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.
Key Takeaway
Economists expect Bank Negara Malaysia (BNM) to maintain the Overnight Policy Rate (OPR) at 2.75% through 2026, citing resilient domestic demand, easing trade tensions, and a healthy labor market. While a minority still sees scope for one more cut, the consensus is for policy stability ahead.
Why OPR Stays Put
Lagged impact of July cut: The July pre-emptive cut to 2.75% is expected to continue supporting growth into 2026.
Domestic resilience: Spending activity, strong labor markets, and sustained infrastructure investment underpin growth.
External relief: Signs of easing tariff and trade tensions reduce pressure for further easing.
Research House Views
MBSB Research: July’s cut likely a one-off; sees no start of an easing cycle. Suggests targeted sectoral support over broad rate moves.
RHB Research: OPR steady as long as GDP remains in the 4%–4.8% range and inflation contained.
HSBC: Expects BNM to stand pat, awaiting clarity on RON95 subsidy rationalisation in Budget 2026.
Capital Economics: Forecasts another 25bp cut to 2.50%, citing slowing growth and subdued inflation.
OCBC: Keeps cut on the table, watching upcoming trade, industrial production, and GDP prints before Nov 6 meeting.
Risks to Outlook
Growth pressures: Trump tariffs, tighter fiscal policy, and weak commodity prices may cap GDP growth near 4.1% in 2025.
Subsidy uncertainty: Petrol subsidy rationalisation remains politically sensitive; delays or dilution could affect inflation trajectory.
Inflation trends: July CPI at 1.2% YoY highlights soft price pressures; even with subsidy cuts, low global commodity prices should keep inflation muted.
Market Implications
Stable OPR provides a supportive backdrop for domestic equities and bonds.
Fixed income investors may see limited downside risk in yields, with BNM policy anchored.
Consumer-linked sectors could benefit from steady rates and resilient demand, though export-driven industries remain vulnerable to tariff headwinds.
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