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.
China maintained its benchmark lending rates unchanged on Tuesday, aligning with market expectations, as shrinking interest margins at lenders curtailed further easing efforts.
Key Highlights:
Lending Rates Unchanged: The one-year Loan Prime Rate (LPR) remained at 3.35%, and the five-year LPR was kept steady at 3.85%. These rates influence the pricing of most new and outstanding loans, as well as mortgages, respectively.
Market Expectations Met: A Reuters survey of 37 market participants had unanimously anticipated that both rates would remain unchanged, indicating a consensus on the current monetary stance.
Context: China's decision to hold rates follows a surprise move in July when the People's Bank of China (PBOC) cut major short- and long-term interest rates for the first time in nearly a year, signaling a shift in its monetary policy framework. Despite this, bank lending in China dropped more than expected last month, reaching the lowest level in nearly 15 years due to weak credit demand and seasonal factors.
Economic Outlook: Economists at Goldman Sachs emphasized the need for continued fiscal and monetary support to prevent further weakening in domestic demand. They predict a 25-basis-point reserve requirement ratio (RRR) cut in the third quarter, followed by a 10-basis-point policy rate cut in the fourth quarter, to help achieve the government’s GDP growth target of around 5% for the second half of the year.
Significance: The decision to leave the LPRs unchanged reflects the balancing act faced by Chinese policymakers as they attempt to support economic growth without exacerbating the financial pressures on banks. The unchanged rates suggest a cautious approach to monetary easing, with future adjustments likely depending on the economic data and the effectiveness of existing measures in stimulating demand.
Comments
Post a Comment