Banking stocks retreat, investors nervous ahead of Budget 2021


BANKING stocks tumbled along with the overall bearish market on Bursa Malaysia last Friday in anticipation of the tabling of Budget 2021 on Nov 6.

Oanda Corp Asia-Pacific senior market analyst Jeffrey Halley said there is anxiety among investors over the upcoming budget and concerns whether it will overcome political factors at play to be passed in Parliament.

“I believe there is nervousness around the budget this week whether the Parliament will pass it or if politics will get in the way again despite the King’s admonishment. If it fails to get passed, it will throw the government’s legitimacy into question,” Halley told The Malaysian Reserve.

Across markets globally, investors appear to be moving modestly into the technology sector as a hedge against volatility in the run-up to the US presidential election tomorrow.

Meanwhile, the resurgence of Covid-19 infections is increasingly affecting the economic recovery in Asia and abroad. “A vaccine will not be a magic panacea. In such environments, cyclical sectors such as banking will underperform,” Halley said.

Malaysia’s Financial Services Index plunged 251.42 points, or 2.05%, to close at 12,009.39 last Friday.

The three biggest banks on Bursa — Malayan Banking Bhd, Public Bank Bhd and Hong Leong Bank Bhd — ended lower by 0.99% to RM7, 3.83% to RM15.08 and 1.07% to RM14.80 respectively.

Other banking heavyweights CIMB Group Holdings Bhd and RHB Bank Bhd weakened by 1.67% to RM2.95 and 1.86% to RM4.23 respectively.

Most indices across Bursa flashed red last Friday, with the benchmark FTSE Bursa Malaysia KLCI sinking 28.31 points, or 1.89%, to end at 1,466.89 points. Twenty-seven out of 30 index constituents were in negative territory.

Dialog Group Bhd was the only constituent member of the headline index that showed uptrend last Friday, up 0.27%, or one sen, to RM3.70.

Two other stocks Hap Seng Consolidated Bhd and KLCCP Stapled Group stayed flat at RM7.33 and RM7.60 respectively.

Losers overwhelmed gainers 1,033 to 202 last Friday, while 309 counters were unchanged and 604 untraded. A total of 5.91 billion shares worth RM3.91 billion were traded.

Areca Capital Sdn Bhd CEO Danny Wong Teck Meng said the upcoming budget may include measures to help the economy, and small and medium enterprises that would have potential impacts on banks. “That would be one of the reasons for the declining banking stocks last Friday,” Wong said.

Additionally, he said banks’ assets quality issue after the moratorium and a potential rate cut at the next Monetary Policy Committee meeting also led to the decline in share prices.

“Long-term investors are suggested to look at banks that have the potential to pay dividends. But investors must be wary of the bank’s assets quality,” Wong added.