KUALA LUMPUR (Nikkei Markets) - Stocks in Singapore and Malaysia edged lower on Thursday as odds of a Federal Reserve rate increase in December rose after this week's monetary policy review.
After the two-day review that concluded Wednesday, the Fed left policy rates unchanged while announcing that it will start reducing its bond holdings from next month, as widely expected. However, the U.S. central bank hinted that rates could go up one more time before the end of the year, sending bond yields higher. According to the CME FedWatch Tool, the probability of a December rate increase climbed to 70% from just over 50%.
"While projected interest rate increases were lowered slightly for 2019, the Fed was more confident in another rate hike this year than markets had expected," said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors. However, Oliver said he didn't expect a negative impact on equity markets as stocks overall were still cheap relative to bonds, and Fed's tightening suggested that U.S. growth is holding up.
Singapore's FTSE Straits Times index fell 0.1% to 3,213.82. Real estate developers once again led the losses on the index. CapitaLand declined 1.1% and City Developments slipped 0.5%
CapitaLand Commercial Trust, Singapore's largest commercial REIT by market capitalization, said Thursday it has agreed to buy the Asia Square Tower 2 property from BlackRock Asia Property Fund for S$2.1 billion ($1.6 billion). In a separate announcement, the company said it will raise S$700 million through a rights issue to fund the purchase. The stock was suspended from trading on Thursday at the company's request.
Great Eastern Holdings rose 0.2%. The insurer is assessing "possible options relating to a minority stake in Great Eastern Life Assurance (Malaysia) to comply with the prevailing foreign ownership requirements applicable to insurance companies in Malaysia," it said Thursday.
The statement was in response to this week's news reports that said Great Eastern plans to sell a stake in its Malaysian operations for $1 billion.
In Kuala Lumpur, the FTSE Bursa Malaysia KLCI fell 0.1% to 1,771.04, taking its losses for the week to 0.9%. Malaysian markets will remain closed on Friday for the Islamic New Year.
Logistic major Westports Holdings was the day's top loser, closing down 2.8%. CIMB Group Holdings added 0.6%, recovering some of Wednesday's losses triggered by Mitsubishi UFJ Financial Group's stake sale in the lender. Still, CIMB was the week's biggest loser on the KLCI, dropping 5.9%.
IHH Healthcare, Asia's largest listed hospital operator by market value, dropped 0.5% to 5.80 ringgit on Thursday, clocking a 3.33% weekly loss. RHB Bank rose 2.52% to close at 5.28 ringgit, and emerged the week's best performer with a 3.53% gain.
Lotte Chemical Titan Holdings, the Malaysian unit of South Korea's Lotte Chemical Corp., dropped 0.76% after a fire broke out at one of its plants in the southern state of Johor. Lotte said it is yet to assess the financial impact of the incident.
Hai-O Enterprise advanced 4.5% to 4.91 ringgit, a record, after the medical products and apparel retailer said first-quarter net profit jumped 84%. Kenanga Investment Bank raised the stock's target price to 4.40 ringgit.
Berjaya Sports Toto rose 1.7% after the lottery company's first-quarter net profit increased by 27%.
FoundPac Group advanced 1.1% amid speculation the designer of precision engineering parts for semiconductor manufacturers will issue bonus shares. Company officials couldn't be immediately reached for comment.
Spritzer, a manufacturer of water products, rose 8.8% to its highest since August. The company later said it would place new shares to a private equity fund managed by Singapore-based Dymon Asia Capital, in a deal that could raise 63.81 million ringgit ($15 million.) Spritzer has risen 8.4% this week.
-- Alexander Winifred and Nimesh Vora