KUALA LUMPUR (Aug 12): Banking stocks are trading downward in morning trade today due to foreign selling and concern over the weaker results for the second half of 2015 (2H15).

Public Bank Bhd dropped 20 sen or 1.08% to a low of RM18.30, but pared losses to settle at RM18.28 with 1.73 million shares done, as at 11.30am.

Public Bank (fundamental: 2.8; valuation: 1.2) is also one of the top loser in the local exchange in morning trade today.

Public Bank has been trading downward since last Friday (Aug 7) which caused the counter to lost 36 sen or 1.89% for the last two trading days.

Meanwhile, CIMB Group Holdings Bhd dipped as much as 13 sen or 2.57% to the low of RM4.92, with 3.72 million shares traded as at 11.30am.

CIMB Group (fundamental: 1.05; valuation: 2.25) has also been trading on a downward trend since Aug 7, which saw the stock shed 4.72% for the last two trading days.

Similarly, Malayan Banking Bhd (Maybank) also dropped as much as 9 sen or 1.06% to trade at RM8.43 apiece with 4.81 million shares changing hands as at 11.30am.

Maybank (fundamental: 1.5; valuation: 2.25) has also been trading downward since Aug 5, which saw the stock lost 7.29% in one week. Trading volumes has also been growing; it reached maximum yesterday at 24.35 million units traded.

SJ Securities Sdn Bhd remisier Goh Kay Chong said that the plunge in banking stocks' share price might be due to foreign selling.

According to Goh, the trading chart showed money outflow from Maybank on Aug 7, whereas money outflow from Public Bank and CIMB Group occurred since Aug 10.

Kenanga Research concurred that foreign shareholdings in CIMB Group and Maybank has been declining.

“As at July 15, 2015, foreign shareholdings in CIMB Group stands at 29%, compared to 33% on Dec 31, 2014; while foreign shareholdings in Maybank stands at 21% versus 22.6% on end-2014,” Kenanga said.

The research firm said that the other reason could be the concern over the weaker performance of banking sector in 2H15.

“There is a fear that the bank’s results will not be within expectation for the 2H15, but I think it is very much depend on how the bank provision themselves. The loan growth and deposit growth are factored in as the management has given guidance of this,” Kenanga added.

When asked if the weakening ringgit has impact on the bank, Kenanga said that this depends on the exposure of the bank towards foreign loans, but Kenanga did not think it is significant.

The ringgit has depreciated to 4.0025 against the US dollar at 11.27am.

However, Kenanga maintained that the banking stocks’ fundamentals remain good and it does not think there would be any risk that could affect the banks tremendously in the near term.

Also, a few banking stocks are among the top losers in the local exchange this morning which has weighed down on the FBM KLCI that has dropped 21.58 to 1,615.13 points as at 11.36am.

The top losers are Hong Leong Bank Bhd (fundamental: 2.8; valuation: 2.2), down 30 sen or 2.28% to RM12.88, with merely 20,700 shares traded; and RHB Capital Bhd (fundamental: 1.5; valuation: 2.1), down 22 sen to RM6.74 with 479,600 units done.

Affin Holdings Bhd dipped 6 sen or 2.52% to RM2.32, with merely 157,300 units done.

AMMB Holdings Bhd fell 7 sen or 0.76% to RM5.19, with 988,100 shares done.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)