel retailer Bonia Corp. dropped 0.8%. Managing director Albert Chiang said he expected annual sales to fall by "high single digit" in the fiscal year to Jun. 30, 2018, amid weak consumer demand.

Among top gainers on the wider market, Tong Herr Resources jumped 8.8% to a record 4.08 ringgit, after third-quarter earnings more-than-doubled.

In Singapore, the Straits Times Index ended 0.2% higher 3,442.35 after falling as much as 0.3% earlier. The Nikkei Asia300 Index of more than 300 regional companies outside Japan rose less than 0.1% after declining earlier in the day following a recovery in Chinese equities.

DBS Group Holdings fell 0.5% while rival lenders Oversea-Chinese Banking Corp. and United Overseas Bank gained 1.7% and 0.9% respectively.

City Developments lost 1.5%.

Medical technology company QT Vascular topped the most active list, closing 8.3% down. The firm earlier reported it had inked a bond settlement deed to partially repay the final tranche of its $13.14 million convertible bonds due 2017/2018 in shares while delaying the balance payment.

Top gainers included insurance company Great Eastern Holdings, which rose 1.5%, and electronics services provider Venture Corp, up 1.4%.

--Alexander Winifred and Joannah Perez

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