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Stocks

Shares come off multi-month lows on bargain buying

KUALA LUMPUR (NewsRise) -- Malaysian shares rose Tuesday, as bargain hunters snapped up yesterday's top losers MISC and Petronas Chemicals Group, helping the benchmark index recover from three-month lows.

The nation's benchmark FTSE Bursa Malaysia KLCI rose 0.22% to 1,635.84 points. The index is down 3.3% in 2016.

Value buying lifted MISC, Petronas Chemicals and Maxis, while Tenaga Nasional, SapuraKencana Petroleum and UMW Holdings fell.

The ringgit fell for the seventh consecutive session, slipping decisively below the psychologically important 4.00 level to near-two month low of 4.053 to the dollar. The ringgit has slumped almost 5% from multi-month highs touched in the middle of April, as a default by state-fun 1Malaysia Development and renewed global growth concerns weighed on sentiment.

Global stocks chalked their worst decline since February last week as lackluster manufacturing economic data from major world economies rekindled fears of an economic slowdown. China trade data released Sunday also missed analyst expectations.

In other markets across the region, Singapore's Straits Times and Thailand's SET index slipped 0.9% and 0.18%.  Indonesia's Jakarta Stock Exchange Composite rose 0.29%, while Philippine's PSE Composite index advanced 2.62% as markets reopened after the Election Day holiday cheering the likelihood that Davao City Mayor Rodrigo Duterte will become the country's next president.

Japan's Nikkei 225 rose 2.15%, outpacing other Asian markets, as intervention fears weakened the yen. China's Shanghai Composite eked out a 0.04% gain.  South Korea's KOSPI advanced 0.6%, while Hong Kong's Hang Seng gained 0.43%.

On the KLCI, 15 of the 30 constituents ended higher Tuesday, while one ended unchanged. Overall advancing issues outnumbered declining ones 427 to 362.

Foreign investors were net sellers of the Malaysia' shares on Monday with a net outflow of 86.7 million ringgit ($21.5 million). These investors have withdrawn over 1 billion ringgit from the nation's equity markets in the last two weeks. For the year, net foreign inflows now stand at 5.24 billion ringgit.

Petronas Chemicals rose 5.07% to 6.42 ringgit. The integrated chemical producer had slipped 9% in the last five sessions in the lead up to its first quarter earnings. Late yesterday, it reported a 2% slide in March quarter net profit, primarily on account of the higher effective tax rate.

"For the group's 2QFY16 outlook, product prices are expected to improve as crude oil prices have increased 18% to $44 per barrel since the beginning of April this year," said Alex Goh, an analyst with AmInvestment Bank.

Alex has a hold rating on the stock with a target price of 6.36 ringgit.

MISC recovered from yesterday's 13% slump on disappointing core first-quarter earnings and weak outlook, advancing 4.83% to 7.6 ringgit.  Late Monday, the shipping major said it entered into an agreement to sell its entire stake in MISC Integrated Logistics for 257.2 million ringgit.

"We are positive on the disposal, given MISC would be able to better use its resources and concentrate on its core business segment," said Daniel Wong, an analyst at Hong Leong Investment Bank. Daniel retained his 'neutral' rating on the stock with a target price of 9.50 ringgit.

Maxis advanced 2.23% to 5.49 ringgit. Until Monday, the mobile operator shed almost 10% since its first quarter earnings announcement late April.

Tenaga Nasional led losses on the KLCI Tuesday, sliding 1.27% to 13.94 ringgit after utility major said it will buy a 30% stake India's GMR Energy for $300 million (1.2 billion ringgit) in cash.

Despite the slide in shares, Max Koh of AmInvestment Bank said he is "positive on the move although earnings contribution may be minimal at this juncture."

SapuraKencana Petroleum fell 1.25% to 1.58 ringgit, tracking a near 4% overnight slump in crude oil prices. The benchmark Brent crude oil contract was last trading up 1.74% at $44.39 per barrel.

UMW Holdings slipped 0.96% to 6.18 ringgit, extending Monday's over 1% slide. The auto-making conglomerate is down over 21% this year.

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