MQ Rating Research - Public Bank

Fundamental Rating: 3.1/5.0

 

PBBANK is a fundamentally good stock, as it posts half of the fundamental tests. Normally, we will pick stocks with a fundamental rating that is more than 2.5 for long-term investment.

 

 

Technical Rating: 4.8/5.0

 

PPBANK experienced a bullish trend these few days; the price stood over EMA 5 and EMA 200. Based on the price trend, PPBANK successfully stands above the short-term & long-term trends. PBBANK: support at RM4.40-4.50, resistance at RM4.70-4.80

 

Opportunities

 

As the Fed begins to increase the interest rate due to the high inflation in the US, investors will be more willing to hold USD with a high-interest rate. This will cause people to change their currency from MYR to USD while the value of MYR will decrease. We believe that Malaysia will slowly follow the Fed step to increase the OPR rate to avoid the depreciation of MYR. 

 

When the Bank Negara decides to increase the OPR rate, it will benefit bank sector because (1) All the floating-rate loan borrower have to pay higher interest compared to previously this will increase the bank revenue; (2) Public more willing to save their money in the bank as the return of free risk rate increases, therefore the bank has more capital to borrow money to a big company. 

 

In conclusion, when high inflation era > Nation Bank will increase interest rate > Bank industry benefits when interest increases.

 

Risk

 

The Fed increased the interest rate to control the inflation caused by supply chain issues. However, the Russia & Ukraine war had made the situation even severe due to increase in oil price and the shortage of grain. This will keep inflation worse and cause an economic recession. 

 

In a recession, companies with insufficient liquidity may face bankruptcy. When some of the companies had bankrupted, this will affect their supplier (the company might still yet to clear full payment to his supplier or supplier will lose the customer, both will affect supplier revenue) and customers (customers will face a supply chain issue at the meanwhile and affect the customer revenue due to shortage of the product). The decrease in revenue can further impact cash flow and eventually lead to bankruptcy to the companies. The bank sector might suffer from a surge in insolvencies when the number of bankrupting companies increases.

 

MQ Trader View

In our opinion, Public Bank is a good fundamental stock which is suitable to hold long term. According to the technical chart, we will look for the right spot to enter our position to grab the opportunity of PBB's positive momentum, as most of the buy signals are detected to have high winning chances with more than 4.5/5.0 MQ Live Backtesting rating. At the same time, we will monitor our position until there is any sell signal appear on MQ Technical Chart.

 

Community Feedback

We encourage traders to try out and evaluate the MQ Trader system and provide us feedback on the features you like to see in the system. We have received many positive feedbacks so far, and we are currently compiling and reviewing them for possible inclusion into the next release of the system.

We would like to develop this system based on community feedback to cater for community needs. Thanks to all those who have provided valuable feedback to us. Keep those feedbacks coming in!

Disclaimer

This article does not represent a BUY or SELL recommendation on the stock covered. Traders and Investors are encouraged to do their own analysis on stocks instead of blindly following any Trading calls raised by various parties in the Internet. We may or may not hold position in the stock covered, or initiate new position in the stock within the next 7 days.

Join us now!

MQ Trader stock analysis system uses Artificial Intelligence (AI), various technical indicators and quantitative data to generate accurate trading signals without the interference of human's emotions and bias against any particular stock. It comprises trading strategies which are very popular among fund managers for analysing stocks. 

MQ Trader stock analysis system is SPONSORED for MQ Trader members. To use this amazing tool, you can sign up via MQ Trader Sign Up!

Contact us

Please do not hesitate to contact us if you have any enquiry: