News

SP Setia Shares Up Boosted By OPR Cut

Last update: 14/07/2016

KUALA LUMPUR, July 14 (Bernama) -- SP Setia Bhd's shares emerged as one of the top gainers thus far, lifted by the overnight policy rate (OPR) cut by Bank Negara Malaysia as the move would be a shot in the arm for the property sector, said PublicInvest Research.



The company's share price rose eight sen to RM3.00 as at mid-day with 805,700 shares traded. The shares opened at RM2.92 and fluctuated between RM2.92 and RM3.00 throughout the trading session.



PublicInvest Research has reiterated an "overweight" call on the property sector as the 25 basis points (bps) cut is positive for the sector as it would bolster the flagging demand currently.



"We estimate that the 25 bps would boost affordability...reducing the mortgage amount by about 3.2 per cent," it said in a note Thursday.



"Overall, it is positive for the property sector but the current weak demand is still a concern. However, sales recovery, which is expected in the second half of 2016, could provide a stronger rerating catalyst for the sector," it added.



SP Setia President and Chief Executive Officer, Datuk Khor Chap Jen, said the company welcomed the OPR cut as it would ease the burden on property purchasers servicing their home loans.



The purchasers' monthly repayments for the loans will be lower and they will have extra money on hand to spend, he said.



"The cut also means that more property purchasers will qualify for home loans and this will especially benefit first-home buyers," he added.



However, despite this, he said the purchasers would still face tight lending rules and he hoped the authorities would consider easing the rules in order to boost the current soft property market.



Khor added the reduction was also good for property developers who had high gearings or planned to borrow future funding from the banks as it will reduce the costs of borrowing.



Bank Negara Malaysia has cut its key interest rate to 3.00 per cent from 3.25 per cent yesterday.



-- BERNAMA