Latest news with #HongLeongInvestmentBank
The Star
11 hours ago
- Business
- The Star
Local banks positioning for potential OPR cut
HLIB Research noted that fixed deposit competition appeared benign with no significant board rate hikes observed. PETALING JAYA: Local banks are positioning for a potential overnight policy rate (OPR) cut in the second half of the year by paring back deposit rates and recalibrating fixed deposit (FD) strategies. In April, total deposits grew 3.8% year-on-year (y-o-y) and 0.2% month-on-month (m-o-m), supported by current account savings account (CASA) growth of 4.5% and FD growth of 2.5%. The CASA ratio held relatively stable at 28.5%, slightly lower than 28.6% in March 2025 but up from 28.4% a year ago. Meanwhile, the industry's loan-to-deposit ratio (LDR) eased to 87.4%, from 87.6% in the previous month and 86.3% in April 2024. Hong Leong Investment Bank (HLIB) Research noted that fixed deposit competition appeared benign with no significant board rate hikes observed. However, it flagged some cuts of between five and 15 basis points (bps) in promotional and conventional deposit rates across May. 'This is seen as a proactive step taken by banks to manage net interest margin (NIM) in view of the potential OPR cut, and possibly as a sign of easing competition,' it noted in a report yesterday. Similarly, Kenanga Research highlighted that most banks anticipate one OPR cut in 2H25, prompting 'more concerted efforts to drive shorter-term fixed deposit products.' It pointed out that fixed deposits with a tenure of fewer than six months made up 52% of total deposits in April 2025, compared with 51% in March 2025, while deposits with tenures of more than one year declined from 3% to 2%. 'This may likely persist as banks seek to further rationalise their funding cost amid the decline in asset yields,' it said. 'However, as the recent reduction in statutory reserve requirement (SRR) looks to provide some relief to funding cost (up to two bps improvement to NIMs), we believe banks can afford to not overly raise deposit rates to accumulate capital in the near term.' Last month, Bank Negara kept the OPR at 3% but lowered the SRR ratio by 100 bps to 1%, effective May 16 – the first SRR reduction since March 2020, at the start of the Covid-19 pandemic. CGS International (CGSI) Research pointed out that over the first four months of 2025, deposits increased by RM30.8bil, outpacing loan growth of RM23.2bil, 'reflecting improvements in the liquidity of the banking industry, in our view.' 'We believe the cut in the SRR by Bank Negara would release about RM19bil into the banking system, and would further enhance banks' liquidity,' the research house added. Meanwhile, in April 2025, total loans grew by 5.1% y-o-y and 1.0% year-to-date, a marginal slowdown from 5.2% y-o-y in March. The moderation was mainly attibuted to the slightly softer business loan growth, which eased to 4.6% y-o-y versus 4.8% in March. On the other hand, household loans held firm at 6% y-o-y for a second straight month. The industry's gross impaired loans ratio inched up to 1.43% in April from 1.42% in March, but improved from 1.63% a year ago, while loan loss coverage held relatively steady at 91%. CGSI Research viewed the slowdown in loan growth as 'not overly concerning,' noting that the expansion remains within its 2025 loan growth forecast of between 4.5% and 5.5%.
The Star
2 days ago
- Business
- The Star
Bursa Malaysia lower at midday on renewed US-China tensions
KUALA LUMPUR: Bursa Malaysia was lower at midday, dragged down by renewed tensions between the United States (US) and China, analysts said. According to reports, China hit back at US President Donald Trump's claim it had violated the temporary trade agreement between the two countries, while the European Union said it opposed the president's doubling of tariffs on steel and aluminium imports. At 12.30 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) declined by 4.89 points, 0.32 per cent, to 1,503.46 from last Friday's close of 1,508.35. The benchmark index, which opened 4.37 points higher at 1,512.72, moved between 1,497.42 and 1,514.12 during the morning session. In the broader market, decliners thumped gainers 694 to 225, while 373 counters were unchanged, 1,054 untraded and 15 suspended. Turnover stood at 2.14 billion units worth RM1.14 billion. Meanwhile, Hong Leong Investment Bank said in a note that following the conclusion of a lacklustre May corporate results season, it expects the benchmark index to remain volatile in June after tumbling 2.1 per cent in May (year-to-date: -8.2 per cent). This is as investor sentiment has stayed cautious amid continued foreign net outflows coupled with developments in the political landscape ahead of the Sabah state election (due by end 2025). "Adding to the cautious tone are renewed concerns over a tariff-driven global slowdown and ongoing legal tussles surrounding Trump's trade policies, which could weigh on market confidence and pressure Malaysia's growth and earnings outlook,' it said. Among the heavyweights, QL Resources fell 11 sen to RM4.39, Axiata slid four sen to RM2.01, Press Metal Aluminium was down nine sen to RM4.95, Petronas Chemicals eased six sen to RM3.36, and Sunway dropped 7 sen to RM4.68. Among the most active counters, Harvest Miracle Capital, ACE Market debutant ICT Zone Asia, and Permaju Industries were flat at 18 sen, 20 sen and 1.5 sen respectively, while Tanco Holdings increased one sen to RM1.01 and Eco-Shop Marketing slipped two sen to RM1.24. On the index board, the FBM Emas Index shaved 44.22 points to 11,255.58, the FBMT 100 Index lost 38.95 points to 11,022.05, and the FBM ACE Index fell 65.44 points to 4,485.59. The FBM Emas Shariah Index slid 54.38 points to 11,201.88, while the FBM 70 Index trimmed 69.27 points to 16,132.23. Sector-wise, the Financial Services Index weakened 43.21 points to 17,797.32, the Industrial Products and Services Index edged down 2.05 points to 150.60, and the Energy Index eased 8.58 points to 699.46, but the Plantation Index rose 16.80 points to 7,224.65. - Bernama
The Star
27-05-2025
- Business
- The Star
ITMAX expects to secure more town council projects
PETALING JAYA: ITMax System Bhd , which has a total unbilled order book of more than RM1.45bil, is in a good position to secure more projects in the near term. Hong Leong Investment Bank (HLIB) Research, in its latest report on ITMAX, said: 'After securing five out of 16 Johor councils, we expect all to come on board over time to realise the integrated smart city system. 'Furthermore, these deals only comprised digital infrastructure solutions and smart traffic light systems. 'We do not discount that other solutions such as network lighting and more smart parking (currently it has secured jobs from seven councils) could be included. 'Along with the recently awarded Kuala Lumpur City Hall variation order and maiden penetration into Penang, ITMAX is expected to continue to scale new heights,' it said. As at the end of the first quarter of 2025 (1Q25), ITMAX had a total unbilled order book of more than RM1.45bil, which would be recognised progressively up to May 2039. At the end of 1Q25, ITMAX's tender book stood at more than RM500mil. ITMAX is a provider of public space networked systems focusing on lighting, video surveillance and traffic management, as well as communications network services. ITMAX recorded a revenue of RM50.7mil in 1Q25 and yielded a quarterly core net profit of RM20.3mil, which matched expectations, accounting for 24% and 22% of HLIB Research's and consensus full-year forecasts, respectively. The research house is reiterating its 'buy' call with an unchanged target price of RM5.17. 'We opine that ITMAX deserves a premium valuation as it has unique direct exposure to the artificial intelligence theme, especially at the application level. 'We believe that this home-grown smart city integrated system and solution provider, has a compelling investment case, given its multi-year growth potential, on the back of solid order and tender books.'
New Straits Times
23-05-2025
- Business
- New Straits Times
Benign inflation opens door for monetary easing: Analyst
KUALA LUMPUR: Bank Negara Malaysia may have room to ease interest rates as inflationary pressures remain muted, said Hong Leong Investment Bank (HLIB Research) Citing data from the Department of Statistics, the firm said Malaysia's consumer price growth held steady at 1.4 per cent year-on-year in April, with core inflation edging up to 2.0 per cent. "The recent data suggests a benign domestic inflation environment, with minimal inflationary pressures," HLIB Research said in its economic report today. The firm maintained its 2025 inflation forecast at 2.7 per cent but flagged downside risks due to a subdued global commodity environment and modest demand conditions. It noted that headline inflation was unchanged from March, aligning with consensus expectations. On a month-on-month basis, consumer prices rose slightly by 0.1 per cent, driven by higher costs in information and communication, personal care, housing and recreational services. Core inflation, which excludes volatile food and fuel prices, rose marginally to 2.0 per cent from 1.9 per cent in March, mainly due to higher housing and utility costs. Food and beverage inflation moderated to 2.3 per cent year-on-year, down from 2.5 per cent in March. The decline was supported by lower prices for vegetables, dairy products, and eggs, although prices for food away from home remained elevated at 4.3 per cent. The transport index registered a steady 0.7 per cent annual increase, underpinned by stable fuel prices and a smaller decline in public transport costs. On a monthly basis, the index was unchanged, as lower diesel and RON97 prices offset a modest increase in public transport fares. HLIB Research said services inflation continued to firm, with personal care costs climbing 4.1 per cent year-on-year, while prices in restaurants and hotels, as well as insurance and financial services, remained steady. With real economic growth projected at 4.0 per cent this year and the ringgit forecast to average 4.35 against the US dollar, the firm reiterated its view that inflationary pressures remain contained. This environment, it said, supports the possibility of a rate cut from the current Overnight Policy Rate of 3.00 per cent to 2.75 per cent by year-end.
The Star
21-05-2025
- Automotive
- The Star
Domestic vehicle sales forecast to moderate this year
MIDF Research expects the May TIV to improve month-on-month. PETALING JAYA: The automotive sector is expected to grow moderately this year, with analysts having mixed views on the outlook for the total industry volume (TIV), as the market adjusts from a record-breaking year in 2024. In a report on the sector, Hong Leong Investment Bank (HLIB) Research said it estimates 2025's TIV to moderate to 750,000 units, representing an 8.2% year-on-year decline from the 816,700 units recorded in 2024. This is slightly below the Malaysian Automotive Association's target of 780,000 units. It attributed the lower forecast to declining order backlogs and a slowdown in new order intakes in the coming months. Echoing HLIB Research's view, MIDF Research noted that newer Chinese electric vehicle (EV) players, namely, BYD and Chery, bucked the trend with stronger registered growth. Looking ahead, MIDF Research expects the May TIV to improve month-on-month, supported by festive demand and a longer working month. It maintained a 'neutral' call on the sector, but downgraded MBM Resources Bhd to 'neutral' from a 'buy.' BIMB Securities, however, maintained a more optimistic stance, expecting TIV to remain robust, underpinned by a steady pipeline of new model launches, particularly in the EV and hybrid segments. It also highlighted potential upside from Perodua's upcoming locally developed EV, due for release by end-2025.
