KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
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Chinese banks are expected to trim rates on 300 trillion yuan ($42.3 trillion) worth of deposits as early as this week, according to insiders, following recent stimulus measures that have further squeezed their already thin margins. Major banks, including Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp., are preparing to lower rates under guidance from the People's Bank of China’s (PBOC) interest rate self-disciplinary mechanism.
The potential cuts, which have not yet been finalized, may include a 20-basis point reduction on one-year time deposits and a 25-basis point reduction on longer-term deposits. This would mark the second reduction this year, following a previous round in July.
The move comes after China rolled out its most significant stimulus package yet to bolster its struggling economy, which included slashing policy rates and reducing borrowing costs on $5.3 trillion of mortgages. The PBOC has already made a historic cut to its one-year policy loan rate, signaling that reductions in deposit rates were likely to follow.
Chinese commercial banks have some flexibility in setting their rates since the PBOC scrapped direct control in 2005, but the central bank continues to influence the range of rates through its self-disciplinary body.
Despite previous deposit rate cuts in 2022 and early 2023, the banking industry’s net interest margins have fallen to a record low of 1.54%, far below the 1.8% level considered necessary for sustainable profitability. The pressure on banks has prompted China to consider injecting up to 1 trillion yuan of capital into its largest state banks to increase their lending capacity and support the economy.
This ongoing reduction in deposit rates is part of China’s broader strategy to stimulate growth and ease financial burdens in the face of economic challenges.
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