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.
Bank Negara Malaysia’s (BNM) surprise move to cut the Overnight Policy Rate (OPR) by 25 basis points to 2.75% — its first reduction since 2023 — has boosted overall sentiment. However, analysts believe the positive impact on Malaysian REITs (Real Estate Investment Trusts) will be modest.
Key Rate Action
BNM lowered OPR to 2.75% (from 3.00%) on Wednesday.
Move seen as pre-emptive to support growth amid global uncertainties.
Roughly half of economists polled by Bloomberg anticipated this cut.
What Analysts Say
Public Investment Bank
Minimal earnings impact (only 1%-2%) for REITs with floating-rate borrowings.
Maintains neutral stance.
Target price for IGB REIT raised to RM2.50 (from RM2.10) following Mid Valley Southkey mall acquisition.
RHB Investment Bank
Maintains “Overweight” on REITs.
Strong domestic consumption and lower bond yields still support sector performance.
Risks from SST expansion may pressure rental reversions — but premium assets should stay resilient.
Top Pick: Pavilion REIT (KL:PAVREIT)
Kenanga Research
Views the OPR cut as a valuation tailwind (driven by MGS yield assumptions).
Notes the REIT Index is up ~6% YTD, outperforming FBM KLCI despite SST worries.
Believes the rate cut was already priced in.
Keeps neutral view on the sector.
Yield & Valuation Watch
10-Year MGS yield: down 38bps YTD to ~3.45%
REIT yield spread vs. 10Y MGS: ~200bps (0.5 SD above historical average)
Kenanga's REIT model assumes 10Y MGS yield at 3.75%
Investor Takeaway
While BNM’s rate cut may spark optimism, REIT earnings upside looks limited for now. However, REITs with strong retail assets, ongoing refurbishments, and savvy acquisition strategies are expected to hold up better in the evolving rate and regulatory environment.
Comments
Post a Comment