Singapore equities fall on real estate developers; Malaysia shares edge lower- Nikkei Asian Review

KUALA LUMPUR (Nikkei Markets) — Singapore shares fell Wednesday, weighed by the decline in rate-sensitive real estate companies. Malaysia stocks also declined.

Investors in the region seemed to have adopted a cautious stance amid lingering concerns over North Korea’s next move after the U.N. imposed fresh sanctions on the isolated nation following its nuclear tests. Earlier on Wednesday, North Korean foreign ministry said it condemned the sanctions, and Pyongyang will “redouble efforts to increase its strength to safeguard the country’s sovereignty.” All the three major U.S. stock indices had closed at a record level overnight, but that did little to cheer Asian markets. The Nikkei Asia300 Index of companies outside Japan lost 0.2%.

Singapore’s FTSE Straits Times index declined 0.2% to 3,230.36.

Jingyi Pan, a market strategist at Melbourne-based IG, said the city-state’s benchmark index was “trapped in a short-term downtrend” and pointed to the recent divergence between STI and MSCI Asia Pacific Index. While the STI is down more than 1% in the last one-month, MSCI’s Asia index gains have exceeded 4%.

“Having said that, the positive growth situation in the U.S. and around the region did not warrant a continued decline,” Pan said. “Watch for reversals ahead of the key 3,200 support.”

Among real-estate stocks, CapitaLand paced declines amongst developers, slipping 0.8%. Capitaland Mall Trust, down 0.9%, led Real Estate Investment Trusts lower.

U.S. bond yields rose for a second day with the 10-year borrowing cost reaching three-week highs on Tuesday, as increasing risk asset prices boosted odds of an interest rate hike by the Federal Reserve in December. The probability of a Fed rate increase in December rose to 40%, according to CME FedWatch Tool.

The FTSE Bursa Malaysia KLCI dropped 0.2% to 1,786.07 points. Genting Malaysia suffered the biggest loss, declining 2.54%.

IOI Corp. advanced 2% to 4.64 ringgit after the palm oil producer and property developer said Tuesday it will sell a 70% controlling stake in Loders Croklaan Group to U.S.-based Bunge for 3.94 billion ringgit ($936 million).

“We believe investors would react positively to this news, given that IOI’s manufacturing earnings are relatively volatile in nature so a smaller stake may reduce such volatility, while there is still a potential upside in the form of synergies from the collaboration with Bunge,” RHB Investment Bank said in a note. RHB upgraded the stock to “neutral” and raised the target price to 4.35 ringgit.

Inari Amertron, a supplier to Apple, added 1.2% after the iPhone maker revealed three new handsets – iPhone 8, 8 Plus and X.

“We believe the additional model (iPhone X) introduced on top of the two conventional lines, coupled with the exciting features would underpin Inari’s earnings growth of 35% in FY18,” AmInvestment Bank said in a note.

Willowglen MSC slumped 8.6% to 1.27 ringgit after the computer integrated systems design company said it had received an offer from its single-largest shareholder New Advent to acquire all the remaining 109.5 million shares it did not own at 0.80 ringgit apiece.

Shares of Hartalega Holdings and Top Glove Corp., two of the world’s largest glove makers, dropped 4.6% and 1.1% respectively. Malaysian Rubber Glove Manufacturers Association President Denis Low Jau Foo said prices of nitrile butadiene – a key raw material for glovemakers – could increase due to production disruptions caused by Hurricane Irma, the Edge Financial Daily reported.

–Alexander Winifred and Nimesh Vora

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