Prop News: Banking stocks decline in apparent reaction to stricter lending regulations

PETALING JAYA: Banking stocks led declines on Bursa Malaysia yesterday, with key heavyweights weakening and weighing on the FTSE Bursa Malaysia KL Composite Index in an apparent investor reaction to the stricter lending regulations to put a cap on Bank Negara’s financing tenure.

Property stocks fell as well but to a lesser degree, as demand for real estate is still seen to be keen despite these latest tightening measures.

Heavyweights Malayan Banking Bhd declined eight sen to RM10.30, CIMB Group Holdings Bhd fell three sen to RM8.24, Public Bank Bhd lost six sen to RM16.96, RHB Capital Bhd declined 10 sen to RM8.40 and BIMB Holdings Bhd fell 10 sen to RM4.08.

Among the property stocks, Mah Sing Group Bhd rose one sen to RM2.49, UEM Sunrise Bhd fell one sen to RM3.07 and SP Setia Bhd closed unchanged at RM3.34.

Among the non-bank financial institutions (NBFIs), meanwhile, Malaysia Building Society Bhd declined 13 sen to RM3.06 while AEON Credit Service (M) Bhd was unchanged at RM17.

These declines were also in line with Asian markets, which closed lower yesterday.

Moving forward, the latest stricter lending regulations on financing tenures announced by Bank Negara last week are seen to have limited impact on banks, with NBFIs possibly bearing the brunt of it.

The figure for the loans ratio to the total lending portfolio in the personal financing segment is already low at 5% and long-tenure property loans are not an unduly inherent industry practice at present.

Alliance Research’s banking analyst Cheah King Yoong said this and the lowering of the tenure limits of property loans from 40 years to 35 years would not result in a significant hike in nett monthly instalments.

“We believe that the shorter maximum tenure will not dampen the growth momentum of property loans significantly. Property loans with a maximum tenure of 40 years (mainly for high-end properties) do not constitute a significant portion of the overall banking portfolio,” Cheah wrote in his client report yesterday.

Mak Hoy Ken of AmResearch, meanwhile, has retained her “overweight” rating on the property sector, noting that the fundamentals of the Malaysian property market remained largely solid and intact.

“The earnings trajectory of Malaysian property developers remains robust, supported by healthy take-up rates and presales. For exposure to the property sector, our preferred picks are Mah Sing, IJM Land Bhd and UEM Sunrise,” Mak said.




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