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Hot Sector – The winners in the Banking sector

Fri 25 Jan 2019

It was reported that Bank Negara Malaysia’s Monetary Policy Committee (MPC) has decided to maintain the overnight policy rate (OPR) at 3.25%, saying that the latest indicators for Malaysia point towards sustained economic expansion.

The MPC said it acknowledged that global growth momentum is moderating with slower growth in the major economies, and trade tensions are beginning to have a material impact on global trade and investments.

Nevertheless, it noted that employment remains firm in the advanced economies, while domestic demand is sustained in Asia. It added that domestic demand also remains Malaysia’s key driver of growth this year.

According to the MPC as quoted by news sites, “sustained growth in private sector activity is expected to offset lower public spending arising from the ongoing fiscal consolidation by the government. With moderating global growth, the external sector is likely to soften. Risks to growth are tilted to the downside, primarily from potential escalation of trade tensions and commodity-related shocks. On balance, the Malaysian economy is expected to remain on a steady growth path in 2019,” it said.

It also highlighted that the domestic financial markets have remained resilient despite bouts of volatility due to global developments, and that the financial sector is sound, with financial institutions operating with strong capital and liquidity buffers.

With the expected unchanged OPR rate, banking stocks are likely to see their individual fundamentals and news flows determining their share price strength.

With the banking sector accounting for the biggest weight among all the sectors on Bursa Malaysia, it holds the key to further strength or weakness in the overall FBM KLCI index as well as the broad market.

How is the sector being rated against other sectors on Bursa Malaysia at this current juncture?

Which banking stocks should elite traders hold as a source of strength yet with continued potential upside if the overall market trades sideways to lower?

And if the market rebounds, which banking stock hold the greatest potential to rally upwards?

Looking at the table below as derived from our mPower algorithm, there are three banking stocks elite traders should avoid now and two banking stocks that are showing high volumes and strength.

Keep only the winners and avoid holding the obvious losers in the sector.

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Note: Certain info presented in the tables above has been redacted to comply with the agreement with elite members of the mPower Algorithm program and mPower Trading program and certain institutional clients. The above analysis reflects our personal view only and is subject to terms of use. Please refer to the full report inside for the complete info.

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