In the face of market turmoil, defense comes first 🗞️🗞️🗞️ Bank stocks have become a safe haven 💎💎💎

$AMBANK (1015.MY)$
In the face of market turmoil, defense comes first

In the volatile global market situation, analysts believe that the Malaysian economy is relatively stable, and it is expected that foreign capital will continue to flow into the Malaysian stock market, especially the banking sector.Bank stocksThe banking sector, with its stable income and defensive nature, is considered a safe haven for foreign investors. Therefore, bank ratings have been upgraded from 'neutral' to 'shareholding'.

According to analysts at Xingye Research, the market will continue to be volatile in the next period due to events such as the US presidential election and the Federal Reserve's interest rate cut cycle.

In such times, analysts see bank stocks as defensive and a safe haven for investors.

Local banks have stable income as a support. Moreover, banks are optimistic about the future outlook. When this fact is proven, foreign institutional investors are expected to further increase their investments and profits.

"Local banks have stable income as a support. Moreover, banks are optimistic about the future outlook. When this fact is proven, foreign institutional investors are expected to further increase their investments and profits."

Industrial research pointed out that foreign institutional investors are already net buyers in the Malaysian stock market, with a net purchase of about 0.8666 billion US dollars of Malaysian stocks (about 3.7666 billion ringgit) so far this year.

Analysts expect that with the rebound in net interest income (NII), stable net interest margin (NIM), and continued loan expansion, the banking industry will achieve a net profit growth of about 6% in the fiscal years 2024 to 2026.

After the 24 basis point year-on-year decrease in net interest margin in the banking industry last year, it is expected to stabilize this year. Despite the slight slowdown in loan growth, net interest income should recover. We also assume that the bank's control and credit cost (CoC) will remain roughly stable.

However, analysts point out that although non-interest income got off to a strong start, growth in this segment is expected to slow to 6%, lower than the 28% growth in 2023. Among them, fee income is expected to grow well.

Analysts also indicated that this may just be the beginning as foreign investors continue to be interested in Malaysia's stable economic growth, domestic reforms, and thematic investment.

Banking stocks have always been highly liquid and large in market cap, so when foreign funds continue to flow back to Malaysia, the banking sector may benefit from it.

Banking sector ratings upgraded to 'shareholding'

As a summary, Industrial Investment Bank raised the rating of the banking industry from 'Neutral' to 'Shareholding', with a preference for AMBANK (1015, main board financial services group), PBBANK (1295, main board financial services group), HLBANK (5819, main board financial services group), and ABMB (2488, main board financial services group).