Malaysian banking stocks seen too pricey still

Kuala Lumpur

AT first glance, Malaysian banking stocks may look tempting, after a share plunge took valuations to the lowest since the global financial crisis in 2009. Some funds are considering them again.

For David Ng, the time to buy is a long way off. "There's no catalyst and no upside," said Mr Ng, who oversees about US$7.5 billion as the chief investment officer of Affin Hwang Asset Management Bhd in Kuala Lumpur and whose Affin Hwang PRS Growth Fund has beaten 80 per cent of peers over three years. "Valuations have to be absolutely cheap before we start buying and when we think there is a rebound in the economic cycle. Neither are present right now." Bad loans are set to increase and banks will post slower earnings growth amid a reluctance to lend as the Malaysian economy slows, said Mr Ng, who pared his holdings of lenders earlier in the year. While a gauge of the nation's financial stocks trades at 1.4 times assets, almost half the level of its 2011 peak, that's still 23 per cent more expensive than the MSCI Asia Pacific Finance Index.