Investors sell banking stocks, sentiment turns cautious

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KUALA LUMPUR (Feb 5): Shares in most major banking counters fell in the morning session today. This group of stocks were hit by profit taking as the market sentiment turns cautious following the rather sharp fall on Wall Street last Friday.

Bank Negara Malaysia (BNM) Governor Tan Sri Muhammad Ibrahim's remark that the recent overnight policy rate (OPR) hike should not be construed as a tightening of the monetary policy also added fuel to the selling.

According to Inter-Pacific Research head of research Pong Teng Siew, the drop in banking counters are typically due to the weaker overall market performance, especially in the US market.

"There is a lot of wariness in market everywhere and worldwide overall sentiments are bad.

"The reaction to the drop in New York market over the weekend has translated into one round selling but I don't think it will continue unless New York market continues to fall," he told when contacted.

Pong said it is global stock markets which impact the banking counters' share prices as the sentiment is not good.

Meanwhile, Areca Capital Sdn Bhd chief executive officer Danny Wong Teck Meng said the BNM governor's remark could partially impact the banking sectors' share prices as previously the banking players had enjoyed a good day when BNM increased its OPR for the first time since July 2016, which helped to improve their lending margin.

"I think the share price fall is partly because of that (governor's remark on not tightening monetary policy).

"Before this, the [banking counters' share prices have] run up quite steadily riding on the interest rate hike, which [occurred] last month. Even the banks also look forward [should] there be another one [because] when there is no interest rate hike, they would not get a higher margin," he said.

As reported today by The Edge Financial Daily, Muhammad said the recent 25-basis-point increase in the OPR should not be construed as a tightening of the monetary policy.

"At 3.25%, it is still an accommodative monetary policy. We are not on tightening trend. In fact, the low-interest rate environment that the world has been experiencing for a long time is basically now in a phase of normalization to ensure that economic growth continues to progress as we move forward," he told The Edge Financial Daily.

As the close of the morning session, shares in AMMB Holdings Bhd (Ambank Group) fell 15 sen or 3.17% to RM4.59 for a market capitalisation of RM13.96 billion.

Additionally, CIMB Group Holdings Bhd saw its shares fall 18 sen or 2.48% to RM7.07 while Malayan Banking Bhd (Maybank) shares dipped two sen or 0.2% to RM10.08. Shares in RHB Bank Bhd also dropped 21 sen or 3.83% to RM5.28 and Alliance Bank Malaysia Bhd dived 10 sen or 2.31% to RM4.23. Public Bank Bhd was unchanged at RM22.