KUALA LUMPUR, Oct 16 (Bernama) -- Trading activity of banking counters on Bursa Malaysia remained subdued today as investors adopted a cautious stance, with uncertainty over the bond yield outlook weighing on market sentiment.
MBSB Investment Bank Bhd (MBSB IB), however, said the banking sector is a lot more attractive at this price point, even though some damage had already been done. It said the main fear was dividend-yield disappointment as investment losses cut into dividends, but now there's a chance to reverse that.
“With mid-to-large-sized banks boasting six per cent yields, it's a good opportunity to accumulate. But judging by how equity markets have not rallied simultaneously, be wary that the market is not confident that this signals that the worst of bond yields is over,” it said in a note.
MBSB IB said that after spiking up to nearly 4.2 per cent in the last month, 10-year Government Securities (MGS) yields came down last week to a more manageable 3.8 per cent. The investment bank said economic indicators and the market’s lacklustre response suggest that there is no confidence in bond yields staying near present levels, so a reversal could happen anytime.
The most glaring indicator was US inflation coming in above expectations
“Theoretically, as long as the Iran conflict persists, there will be further room for banking valuations to fall further. We look at the Global Financial Crisis and COVID pandemic for clues as to how far (down) the floor is,” it said. Several factors point toward relative stability in banking share prices at least until the end of 2026 – the biggest threat is if bond yields hike once more.
Hence, MBSB IB has maintained a “positive” call on the sector as “dividend yields are too attractive to ignore, and the reversal in bond yields implies some room to recoup earnings.”
At 9.55 am, banking counters on Bursa Malaysia were mixed.
Maybank fell six sen to RM10.08, CIMB declined 12 sen to RM7.48, while Public Bank rose two sen to RM4.74 and RHB added three sen to RM7.28
Hong Leong Bank gained eight sen to RM21.48, AMMB edged up two sen to RM6.39, while CIMB rose four sen to RM7.45.
-- BERNAMA