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Singapore, Malaysia equities fall as lower crude price damps energy sector stocks

Keppel, Sembcorp, Sapura Energy among worst performers

KUALA LUMPUR (Nikkei Markets) -- Singapore and Malaysia shares extended losses on Wednesday after crude oil prices slipped overnight and Wall Street weakened.

Singapore's Straits Times Index dropped 0.9% to 3,368.70 and the Bursa Malaysia KLCI index lost 0.6% to close at 1,722.99. Energy related stocks were among the worst performers in both the markets after Brent crude dropped to its lowest level in two-weeks. Crude prices fell after the International Energy Agency cut its forecast for oil demand.

Singapore rig-builders Keppel Corp. and Sembcorp Marine lost 3.3% and 4.7% respectively. Sembcorp Industries, parent of Sembcorp Marine, fell 2.5%. In Malaysia, Sapura Energy and Bumi Armada declined 3.5% and 0.6%.

Further weakness in oil prices could hit energy stocks, though crude's gains above $60 per barrel this year will likely bolster the sector's earnings, said Bernard Ching, head of Malaysia research at Alliance Investment Bank.

"Investors are looking at earnings delivery to gain more confidence," Ching said. "Oil and gas stocks have been on an upward trajectory given the oil price rebound."

Energy stocks were amongst the major contributors to the decline in U.S. stocks and on the Nikkei Asia300 Index of companies outside Japan. The S&P 500 Index declined 0.2% Tuesday to a two-week low. Nikkei Asia300 index dropped 0.8% on Wednesday.

In its markets overview, UOB said risk aversion had set in, triggering "a necessary short-term correction after the strong correlated rally over the past few weeks." Weak Chinese data released Tuesday also appear to weigh on industrial metal prices, UOB said.

Singapore lenders, having exposure to oil and gas companies, declined. DBS Group Holdings and United Overseas Bank slipped at least 0.6% each and Oversea-Chinese Banking Corp. lost 1.2%.

Postal service provider Singapore Post lost 1.5% after announcing late Tuesday a 9.5% fall in second-quarter net profit.

Agricultural commodities firm Olam International, which posted a 17.5% increase in third-quarter net profit, lost 2.2%.

RHT Health Trust surged 10.5% after India-based Fortis Healthcare, which is the controlling shareholder of the Singaporean trust, proposed acquiring the trust's entire asset portfolio for around $718 million. As many as 20.77 million shares changed hands, the highest since June 2014.

Parkson Retail Asia slipped 2.7% after the department store operator said late Tuesday that its net loss in September quarter widened from a year earler.

Noble Group advanced 0.5%. The troubled commodity trader said Wednesday it had started talks with various stakeholders regarding potential options in order to address the company's capital structure and liquidity position.

DBS on Wednesday raised its full-year Singapore GDP forecasts for 2017 and 2018 to 3.2% and 3%, respectively, citing better-than-expected third-quarter growth and expectations of continued strengthening in the global economy. It expects third-quarter GDP growth to be the strongest this year at 5.1% on-year. Advance estimates released last month showed that the city-state's economy grew 4.6% in the September quarter.

In Kuala Lumpur trading, Petronas Dagangan was the second-biggest loser on the KLCI, falling 2.7%. Maxis, the nation's second-largest mobile phone operator by revenue, closed 1.2% lower as it cut prices on some of its products, signaling intense competition in Southeast Asia's third-largest economy.

Outside of the KLCI, Paramount Corp. advanced 4.6 % after the property developer said third-quarter net profit surged nearly eight-fold from a year earlier. Rival Eastern & Oriental added 1.4% after its second-quarter net profit jumped five-fold. Lay Hong rose 0.5% after the food products maker reported a three-fold rise in its second quarter net profit.

Scomi Energy Services jumped 3.5% after saying on Tuesday that it had hit its first oil at the Ophir offshore field.

Evergreen Fibreboard, a furniture maker, jumped 3.3% to a six-week high despite third-quarter net profit falling 11%. Hong Leong Investment Bank analyst Rachael Hong said she expected Evergreen's earnings to improve, driven by the commencement of a new particleboard line.

--Alexander Winifred and Nimesh Vora

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