KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
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Key Points:
Large Cash Injection:
- The People's Bank of China (PBOC) added 674 billion yuan ($93 billion) to the banking system, the most since January. This move is to ensure banks have enough money as tax payments increase.
Why Now:
- Tax Payments: July is a major month for tax payments in China, putting pressure on bank liquidity.
- Policy Meeting: The injection coincides with China’s Third Plenum, a key meeting where leaders discuss major economic policies.
Focus on Short-Term Rates:
- The PBOC is considering using the seven-day repurchase rate as the main short-term policy rate, replacing the current medium-term lending rate.
Expert Opinions:
- Ming Ming, Citic Securities: The PBOC needs to add cash to ease the pressure from tax payments and might be preparing to switch to the new short-term rate.
- Xing Zhaopeng, ANZ: The PBOC wants to prevent sudden increases in funding costs and maintain stability during the policy meeting.
The PBOC’s cash injection ensures bank stability during high tax payments and potential rate changes, aiming for a smooth financial system during critical policy discussions.
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