Public Bank falls most in 12 years as banking stocks hit by MSCI review

KUALA LUMPUR (Nov 30): Four banks took a nosedive at the final 30 minutes before the closing bell and dragged the FBM KLCI down sharply by nearly 45 points.

The four banks that came under pressure were Malayan Banking Bhd (Maybank), Public Bank Bhd, CIMB Group Holdings Bhd and Hong Leong Bank Bhd.

Besides the earnings contraction, analysts and fund managers contacted by The Edge relate the selling to the act of rebalancing portfolios as a result of MSCI having lower weightage on Asean markets.

At the closing bell, Public Bank led the fall. It was the third top value loser on Bursa Malaysia today. It shed 6.45% or RM1.20 to RM17.40, giving it a market value of RM67.55 billion. Its trading volume was at 32.87 million shares.

The country's biggest bank, Maybank, dropped 4.7% or 39 sen to RM7.90, making it the eight biggest loser today. Its market capitalisation shrank to RM88.81 billion after 17.45 million shares changed hands.

Over at CIMB Group, which was earlier leading the fall in the morning session, lost 5.22% or 20 sen at RM3.63, translating into a market capitalisation of RM36.02 billion.

Hong Leong Bank saw most of its earlier 6.35% gain evaporate in the last 30 minutes. It tumbled from an intraday high of RM18.10 to close at RM17.18, up 0.94% or 16 sen. Its market capitalisation stood at RM37.24 billion.

Affin Bank Bhd also declined 2.5% or four sen at RM1.56.

The Financial Services index, which counts banks as constituents, was the top decliner among the indices present on Bursa Malaysia. The index was down 3.22% or 458.89 points at 13,804.21 points.

Malacca Securities head of research Loui Low attributed the selldown of the banking stocks to the rebalancing done by MSCI.

He also noted that the selling pressure was also a reaction to the lower results seen by some banks.

"It could be [because of the lower earnings], as the whole banking sector was being sold down hence it will be sold according to their weighing," said Low.

A banking analyst said the sharp plunge in the FBM KLCI, as well as some blue chips, was due to the MSCI rebalancing. A similar trend was also seen in other markets.

He noted that the portfolio rebalancing over the years has trimmed Asean's weightage and Malaysia the most.

A fund manager concurred that the MSCI rebalancing was the likely reason for the decline, but noted that as far as bank earnings were concerned, there were no major unpleasant surprises.

However, not all banks were down today.

Hong Leong Financial Group Bhd was the ninth top gainer on the local bourse. It gained 1.86% or 30 sen at RM16.40, with a market capitalisation of RM18.82 billion.

Meanwhile, Alliance Bank Malaysia Bhd posted a minute gain, rising 1.94% or five sen at RM2.63. RHB Bank Bhd closed unchanged at RM5.15.

The FBM KLCI closed 2.79% or 44.88 points lower at 1,562.71 points, mainly lead by Public Bank, Petronas Chemicals Group Bhd and Tenaga Nasional Bhd.

Benchmark indices in the region were in a sea of red. Indonesia's Jakarta Composite fell the most by 2.96%, followed by Thailand's Set (-2.05%), Hong Kong's Hang Seng (-2.06%), Singapore's Straits Times (-1.75%), South Korea's Kospi (-1.6%), Japan's Nikkei 225 (-0.79%), and China's Shanghai Composite (-0.49%).