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Malaysia: Consumer, property and auto sectors to benefit from rate cut
PETALING JAYA: The benchmark interest rate cut by Bank Negara will be a boon for the consumer, property and automotive sectors.
A lower overnight policy rate (OPR) would translate into cheaper borrowing costs, benefiting domestic households and businesses as it would increase the consumers’ disposable income.
MIDF Research pointed out that the rate cut would see improvement in investment and domestic consumption activities in the second half of this year.
Nonetheless, the research house maintained its economic growth forecast for this year at 4.9%.
The local stock market ended higher yesterday after the central bank cut its overnight policy rate (OPR) to 3% from 3.25% due to macroeconomic headwinds.
“Domestically, economic activities remain solid given that current jobless rate reflects full-employment condition, stable industrial production index and distributive trade performances as well as low inflationary pressure,” it said in a report yesterday.
The benchmark index FBM KLCI closed 6.57 points or 0.4% higher to 1,639.37 led by gains from Axiata Group Bhd 
and Digi.Com Bhd and Petronas Chemicals Group Bhd .
Stocks in the consumer sector, namely Nestle (M) Bhd , Kawan Food Bhd , Amway (M) Holdings Bhd and Petronas Dagangan Bhd closed higher yesterday.
Automotive stocks namely Bermaz Auto Bhd and DRB-Hicom Bhd closed 1.86% and 4.4% higher to RM2.19 and 2.37 a share respectively.
Meanwhile, banking stocks were mixed but overall the Bursa Malaysia’s financial services index closed down 180.79 points or 1.07% after the Monetary Policy Committee (MPC) of Bank Negara decided to reduce its interest rate.A cut in OPR is expected to have a negative impact to banks’ profitability.
Public Bank Bhd closed down eight sen or 0.35% at RM22.48, AMMB Holding Bhd fell four sen to RM4.44, and Alliance Bank Malaysia Bhd decline six sen or 1.5% to RM3.94.
CIMB Group Holdings Bhd and RHB Bank Bhd were unchanged at RM5.20 and RM5.69 a share, respectively.
Malayan Banking Bhd and Malaysia Building Society Bhd ended the day slightly higher by 0.11% and 1.02% to RM8.99 and 99 sen a share, respectively.
RHB Research pointed out that although the Bank Negara had retained its gross domestic product forecast of 4.3% to 4.8% for 2019, it however highlighted the increasing downside risks stemming from heightened uncertainties in the global and domestic environment, trade tensions, and extended weakness in commodity-related sectors.
“Considerable downside risks to global growth persist mainly from unresolved trade tensions and prolonged country-specific weaknesses in the major economies, further dampening global trade and investment activities.
“Although the tightening in global financial conditions has eased somewhat, heightened policy uncertainties could lead to sharp financial market adjustments, further weighing on the overall outlook,” it said.
It is noteworthy that Malaysia was the first country in the South-East Asia to cut its interest rate as global monetary policy turned more dovish led by the US’s Federal Reserve.
The Bursa Malaysia’s benchmark index had slipped more than 3% this year and it is one of the worst performing market in the region.
Source: https://www.thestar.com.my/business/business-news/2019/05/08/consumer-property———–and-auto-sectors-to-benefit/#b3ERfokuLvbdLwIW.99