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Singapore, Malaysia stocks fall on dollar strength, weaker China data

Real estate developers drag STI down, profit taking likely in Malaysia blue chips

KUALA LUMPUR (Nikkei Markets) -- Singapore and Malaysia shares fell Thursday, weighed by a strengthening dollar and weaker-than-expected data from China.

U.S. bond yields rose and the dollar rallied for a third day on Wednesday amid expectations of progress on tax reforms in the world's largest economy. The hopes of an overhaul of the U.S. tax code sent Wall Street to record highs overnight.

While the headway on U.S. tax reforms is positive for Asian risk assets, the focus for regional markets on Thursday was dollar's strength and rising probability that the Fed may raise rates in December. According to the CME FedWatch Tool, the odds for an increase are now at almost 1-in-2 as compared with 1-in-4 in the aftermath of North Korea's nuclear test earlier this month.

The softer-than-expected China data hurt regional sentiment. Retail sales in Asia's biggest economy rose by 10.1% last month and factory output increased by 6%, both below the estimates of economists polled by Reuters. Fixed investments expanded by 7.8% in last month, also lagging behind expectations.

"U.S. markets once again offered positive leads that were not picked up by the regional markets, with the notable strengthening of the dollar casting some pressure," said Jingyi Pan, a market strategist at Melbourne-based broker IG.

The Malaysian ringgit was down 0.3% against the dollar on Thursday at 4.2050 and the Singapore currency was little changed at 1.3504.

Singapore's FTSE Straits Times index fell 0.3% to 3,220.95, led again by rate-sensitive real estate companies. Developers CapitaLand and City Developments slipped at least 1% each. Capitaland Mall Trust paced decline among the Real Estate Investment Trusts, shedding 1.4%.

Vibrant Group, a provider of integrated solutions, advanced 2.6%, after saying net profit for the quarter ended Jul. 31 totaled S$122.65 million ($91.2 million), up from S$387,000 a year earlier. Revenue in the quarter jumped 90%. As many as 3.39 million shares changed hands, the highest in more than two-years.

OLS Enterprise, engaged in the production of films, consulting and contracting, jumped 25%. The company said late Wednesday that it will acquire BSDCN for S$6.02 million. BSDCN is a holding company which owns Pine, a Korean asset management company.

The FTSE Bursa Malaysia KLCI dropped 0.3% to 1,781.37. Westports Holdings was the top loser on the benchmark index, down 2.8%.

"Blue-chips are going to get hit" as some exchange traded funds could see an opportunity to take profit, said Gerald Ambrose, chief executive of Aberdeen Asset Management in Malaysia. While macro data for Malaysia has looked "pretty good," company earnings are "neither here nor there," he said.

AMMB Holdings was the best performer on the KLCI, with a 3.5% gain.

Hong Leong Investment Bank said the lender's share price will be supported by undemanding valuations and a strong dividend yield of 5.2% projected for fiscal years 2018-2020. "After the recent sell down, AMMB is currently trading at steep discount of 0.8 P/BV, 41% lower as compared to peers' P/B of 1.36X," Hong Leong said in a note. The stock lost almost 14% last month after its proposed merger with RHB Bank was called off.

Sensor manufacturer Globetronics Technology, a supplier to Apple, extended its fall for a second day. The stock lost 5.84% to close at 5.97 ringgit. Maybank Investment Bank downgraded the stock to "Sell," saying investors had been too optimistic in forecasting a jump in demand for gesture sensors by assuming that Apple would bundle wireless earphones with the new iPhones it introduced Tuesday.

Shares of Inari Amertron, which provides electronic manufacturing services to Apple supplier Broadcom, rose 0.4% to 2.50 ringgit.

TRIplc, engaged in property construction, slumped 7.3% after Puncak Niaga Holdings, controlled by Rozali Ismail, received approval from the Securities Commission to take over the company for 210 million ringgit ($50 million.) Ismail is the major shareholder of both the companies. Shares of Puncak Niaga ended up 2.6%. Trading volumes on TRIplc was the highest this year and for Puncak Niaga, the highest since March.

"There appears to be negative sentiment surrounding the deal, as cash from the takeover will not be paid out to shareholders," said Lee Chung Cheng, head of research at JF Apex Securities.

-- Alexander Winifred and Nimesh Vora

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