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Equities

Singapore, Malaysia equities advance tracking Wall Street rally

Banks drive gains for STI, while Sime Darby, Nestle (Malaysia) boost KLCI

KUALA LUMPUR (Nikkei Markets) -- Shares in Singapore and Malaysia ended a truncated trading session higher, boosted by an overnight rally in U.S. indexes after retail sales and inflation data.

Singapore's Straits Times Index climbed 1.2% to 3,443.51 and Malaysia's FBM KLCI Index advanced 0.2% to 1,838.28 on Thursday. It was a half trading day for both the markets, which are closed on Friday for the Chinese New Year holiday. For the week, the STI added 2% and KLCI 1%, tracking a recovery in global equity markets from last week's slump.

U.S. indexes rose for the fourth straight session overnight as investors digested a quicker-than-expected increase in consumer prices and retail sales that unexpectedly declined. The consumer price inflation was at 2.1% in January, quicker than the 1.9% projected by analysts. The January retail sales declined 0.3% month-on-month.

The faster-than-expected inflation prompted U.S. 10-year bond yields to rise to fresh four year highs of more than 2.90%. The 1.3% advance on the S&P 500 Index despite the rise in yields and upside inflation surprise was noteworthy, considering that the increase in U.S. borrowing cost was blamed primarily for last week's rout in global equity markets.

"The shrugging-off of the latest inflation surprise does reaffirm the underlying market confidence to a certain extent," said Jingyi Pan, a market strategist at broker IG Asia. "Although it may still be too early to suggest that we are out of the woods from the latest surge in volatility."

Other analysts said any recovery in U.S. markets in the face of increasing likelihood of quicker rate increases by the Federal Reserve may not be sustainable.

"If U.S. equities did somehow manage to stage a recovery alongside a further increase in interest rate expectations in the short term, we doubt that such a rebound would be sustained," Capital Economics said in a note.

On the STI, lenders were among the day's top performers. Oversea-Chinese Banking Corp. advanced 4.2% and United Overseas Bank added 3.1%, more than making up for the losses they suffered Wednesday after their quarterly earnings. DBS Group Holdings climbed 0.9%.

StarHub tumbled 10% after the telecommunications company reported a 74% decline in net profit for the fourth quarter.

Thai Beverage dropped 6.6% after reporting a 62% decrease in first-quarter net profit. DBS Equity Research said it continues to hold a positive view on the stock over the medium and longer term, saying the weak earnings will likely be temporary. The recent acquisition of Vietnam's Saigon Beer Alcohol Beverage Joint Stock Co. and margin expansion from an excise-tax increase could be among the catalysts, it said.

In Malaysia, Sime Darby Plantations and Nestle (Malaysia) led winners on the KLCI, rising at least 1.7% each. Shipping company MISC declined 0.6%, extending its losses from Wednesday after reporting an 87% slump in fourth-quarter net profit.

Hibiscus Petroleum rose 5%, adding to Wednesday's 16.9% rally. Interest in the stock surged after the company's managing director Kenneth Pereira told Bloomberg that earnings could "more or less" double, following its acquisition of a 50% stake in a North Sabah oilfield.

Glove maker Supermax Corp. jumped 5.9% after second-quarter net profit increased 59% on-year, boosted by higher sales.

Carlsberg Brewery Malaysia advanced 3% to a record after announcing a plan to pay 100% of consolidated net profits as dividend. The move "provides investors with greater visibility of their investment returns," Kenanga Investment Bank analyst Clement Chua said.

-- Alexander Winifred & Joannah Perez

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