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Stocks

Malaysian stocks rebound as Tenaga hits record high, Singapore equities fall

Markets shrug off North Korea's latest missile test

KUALA LUMPUR (Nikkei Markets) -- Malaysian shares recovered from nine-month lows on Wednesday, paced by gains in heavyweight Tenaga Nasional. Singapore stocks slipped from near 29-month highs.

It was a mixed session for Asian markets with little discernible impact from North Korea's latest missile test. Pyongyang confirmed on Wednesday it had successfully launched a new type of intercontinental ballistic missile that was capable of striking anywhere in the U.S. It was North Korea's third intercontinental ballistic missile test, following the two in July.

"To the markets, the latest launch is no different from the previous firings," said Jingyi Pan, a market strategist at Melbourne-based broker IG. "Hence the muted reaction."

Overnight cues out of the U.S. were positive as the three major benchmark indexes rose to record levels. The rally came after more progress on the tax bill, with the Senate Budget Committee approving the tax plan, paving way for a full floor vote later this week.

"The Committee pushing the bill to the floor is a positive surprise and should help risk appetite," Pan said.

The Bursa Malaysia KLCI index advanced 0.4% to 1,720.38, recovering from its lowest level since early March.

Tenaga, Malaysia's largest power utility, added 2.8% to close at a record. Most analysts have a positive outlook on the company after the implementation of the Incentive Based Regime (IBR), which reduces earnings volatility and provides secured free cash flows.

Most Malaysian banking stocks rose, after dragging down the index to near nine-month lows on Tuesday.

CIMB, the nation's second-biggest bank, edged 0.2% higher after saying Tuesday it was on track to meeting its year-end operational targets. "We believe value has emerged following the stock's 16% decline in share price," UOB Kay Hian Securities analyst Keith Wee wrote in a note.

Smaller rival AMMB Holdings rose 0.7% after Tuesday's 2.6% decline.

IJM Corp. dropped 0.3% to 3.06 ringgit after the construction company reported a 32% decline in second-quarter net profit, missing analyst expectations. TA Securities downgraded IJM to "sell" from "buy" and lowered its target price to 2.89 ringgit, saying margins for property, plantation, and manufacturing divisions were weaker-than-expected.

Notion VTec, a manufacturer of precision components, slumped 9.2% after swinging to a net loss in the fourth-quarter. Taliworks Corp. shed 0.9% after the infrastructure company reported a 49% decline in third-quarter net profit.

Malaysian Resources Corp. gained 4% amid speculation that it plans to form a joint venture with Gamuda and bid for the project delivery partner job for KL-Singapore High Speed Rail project. Shares of Gamuda added 2.6%.

"This news is a positive surprise, more so for MRC, as management has been fairly muted about potential upside to its rail tenders," CIMB Investment Bank said in a note.

Southern Steel rose 3.6% after its first-quarter net profit jumped nearly three-fold. Revenues increased by 54% in the quarter.

Singapore's Straits Times Index declined 0.1% to 3,438.99. Real-estate developer City Developments and Yangzijiang Shipbuilding Holdings were the day's worst performers, losing 2.3% and 3.8% each.

CapitaLand edged down 0.3%. Late Tuesday, the property developer said it, along with CapitaLand Retail China Trust, will buy 100% interest in a company that owns Rock Square shopping mall for 3.3 billion yuan ($500 million). Shares of CapitaLand Retail China slipped 1.2%.

EuroSports Global added 2.1% after the automobile retailer said its joint venture had entered into dealership agreement with Automobili Lamborghini.

Among the most active shares were Hyflux, closing down 1.3%. Over 16 million shares changed hands.

Noble Group advanced 6.8% after saying that it plans to sell four dry bulk carrier vessels for approximately $95 million, as the troubled commodity trader continues to dispose assets in its bid to reduce debt and keep its credit lines open.

--Alexander Winifred and Nimesh Vora

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