KUALA LUMPUR, June 22 (Bernama) -- Bursa Malaysia ended on a softer note today as investors engaged in profit-taking following the recent rebound in the local market, an analyst said. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) declined by 0.65 per cent, or 11.19 points, to 1,700.84 from last Friday's close of 1,712.03. The benchmark index opened 1.56 points lower at 1,710.47 and moved between 1,699.94 and 1,712.32 throughout the trading session. Market breadth was negative, with decliners outnumbering gainers 560 to 481. A total of 608 counters were unchanged, 1,649 untraded, and 14 suspended. Turnover slipped to 3.29 billion units worth RM2.40 billion from 3.45 billion units worth RM3.79 billion on Friday.
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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