Banks fall on surprise OPR cut, glove makers rally

  • Banking
  • Wednesday, 22 Jan 2020

KUALA LUMPUR: Bank Negara Malaysia's suprise move to cut the overnight policy rate (OPR) by 25 basis points to 2.75% – the lowest since 2011 – prompted investors to cut their holdings in banks and sent the FBM KLCI into the red.

At 5pm, the KLCI was down 9.35 points or 0.59% to 1,577.98. Turnover was 3.07 billion shares valued at RM2.57bil. There were 397 gainers, 509 losers and 362 counters unchanged.

Concerns about a lower OPR impacting banks' net interest margins saw Public Bank, Hong Leong Bank, CIMB and Maybank falling just after the announcement was released at 3pm. Most economists had expected the OPR to be maintained.

Public Bank fell 46 sen to RM19.02 and erased 3.16 points from the KLCI while HLBank lost 60 sen to RM16.24 and wiped put 2.30 points.

CIMB lost 10 sen to RM5.03 and erased 1.75 points, Maybank was down five sen to RM8.55 while AmBank shed two sen to RM3.82 and RHB Bank was unchanged at RM5.84. BIMB fell 14 sen to RM4.06.

OCBC Bank economist Wellian Wiranto said with the conclusion of US-China Phase 1 deal and a nascent pickup in global trade flows, the outlook for Malaysian economy should have been looking better now versus two months ago, when Bank Negara's Monetary Policy Committee (MPC) last met.

“It appears that better may not be good enough, however. BNM surprised the market and us by cutting its OPR by 25bps to 2.75% - a level not seen since early 2011. Ostensibly, it is labelled as a 'pre-emptive measure'.

“The out-of-left-field nature of the cut, plus a tell-tale wariness on both global and domestic growth drivers in the statement, signal this may not be the last cut for the year – especially if economic momentum does not pick up,” Wellian said.

Other decliners were MAHB, down 23 sen to RM6.76 on worries about the spread of the new flu-like coronavirus and its impact on travelling and tourism.

Reuters reported Hong Kong confirmed its first case of a new flu-like coronavirus on Wednesday following an outbreak in the central mainland China city of Wuhan, local broadcasters RTHK, Cable TV and TVB said, citing unnamed sources.

The outbreak, which began in Wuhan, has spread to more Chinese cities including the capital Beijing, Shanghai, and Macau and cases have been reported outside the country's borders, in South Korea, Thailand and Japan.

However, glove makers fared well as outbreaks pushed up the demand of their products. Top Glove rose 32 sen to RM5.43 and added 1.49 points to the KLCI and Top Glove's 32 sen gaine to RM5.43 added 1.45 points to the index. Supermax added nine sen to RM1.54.

IHH Healthcare rose 13 sen to RM5.86 and nudged the KLCI up by 2.01 points.

Powerell, which was listed on the ACE Market, ended its trading debut up 3.5 sen to 28.5 sen. It was the most active with 304.11 million shares done.

Icon Offshore surged 29.5 sen to 41.5 sen following the share consolidation of 50 into one share. It also proposed a rights issue on the basis of 100 right shares for every one share after the consolidation, together with free warrants.

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