Banks trading higher today prior to MPC meeting announcement

Banks trading higher today prior to MPC meeting announcement
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KUALA LUMPUR (Jan 20): All banks, except for one, were in the green today prior to an impending announcement this afternoon on the outcome of the Monetary Policy Committee (MPC) meeting.

At lunch break today, Malayan Banking Bhd was up 1.36% or 11 sen at RM8.21, Public Bank Bhd increased 2.97% or 62 sen to RM21.52, CIMB Group Holdings Bhd was 0.5% or two sen higher at RM4.02, while RHB Bank Bhd was up 0.95% or 0.5 sen at RM5.29.

Hong Leong Bank Bhd increased 0.57% or 10 sen to RM17.54, AMMB Holdings Bhd was higher by 2.82% or nine sen to RM3.28, Malaysia Building Society Bhd hiked 2.46% or 1.5 sen to 62.5 sen, Alliance Bank Bhd was up 0.38% or one sen to RM2.65, and Affin Bank Bhd increased 0.59% or one sen to RM1.70.

Only BIMB Holdings Bhd was in the red, dipping 3.33% or 14 sen to RM4.06.

Economists see less pressure for Bank Negara Malaysia (BNM) to cut its overnight policy rate (OPR) at the MPC meeting today — its first for the year, following the announcement on the RM15 billion Perlindungan Ekonomi dan Rakyat Malaysia (PERMAI) assistance package by the government on Monday (Jan 18).  

JP Morgan economist Milo Gunasinghe said in a note yesterday that while the risk of a cut has increased, he expects the central bank to keep rates intact this week given the relief measures announced, the short duration of the movement control order (MCO) restrictions and a limited policy rate transmission mechanism.

“We think BNM will keep the OPR on hold at 1.75% this week, following the 125 basis points (bps) in cumulative cuts in 2020,” he said.  

UOB Economics and Market research economists Julia Goh and Loke Siew Ting also highlighted in a report yesterday that the pressure to ease may be reduced with the latest assistance measures and government’s assessment that the economic impact from current MCO is more manageable.

They, however, still pencilled in a 25bps OPR cut to a new low of 1.50% in 1Q21.

The next policy review after today is scheduled for March 4.

Also read: 
Less pressure for BNM to cut rate at 2021’s first MPC meeting, say economists

Lam Jian Wyn