KUALA LUMPUR, July 9 (Bernama) -- Bursa Malaysia closed lower on Thursday as renewed geopolitical tensions in West Asia weighed on investor sentiment. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) fell 5.97 points, or 0.36 per cent, to 1,677.64 from Wednesday's close of 1,683.61. The benchmark index opened 2.62 points lower at 1,680.99, and moved between 1,676.18 and 1,683.80 throughout the session. However, market breadth was slightly positive, with gainers leading losers 533 to 504, while 547 counters were unchanged, 1,112 untraded, and 12 suspended. Turnover slipped to 2.64 billion units valued at RM2.19 billion from 2.96 billion units valued at RM2.18 billion on Wednesday.
Beijing’s Banking Stimulus Plan
- China to inject at least 400 billion yuan ($55B) into major banks as part of an economic stimulus package.
- The first batch includes Agricultural Bank of China and Bank of Communications, with the plan expected to be completed by June.
- Total capital injection could reach 1 trillion yuan ($138B), funded by special sovereign bond issuance.
Market & Banking Sector Impact
- Agricultural Bank of China (+2.6%) and Bank of Communications (+2.2%) gained in Hong Kong following the news.
- China’s banking regulator first hinted at capital replenishment in September 2024, with further confirmation from the Ministry of Finance.
- Despite Chinese banks exceeding capital requirements, they face shrinking margins, rising bad debt, and profit pressures.
Economic Context & Policy Moves
- China has enacted broad economic stimulus measures, including:
- Mortgage rate cuts
- Lower key policy interest rates
- Encouraging more lending to support economic growth
- This is the first major state-funded bank recapitalization since the 2008 financial crisis.
Summary:
- China to inject at least $55B into key banks, possibly rising to $138B.
- Funding will come from special sovereign bonds.
- Banks like Agricultural Bank of China & Bank of Communications saw stock gains.
- Move aims to strengthen the banking system amid weak profits and rising bad debt.
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