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Malaysian shares edge higher despite British American Tobacco's plunge

KUALA LUMPUR (NewsRise) -- Malaysian shares ended slightly higher on Wednesday, as gains in heavyweights tempered the impact of British American Tobacco Malaysia's biggest single session decline in at least 10 years after it reported disappointing earnings.

Caution ahead of the U.S. Federal Reserve's policy meeting outcome and the Bank of Japan's two-day review weighed on regional sentiment.

The nation's benchmark FTSE Bursa Malaysia advanced 0.1% to 1,663.56 points. The index fell 0.7% last week and is down 1.7% for the year.

Most banking stocks advanced on Wednesday, led by CIMB Group Holdings and AMMB Holdings. Petronas Dagangan, Genting Malaysia, PPB Group and SapuraKencana Petroleum also rose. Apart from British American Tobacco Malaysia, Westports Holdings and Malayan Banking also fell.

The ringgit declined 0.4% to 4.0735, its lowest since June 27. The currency is down 0.6% this week, adding to last week's near 3% slump.

British American Tobacco plunged 11.1% to 49.9 ringgit, its lowest level in one and a half months and posting its biggest single-day percentage decline in at least 10 years. Late yesterday, the cigarette maker reported a 78% year-on-year plunge in second quarter net profit, missing expectations for a second consecutive quarter, as sales volumes continued to suffer on account of last November's excise duty hike and due to illegal cigarette trades.

The company said rising illegal cigarette trade is the most concerning challenge for it in 2016. Based on first-half results, British American Tobacco Malaysia expects full year profit from operations to be lower than the previous year.

"We remain pessimistic on both the legal tobacco industry and British American Tobacco Malaysia in view of the weak volume trend which has yet to show any signs of recovery," said Soong Wei Saing, an analyst with Kenanga Research. The house has an underperform rating on the stock and a target price of 48.70 ringgit.

Japan's Nikkei 225 was the best performing market in Asia on Wednesday, rising 1.7%. Prime Minister Shinzo Abe said the government will compile an economic stimulus package of over 28 trillion yen next week.

After an upper house election victory earlier this month, Abe ordered a fresh round of fiscal stimulus to boost the nation's economy. The Bank of Japan is also expected to ease monetary policy further at its two-day review starting tomorrow. The yen was down 0.8% against the dollar.

Markets also await the outcome of the Federal Reserve's meeting later today. Even though the authority is expected to hold rates steady at its meeting, investors will watch for any hints that recent upbeat U.S. data and resilience in global financial markets could prompt a rate increase earlier than expected.

Expectations of an extended pause by the Fed and supportive policies from other central banks had helped prop up global risk appetite after the Brexit vote.

In the rest of Asia, China's Shanghai Composite slipped 1.9%, while Hong Kong's Hang Seng ended 0.4% higher. South Korea's KOSPI ended flat.

In Southeast Asian markets on Wednesday, Thailand's SET index and Philippine's PSE Composite advanced 0.7% and 0.9% respectively. Singapore's Straits Times and Indonesia's Jakarta Stock Exchange Composite rose 0.2% and 0.9%.

On the KLCI, 19 of the 30 constituents ended higher Wednesday, while overall advancing issues outnumbered declining ones 430 to 343.

Foreign investors sold 76.9 million ringgit ($18.8 million) of the nation's shares on Tuesday, according to Kenanga Research. Foreign inflows now stand at more than 800 million ringgit for 2016.

Genting and Petronas Dagangan rose 2.2% to 8.9 ringgit and 1.9% to 23.36 ringgit. The gaming conglomerate and the oil and gas product retailer had fallen 2.3% each in trade yesterday.

Banking majors CIMB and AMMB also recovered from Tuesday's fall, rising 2.6% to 4.29 ringgit and 1.6% to 4.36 ringgit. Hong Leong Bank, which slipped 1% yesterday, rose 0.8% to 13.28 ringgit. Public Bank and RHB Bank rose 0.5% to 19.6 ringgit and 0.2% to 5.17 ringgit.

However, Malayan Banking, the heaviest weighed financial stock on the KLCI, ended 0.7% lower at 8.03 ringgit.

Dealers said markets and most index stocks are not exhibiting any specific trend. KLCC Property Holdings, PPB Group, Genting Malaysia, SapuraKencana Petroleum rose Wednesday, but have alternated between daily gains and losses this week.

Property investment major KLCC Property Holdings and agribusiness major PPB Group rose 0.9% to 7.55 ringgit and 0.4% to 16 ringgit, recovering partially from yesterday's 2.6% and 0.8% fall.

Oil services major SapuraKencana advanced 1.4% to 1.44 ringgit, erasing some of Tuesday's 2% slide, while Genting Malaysia, which also slipped 2% yesterday, rose 0.2% to 4.43 ringgit.

Logistic major Westports slipped 0.7% to 4.34 ringgit, giving up a part of Tuesday's 1.4% advance.

Integrated infrastructure conglomerate YTL Corp was among the handful of stocks to end lower, declining 0.6% to 1.67 ringgit.

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