KUALA LUMPUR (March 29): The recent global market volatility due to concerns in the banking sector of some advanced economies had minimal impact on the Malaysian financial markets beyond some weakness observed in the domestic equity market, said Bank Negara Malaysia (BNM).

The central bank added that it remains vigilant of potential spillover risks from the global banking sector to the domestic financial markets.

“Renewed uncertainty over the pace of US monetary policy tightening amid a persistent increase in inflation and the failure of some US banks in the first quarter of 2023, has dampened the performance of equity markets globally, including Malaysia’s,” said BNM in its Economic and Monetary Review and Financial Stability Review 2022 reports.

The US Federal Reserve lifted the benchmark interest rate by 0.25 percentage points to a target range of 4.75% to 5% last week.

BNM added: “While the risk-off sentiment among investors due to concerns in the global banking sector has placed some pressure on the domestic equity market, especially the banking counters, the impact was nevertheless moderate and short-lived”. 

The collapse of several banks in the US in mid-March, followed by the Credit Suisse crisis in Europe, sent markets tumbling all around the world.

On the home front, the FBM KLCI suffered its largest single day decline of 1.97% on March 14 to 1.393.83. It was the first time the index fell below the 1,400 mark this year, signalling investors’ shaky confidence.

Don't miss the other highlights of the BNM Annual Report 2022. Read the articles here.