FBM KLCI turns bearish as finance stocks fall for 3rd straight day

by NG MIN SHEN & MARK RAO / pic by TMR FILE

BANKING stocks fell the most in nearly three months yesterday, dragging the FTSE Bursa Malaysia KLCI (FBM KLCI) lower for the third consecutive day as a weaker lending outlook and external economic figures hit investor sentiment.

The Kuala Lumpur Financial Index (KLFIN) slid 0.82% or 133.34 points to close at 16,059 yesterday, marking its biggest move since falling 1.07% on May 7, according to Bloomberg.

Meanwhile, the benchmark FBM KLCI was 7.82 points or 0.48% lower at 1,634.87, after hovering largely in the red throughout the day as financial and plantations stocks pushed the key index down. The MSCI AC Asia Pacific Index, however, advanced 0.15%.

“The FBM KLCI has turned bearish. Investors are concerned about the health of the global economy as there was little progress made in the ChinaUS trade talks during market hours and the weak trade numbers from Singapore did not help,” said an analyst with a local brokerage.

Public Bank Bhd contributed the most to KLFIN’s decline, falling 1.35% or 30 sen to RM21.90, while Syarikat Takaful Malaysia Bhd had the largest drop of 4.54% or 29 sen to RM6.10.

Malayan Banking Bhd slipped 0.92% or eight sen to RM8.65, CIMB Group Holdings Bhd lost one sen to settle at RM5.08, Hong Leong Bank Bhd was down 1.32% or 24 sen at RM17.96, while Hong Leong Financial Group Bhd fell 42 sen or 2.2% to RM17.98.

MIDF Amanah Investment Bank Bhd analyst Imran Yassin Yusof said investors are shying away from the banking sector this year.

“Banking stocks outperformed the market in 2018, but are on a downtrend this year on suspected profit-taking, among other factors,” he told The Malaysian Reserve when contacted.

This is in spite of the sector’s fundamentals remaining intact with healthy earnings and strong asset quality, while return on equity is still performing ably, he said.

“We observe many banking stocks performing below their pricing averages and this can only be explained by weak sentiment in the industry, as opposed to anything fundamental.”

Since the start of the year, KLFIN has fallen 7.15%, while the FBM KLCI retreated by 3.3%.

RHB Bank Bhd brought the biggest boost with a 1.1% jump to RM5.50, buoyed by news of a potential sale of its insurance business.

Manulife Holdings Bhd posted the largest gain yesterday, climbing 8.95% to RM2.80, whereas AMMB Holdings Bhd added 0.48% to reach RM4.23.

RHB rose on news that it had received the central bank’s approval to begin talks with Tokio Marine Asia Pte Ltd for a potential sale of its majority stake in RHB Insurance.

In a statement to Bursa Malaysia yesterday, the country’s fourth-largest lender by assets said Bank Negara Malaysia (BNM) in a letter dated July 29, 2019, stated that it “has no objection for the company to commence negotiations with Tokio Marine in relation to the proposed disposal of up to 94.7% of its equity interest in RHB Insurance”.

The central bank’s approval for talks to begin is valid for six months from the date of BNM’s letter.

“Pursuant to the Financial Services Act 2013, the relevant parties will be required to obtain the prior approval of the minister of finance with the recommendation of BNM before entering into any definitive agreement to effect the proposed disposal,” RHB added.

Accordingly, a detailed announcement on the proposed disposal will be made upon execution of any definitive agreement for the proposed disposal.

Shares of RHB — which have jumped 3.97% year-to-date — closed at RM5.50 yesterday, valuing the firm at RM22.06 billion.

Bursa Malaysia was closed on Tuesday for a public holiday to commemorate the installation of Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah as the country’s 16th Yang di-Pertuan Agong.