UEM Sunrise shines after Bank Negara OPR cut

KUALA LUMPUR (July 14): UEM Sunrise Bhd rose as much as three sen or 3% after Bank Negara Malaysia cut the overnight policy rate (OPR) to 3% from 3.25%. UEM Sunrise shares could have risen on expectation that lower interest rates will encourage consumers to take bank loans for property purchases.

Bank Negara said in a statement yesterday that it had cut the OPR, due to slower global economic growth concerns. "Looking ahead, there are increasing signs of moderating growth momentum in the major economies," Bank Negara said.

At Bursa Malaysia today, UEM Sunrise shares rose to their highest so far at RM1.12. At 12:30 p.m., the eighth most-active stock settled at RM1.11, with some 16 million shares exchanged.

At RM1.11, UEM Sunrise has a market capitalisation of RM4.95 billion. Yesterday, UEM Sunrise shares added six sen to RM1.09, to become the eighth most-active entity.

In a note today, Hong Leong Investment Bank analyst Jason Tan said the research firm had a "hold" call on UEM Sunrise shares, with a 91 sen target price. Tan said Bank Negara's rate cut was seen having a positive impact on the Malaysian property sector's near-term sentiment.

Tan said this was despite Hong Leong's view that the OPR cut would have limited impact on the property segment, given the muted impact on affordability.

“Based on our calculation, a 25bps rate cut will reduce monthly instalment by circa 3% or RM67 per month, for properties worth RM500,000 with loan tenure of 30 years.

“For every RM3,000 of fixed monthly instalment, a 25bps cut will raise the amount of loan eligibility from RM585k to RM603k or a 3% increase,” he said. — theedgemarkets.com