Bursa’s key index hits 32-month high on positive sentiment
KUALA LUMPUR: Positive sentiment on the local banking sector following Bank Negara Malaysia’s Overnight Policy Rate (OPR) hike on Thursday pushed the FTSE Bursa Malaysia KLCI (FBM KLCI) to a 32-month high yesterday, say analysts.
The surge, which brought the key benchmark index to close at 1,853.92 — up 8.06 points from Thursday’s 1,845.86 — was also supported by key heavyweights, such as Nestle (Malaysia) Bhd, Petronas Gas Bhd and Sime Darby Bhd.
The ringgit also broke another record yesterday, strengthening to a new 21-month high of RM3.8710 against the US dollar.
MIDF Amanah I nvestment Bank Bhd head of research Mohd Redza Abdul Rahman expects increased foreign fund flows this week into big-cap companies, especially banking counters, with a higher possibility that total inflows will break the RM3 billion mark.
An increase in fund flows into banking stocks was a sign of positive sentiment after the OPR hike, he added.
“Foreign fund flows are expected to be higher than last week if foreigners dip into the banking stocks. They would also possibly dip into non-bank sector as most of the big caps with higher proportion of fixed rate debts seem to have minimal impact from the rate hike,” Redza told NST Business.
RHB Bank Bhd led the increase in the banking sector, closing 1.85 per cent higher from Thursday, followed by Hong Leong Financial Group Bhd (1.11 per cent), AMMB Holdings Bhd (0.83 per cent) and Malayan Banking Bhd (0.80 per cent).
The banks were also among the top 10 gainers on the FBM KLCI yesterday.
Stock market expert Nazarry Rosli said the increase in OPR would not give an overall negative impact to the economy and the stock market.
“The rate hike is not a major concern for now since the increase is minimal. It gives net positive effect to the market. You can see how the market reacts positively yesterday,” he said.
Nazarry added that the OPR hike also would not adversely affect cash-rich companies.
“Only companies with high gearing will be negatively impacted.”
On the country’s economic growth, Malaysian Rating Corp Bhd said with global growth momentum unlikely to reverse in the near term, the outlook this year remains favourable for exportdependent Malaysia.
“Coupled with sustainable growth in consumer spending, Malaysia’s headline gross domestic product growth will likely remain above five per cent,” it said in a note.