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Stocks

Shares rise as bets of bottoming out crude prices cheer investors

KUALA LUMPUR (NewsRise) -- Malaysian shares rose Tuesday as expectations of a dip in U.S. shale output drove an overnight rally in crude oil prices, lifting energy stocks such as SapuraKencana Petroleum.

     The nation's benchmark FTSE Bursa Malaysia KLCI rose 0.16% to 1,677.28. The index had risen as much as 0.67% earlier Tuesday to its highest levels since January 4. The KLCI is up 0.6% for February and down only 0.87% in 2016.

     UMW Holdings, Maxis, SapuraKencana and plantation shares were amongst the best performing stocks Tuesday, while MISC and Astro Malaysia Holdings led losses.

     The ringgit closed rose 0.05% to 4.192 Tuesday. The currency has reversed its near 1% decline in 2016, registered in January, and is now up 2.3% since the beginning of the year - making it the best performing Asian currency.

     "Profit taking activities may cap the current rebound near 1,700 psychological levels, given the choppy trading environment and external market uncertainties," said Nick Foo of Hong Leong Investment Bank.

     The KLCI fell to its lowest level in 2016 of 1600.92 on January 21 and has risen 4.8% since then.

     U.S. benchmark crude rose over 6% Monday while global benchmark Brent crude rallied 5% after the International Energy Agency said it expects U.S. shale oil production to decline in 2016 and 2017. The energy agency added that it expects supply and demand to rebalance in 2017.

     Rising U.S. shale output and record production from other crude oil producers has created a significant supply glut in the global crude oil market in recent months, driving sharp declines in prices. Last week, major oil producers agreed to an output freeze at January levels, easing some oversupply concerns.

     Brent crude oil prices, which slipped 35% in 2015, have fallen another 9% in 2016.

     In other Southeast Asian markets Tuesday, Philippine's PSE Composite index and Singapore's Straits Times rose 0.53% and 0.56%. Thailand's SET index advanced 0.38%, while Indonesia's Jakarta Stock Exchange Composite fell 1.16%.

     In Asia, Japan's Nikkei 225 index and Hong Kong's Hang Seng fell 0.37% and 0.25%. China's Shanghai Composite index declined 0.79%, while South Korea's KOSPI eked out a 0.03% gain.

     On the KLCI, 18 of the 30 constituents ended higher Tuesday, while overall declining issues outnumbered advancing ones 438 to 417.

     Foreign investors bought Malaysian shares worth 54.0 million ringgit ($12.9 million) Monday, according to BIMB Securities. Yesterday's inflows trim the net withdrawals from overseas investors since the start of the year to 576 million ringgit.

     UMW Holdings, which reports fourth quarter earnings later this week, rose 1.58% to 7.07 ringgit. The conglomerate, with businesses auto-making to oil and gas, is the worst performing index stock this year, declining over 10%. Stringent loan requirements and weak consumer sentiment are expected to lead to a fall in total industry volumes (TIV) in 2016, analysts said.

     Plantation major Kuala Lumpur Kepong, which reported earnings last week, rose 0.83% to 24.2 ringgit. Plantations-to-motoring conglomerate Sime Darby rose 0.51% to 7.96 ringgit ahead of its fiscal second quarter earnings tomorrow, while IOI Corporation ended 0.21% higher at 4.72 ringgit.

     SapuraKencana Petroleum rose 1.02% to 1.99 ringgit. A rebound in oil prices this month has helped the oil services major has recoup most of the near 25% fall registered earlier this year.

     Mobile operator Maxis rose 1.12% to 6.30 ringgit Tuesday, chalking an over 10% gain for the month, as telecommunication stocks rebounded from January's lows on spectrum allocation uncertainty.

     State-owned Petronas Gas and banking major CIMB Group Holdings were among the other stocks to advance Monday, gaining 0.89% to 22.6 ringgit and 1.16% to 4.35 ringgit, ahead of quarterly earnings later this week.

     Shipping major MISC led losses on the KLCI, slipping 1.37% to 8.64 ringgit, while television services provider Astro Malayisa fell 1.12% to 2.65 ringgit. MISC had risen almost 3% earlier Tuesday, while Astro Malaysia rose as much as 1.5% intraday.

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