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Singapore shares slip after budget, Malaysia up tracking Wall Street

SINGAPORE (NewsRise) - Shares in Singapore fell Monday after the government's budget detailed few short-term measures to help businesses cope with slowing growth and rising costs.

The FTSE Straits Times index shed 0.4% to 3,096.69 points, its first decline in four sessions. The Singapore dollar was little changed at 1.418 against the U.S. dollar.

Finance Minister Heng Swee Keat described the budget as expansionary, with government expenditure expected be around 5.2% higher than in the previous financial year. Heng projected a smaller budget surplus of S$1.9 billion ($1.33 billion), or 0.4% of gross domestic product, for the year 2017/18.

While Singapore extended a helping hand to offshore marine and construction companies, hopes for reliefs for the property sector did not materialise. The city-state's property stocks had soared in the run up to the budget amid expectations the government would ease property cooling measures.

City Developments fell 0.4% to S$9.22, while Capitaland Mall Trust slid 0.8% to S$1.96. The stocks are up over 11% and almost 4% this year, respectively.

Personal income and corporate tax rebates for the fiscal year starting April 1 were aimed at lower- and middle income Singaporeans and smaller enterprises. For instance, the maximum corporate tax relief for companies was raised from S$20,000 to S$25,000 for taxes paid in year of assessment 2017.

Sembcorp Industries rose 0.3% to S$3.20, while Keppel Corp was unchanged at S$6.64 after the government said it would defer an increase in foreign worker levies for companies in the offshore and marine industry that were scheduled to take effect on July 1.

Keppel is the world's largest maker of offshore oil rigs, while Sembcorp Industries' Sembcorp Marine unit is the global number two.

Both companies, which have large engineering arms, also stand to benefit from the government's decision to bring forward S$700 million of public sector infrastructure projects as well as higher investments in clean water.

Separately, the budget said Singapore will increase price of water by 30% in two phases, starting July this year to reflect higher cost of producing clean water through desalination, purification of used water.

Water treatment solutions provider Hyflux ended unchanged at 61 cents a share.

Banks, which reported lackluster earnings last week and have seen a strong rally since Donald Trump's victory amid expectations of rising interest rates, fell tracking a decline in U.S. bond yields. DBS Group Holdings slipped 0.5% to S$18.50 and Oversea-Chinese Banking Corp lost0.4% to S$9.48. United Overseas Bank slipped 0.3%.

Raffles Medical Group slid 1.4% to S$1.46 after it reported a 1.3% increase in profit after tax and minority interest on a 15% jump in revenue to S$473.6 million

Malaysian shares rose to fresh 10-month highs Monday, helped by another record-setting session on Wall Street and extended gains in British American Tobacco Malaysia.

The FTSE Bursa Malaysia KLCI rose 0.3% to 1,712.58, its highest since late April 2016. After all three major U.S. indexes posted rose to fresh record highs on Friday, clocking a fourth straight weekly gain amid optimism over Donald Trump's economic policies and tax cuts. The Nikkei Asia300 index rose 0.4%.

The nation's markets have had a strong start to this year, with the KLCI up over 4% in 2017, helped by strong global risk appetite and as crude prices hold above $50 to a barrel. However, some analysts expect the rally to stall amid caution over earnings outlook and as investors look to lock in gains.

"KLCI could pause for a profit, taking a breather this week after a steady uptrend since the beginning of the year," said Kaladher Govindan, head of research at TA Securities. "Overall, the corporate earnings are not expected to post any major positive surprises, as subdued increase in sales, higher costs, impairments and provisions should underscore the earnings contraction in 2016."

British American Tobacco Malaysia, among the worst performing stocks on the KLCI last year amid concerns for concerns over illegal market volumes, advanced 3.9% to 51.08 ringgit to extend last week's near 10% rally after it posted an over 50% jump in December quarter net profit.

Genting Malaysia added 2.5% to 5.38 ringgit to stretch its rally since the start of the year to almost 18% amid optimism over revenue and earnings in the wake of an increase in its Malaysia's resort capacity.

Kuala Lumpur Kepong, which slipped 0.8% last week after fiscal first quarter earnings, fell 1.6% to 24.48 ringgit on Monday.

--Kevin Lim and Nimesh Vora

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