Singapore stocks post weekly gains on global equity rally, Malaysia shares decline
SINGAPORE (Nikkei Markets) -- Singapore shares rose this week as the U.S. Federal Reserve Chair's remarks on inflation and the economy being close to neutral interest rates spurred a global rally in equities. Global Logistic Properties soared on Friday after a Chinese private equity consortium won an $11.6 billion bid to acquire the company.
Malaysian stocks posted weekly losses as weaker-than-expected DiGi.Com earnings dragged telecommunication companies lower.
Investors will be watching more closely the June U.S. consumer inflation data, due later on Friday, after Fed Chief Janet Yellen's remarks earlier this week. Yellen, in her testimony to U.S. policymakers, expressed concerns over low inflation and said the Fed could alter policy plans if price gains continued to remain weak. Also boosting risk appetite were her remarks that interest rates won't have to rise too much to reach neutral levels.
"Janet Yellen caught markets unaware by striking a dovish tone in her congressional testimony on Wednesday," said Lukman Otunuga, a research analyst at brokerage FXTM. "While Yellen reiterated the Federal Reserve's game plan to continue gradually tightening monetary policy, there was lack of commitment to a hiking timeline and tone of caution on inflation."
Most Asian markets ended higher for the week. The Nikkei Asia300 index of companies outside of Japan posted a 3.3% weekly advance.
Singapore's FTSE Straits Times Index rose 1.6% to 3,287.43 on Friday, primarily on the back of an over 20% jump in Global Logistic Properties. GLP rose 22% to S$3.29 after the warehouse operator said it will be acquired by private equity consortium Nesta Investment Holdings for S$3.38 per share. The offer values GLP at S$16 billion ($11.6 billion). Friday's rally helped GLP wipe off accumulated losses through the week, as the stock closed higher by 15.5%. Trading in the stock was halted on Thursday at the company's request.
GLP, backed by Singapore sovereign wealth fund GIC, will be delisted from the Singapore exchange and privatized post the acquisition. The company began a strategic review of options to enhance shareholder value in December, following a request from GIC Real Estate, its largest shareholder, which is the property arm of GIC.
For the week, the city-state's benchmark index rose 1.8%. Oversea-Chinese Banking Corp. has gained 3.4% since last Friday and United Overseas Bank rose 2.7%. Both the banks will report earnings at the end of this month. DBS Group Holdings rose 1.3% this week. All the three lenders' have rallied after their March quarter earnings beat expectations. On Friday, OCBC and UOB rose by at least 1.1% each and DBS edged higher by 0.3%.
Markets shrugged off Singapore's weaker than expected second-quarter gross domestic product data. The GDP grew 2.5% year-on-year in the quarter ended June, the Ministry of Trade and Industry said in its advance estimate released Friday. The expansion was slower than the 2.8% median estimate of economists surveyed by Reuters.
The FTSE Bursa Malaysia KLCI edged higher 0.1% to 1,755 on Friday. For the week, the index lower by 0.3%.
DiGi.Com fell 1.5% on Friday to end the week with losses of 6.8%, its worst weekly performance since 2008. The slump came after the mobile operator reported a 14.7% drop in second-quarter net profit and a 6.7% fall in service revenues. At least two brokerages slashed the target price on the stock after revising earnings estimates lower.
Axiata Group slipped 0.7% on Friday to take its losses for the week to 2.1%. It was a choppy week for the telecom major amid reports that its Nepal unit may not be allowed to repatriate dividend. The company said it had not received any official intimation to that effect.
Telekom Malaysia declined 0.6% on Friday, taking its losses this week to 2.3%.
Luxchem Corp. rose 4.8% to 2.19 ringgit on Friday after AmInvestment Bank initiated coverage with a "buy" call and fair value of 2.74 ringgit after it forecast strong sales for the company's latex-related products as stricter hygiene standards drive glove demand.
Vivocom Holdings International jumped 20.8% after a media report that it plans a joint bid for Kelantan airport job worth 450 million ringgit ($104.5 million). Company officials couldn't be immediately reached for comment.
Hua Yang fell 4.4% after the management services company said that first-quarter net profit plunged 93% and revenues declined by 62.5%.
--Nimesh Vora and Kevin Lim