FW: AmBank Research - Banking Sector: Fundamentals of banks still sound OVERWEIGHT, 15 May 2018

 

 

SECTOR FOCUS OF THE DAY

Banking Sector: Fundamentals of banks still sound           OVERWEIGHT

 

Foreign holdings in Malaysian Government Securities (MGS) in April 2018 rose to RM170.7bil (+RM4.8bil MoM) from RM165.9bil in March 2018. This was also higher than Dec 2017’s RM164.4bil. Percentage-wise, foreign holdings of MGS increased to 46.4% in April 2018 from 45.6% in March 2018 and 45.1% in Dec 2017. Despite the increase in foreign holdings of MGS, the local 10-year bond yield has trended higher. In April 2018, the 10-year Malaysia bond yield rose to 4.03% vs. 3.95% in Dec 2017.  

 

Besides, there were also some pressure on MGS yields in the early trading hours yesterday in a knee-jerk reaction due to the unexpected outcome of the 14th general election. Nevertheless, the pressure was seen to subside towards the second half of the trading day. Also, a rebound in the domestic currency to 3.95 vs. the USD was also evidenced at the end of trading yesterday compared to the lowest level of 3.98 in the morning session.    

 

Overall, the fundamentals of banking stocks are expected to remain intact with the domestic economic growth still expected to be on positive trajectory notwithstanding a change in the government. Despite the knee-jerk reaction to the prices of banking stocks yesterday, the reforms to be undertaken are expected to have a positive impact on the economy and the sector in the longer term.

 

Others :

Axiata Group: XL’s volatile bottom line recovery phase  BUY

MISC: Dented by weak tanker rates                                        HOLD

Sunway Construction: Bags 180-bed hospital job               HOLD

 

 

 

QUICK TAKE

Felda Global: Sells 30% stake in Taiko Clay Chemicals       HOLD

 

 

RETAIL RESEARCH

Stocks On Radar: Lee Swee Kiat Group, Deleum, Frontken Corp., Luxchem Corp.    

 

 

ECONOMIC HIGHLIGHT

Malaysia: Volatility remains despite positive signs

 

 

NEWS HIGHLIGHTS

SP Setia: Optimistic of meeting RM5bil sales target

Gabungan AQRS: Unaffected by review of megaprojects

Maybulk: Banking on China to drive global demand growth

MMC: Still keen to acquire stake in Sabah Ports

 

 

 

 

 

DISCLAIMER:

The information and opinions in this report are prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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