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.
US regulators have significantly reduced the proposed capital increase for the largest US banks, including Bank of America and JPMorgan Chase, from an initial 19% to 9%, following extensive revisions to the original regulatory package. The decision reflects a compromise after intense lobbying from the banking sector.
Key Takeaways:
Reduced Capital Requirements: The revised plan, which mandates a 9% increase in capital for the eight US global systemically important banks, represents a substantial reduction from the original 19% hike. The initial proposal, aimed at bolstering banks' defenses against unexpected losses and financial shocks, faced strong opposition from the banking industry.
Regulatory Intentions and Compromises: Fed Chair Jerome Powell aims to secure broad support for the changes while avoiding prolonged legal battles. The revisions, expected to be released soon, are part of the ongoing Basel III capital overhaul initiated after the 2008 financial crisis. Despite the concessions, some concerns remain among banks regarding trading risks and how the proposals align with stress tests.
Potential Delays and Political Risks: The revised plan will be subject to a 60-day comment period, and final adoption may not occur until next year. Banks are likely to seek an extension of this timeline. The rule’s implementation could be further jeopardized by political changes, such as a potential Trump administration return or a Republican-controlled Congress, which could repeal the rule or delay its compliance date.
The reduced capital requirements reflect a balancing act by regulators to strengthen the banking sector's stability without provoking industry pushback or political fallout. However, uncertainties remain regarding the rule's finalization and potential resistance from individual banks.
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