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Equities

Malaysian stocks surge to two-year highs on foreign fund flows, election bets

Singapore equities too at their two-year peak

KUALA LUMPUR (Nikkei Markets) -- Malaysian stocks jumped to more-than-two-year highs, powered by surging foreign fund inflows and expectations surrounding national elections.

Singapore shares too advanced to their highest level in more than two years, amid a persisting rally in global risk assets.

The FTSE Bursa Malaysia KLCI index rose 0.8% to 1,832.15, the highest since May 2015. Singapore's Straits Times Index rose 0.7% to 3,512.18, the peak since April 2015.

The momentum for both the Southeast Asian markets showed no signs of slowing down, as investors continued to bet that expectations of faster global growth would boost returns on risk assets. The positive start to the week came after U.S. markets rose to a record on Friday despite a tepid jobs report.

In Kuala Lumpur, foreign investors bought 915.1 million ringgit ($228.9 million) worth of shares last week, the biggest weekly purchase since March 2017. There was more good news for Southeast Asia's third-largest economy on the political front -- the Malaysian parliament is expected to be dissolved around April, state news agency Bernama reported Monday, citing a member of ruling party Barisan Nasional's top decision making-body.

"It's a pre-election rally," said Vincent Lau, vice-president at broker Rakuten Trade. "With strong foreign buying, it's possible that the KLCI could test its all-time highs ahead of the election. Most analysts would be scrambling to revise their year-end targets."

Rakuten expects the KLCI to hit 1,910 points this year. The gauge's record high is currently at 1,896, reached in July, 2014.

Utility company Tenaga Nasional rose 1.8%. Malaysia's power demand is expected to grow as much as 2.5% this year after remaining little changed in 2017, Hong Leong Investment Bank analyst Daniel Wong wrote in a note to clients.

Palm oil companies including IOI and Kuala Lumpur Kepong added 0.9% and 1%. Malaysia, the world's second-largest palm oil producer, suspended export tax on crude palm oil shipments starting Monday. The move would help exporters save 144 ringgit per metric ton, boosting international sale prospects for the nation's palm oil, as shipments will turn more competitive against Indonesia's exports, CIMB Investment Bank analyst Ivy Ng said.

Energy stocks rallied as Brent crude oil hovered near its highest level in two-and-a-half years. UMW Oil & Gas and Sapura Energy, two of Malaysia's largest oil and gas companies, jumped 11% and 20.4%. Smaller rivals KNM Group and Hibiscus Petroleum added 1.5% and 3.2%.

Malakoff, a power producer, advanced 7.9%. It signed a deal with Touch Meccanica, a landowner, to develop several energy projects including solar and hydro power plants in Pahang state.

Construction firm Muhibbah Engineering (M) rose 8.2% after Nomura Securities raised its earnings and order book projections.

Binasat Communications, which provides support services to telecommunication companies, jumped 28.3% on its trading debut on the Malaysian stock exchange.

In Singapore, real-estate group CapitaLand, which recently divested its non-core retail assets in China and India, was among the day's top performers, adding 1.9%.

RHB Research has a 'buy' call on the stock, saying its latest deals in India and China "clears an overhang on market concerns over its retail assets in Tier-2 & 3 cities amidst the threat of an oversupply and rise in e-commerce."

United Overseas Bank and Singapore Telecommunications were the biggest contributors by points on the Straits Times Index, up 1.3% and 0.8%.

SPH REIT was little changed at S$1.07. Its first quarter's distribution per unit remained unchanged on year at 1.34 Singapore cents. Revenues increased 1.7% to S$53.48 million ($40.3million).

Delong Holdings rose 6.2%, adding to Friday's 15% jump. The Singapore Exchange issued a query regarding the trading activity on the steel manufacturer. After markets closed, the company said it had received a full refund of 31.85 million yuan ($4.9 million) of bidding deposit in respect of a proposed acquisition.

--Alexander Winifred and Joannah Perez

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