Shares up as BNM SRR ratio cut salves wounded financial markets

Shares up as BNM SRR ratio cut salves wounded financial markets
-A +A

KUALA LUMPUR (March 20): The FBM KLCI rose in afternoon trades today with world equities and after Bank Negara Malaysia (BNM) said yesterday that the statutory reserve requirement (SRR) ratio for the country’s banks will be lowered by 100 basis points from 3.00% to 2.00% to inject more liquidity into the system.

At 3:15pm today, the KLCI rose 67.23 points or 5.51% to 1,286.95. Bargain hunting for beaten-down Malaysian shares was apparent, after recent substantial losses due to concerns on the economic impact from the Covid-19 pandemic.  

Across Bursa Malaysia at 3:39pm, 3.47 billion shares were traded for RM2.18 billion, as investors evaluated the economic impact of Malaysia’s movement control order between Wednesday (March 18) and March 31 to curb the Covid-19 outbreak.

"Investor sentiment should remain edgy, amid worries the current two-week lockdown may be extended, and as uncertainties over the duration of the Covid-19 outbreak persist.” TA Securities Holdings Bhd wrote in a note today.

Yesterday, BNM said in a statement that the SRR ratio will be lowered by 100 basis points from 3.00% to 2.00%, effective today (20 March 2020).

“These combined measures will release approximately RM30 billion worth of liquidity into the banking system,” the central bank said.

Across world equity markets today, it was reported Asian shares made a partial comeback from a global rout on Friday, but still nursed massive losses for the week, while bonds rallied and oil extended its gains.

"U.S. S&P 500 e-mini stock futures also pointed to a brighter end to the week, adding 1.7%. In afternoon trade in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan was 4.41% higher, ending a seven-sessions streak of losses,” Reuters reported.