OPR unchanged. Bank Negara Malaysia (BNM) maintained the Overnight Policy Rate (OPR) at a record-low of 2% after the Monetary Policy Committee (MPC) meeting yesterday (29 Apr ‘09). Earlier, the OPR was cut three times by total of 150bps between Nov ’08 and Feb ’09. The latest move was not that surprising after the “not so subtle hint” contained within recent comments by the central bank’s Governor.

1. Equity Research
PP11072/03/2010 (023549)
Economics 30 April 2009
Overnight Policy
Rate (OPR) Nowhere to go
OPR unchanged. Bank Negara Malaysia (BNM) maintained the
Suhaimi Ilias Overnight Policy Rate (OPR) at a record-low of 2% after the Monetary
Suhaimi_ilias@maybank-ib.com Policy Committee (MPC) meeting yesterday (29 Apr ‘09). Earlier, the
(603) 2297 8682 OPR was cut three times by total of 150bps between Nov ’08 and Feb
’09. The latest move was not that surprising after the “not so subtle
hint” contained within recent comments by the central bank’s Governor.
Wong Chew Hann
wchewh@maybank-ib.com Schedule of BNM’s MPC Meetings in 2009
(603) 2297 8686 Dates Outcome
21 Jan ’09 (Wednesday) 75bps reduction in OPR to 2.5%
24 Feb ’09 (Tuesday) 50bps reduction in OPR to 2%
29 Apr ’09 (Wednesday) OPR maintained at 2%
26 May ’09 (Tuesday) To be announced (TBA)
29 Jul ’09 (Wednesday) TBA
25 Aug ’09 (Tuesday) TBA
28 Oct ’09 (Wednesday) TBA
24 Nov ’09 (Tuesday) TBA
Source: BNM
Malaysia: OPR (% p.a.) & SRR (%)
4.5
4.0
3.5
3.0
2.5
2.0
1.5
Statutory Reserve Requirement: Commercial Banks
1.0
Overnight Policy Rate: Bank Negara Malaysia
0.5
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jul-04
Jul-05
Jul-06
Jul-07
Jul-08
Apr-04
Oct-04
Apr-05
Oct-05
Apr-06
Oct-06
Apr-07
Oct-07
Apr-08
Oct-08
Apr-09
Source: BNM
Impact of Previous OPR cuts on BLR and FD Rate
st nd rd
1 OPR cut 2 OPR cut 3 OPR cut
(24 Nov ’08) (21 Jan ’09) (24 Feb ’09)
OPR 3.25% (-25bps) 2.50% (-75bps) 2.00% (-50bps)
SRR 3.50% (-50bps) 2.00% (-150bps) 1.00% (-100bps)
BLR (average) 6.48% @ end-Dec 5.89% @ end-Feb 5.53% @ 15 Apr ’09
‘08 (-24bps) ’09 (-59bps) (-36bps)
FD rate:
1-month 3.00% (-10bps) 2.50% (-50bps) 2.00% (-50bps)
3-month 3.50% (-20bps) 3.00% (-50bps) 2.50% (-50bps)
Source: Maybank-IB

2. Overnight Policy Rate
We now think there will be no more OPR cuts. There is a noticeable
shift in the tone of BNM and the Governor. Earlier Monetary Policy
Statements (MPS) were “bearish”. In contrast, remarks made by the
Governor just before yesterday and the latest MPS were relatively
“upbeat”, signaling the need for further OPR rate cuts is significantly
mitigated. Consequently, we revise up our OPR outlook for end-2009
and end-2010 to 2% from 1.5% previously.
Central Bank’s Sound Bites…
Source Remarks about Economic Conditions & Outlook
MPS, 24 Nov ‘08 …the outlook for global growth has deteriorated further.
Several major advanced economies are now in recession amid
severe stress in their respective financial systems. The sharp
slowdown in global demand, the significant fall in commodity
prices and the substantial decline in equity prices have exerted
greater downward pressure on the growth prospects of
regional economies.
The adverse global developments have already affected the
Malaysian economy, as evidenced by the slowdown in export
performance and lower equity prices. While domestic demand
remains resilient, there are indications of slower private sector
activity amid some softening in the labour market conditions
and a more challenging business environment.
MPS, 21 Jan ‘09 The international economic and financial conditions have
deteriorated much more significantly in the recent period. The
major industrial economies are now experiencing a recession
and this has significantly increased the risks to global growth.
The sharper deterioration of the global economy is expected to
have a greater impact on the Malaysian economy. The large
decline in external demand has already led to a contraction in
exports and a moderation in the pace of private investment
activity. In addition, these developments have also affected
labour market conditions.
MPS, 24 Feb ‘09 The international economic and financial environment has
deteriorated sharply in the recent quarter. The major advanced
economies are experiencing a deepening economic
contraction, while the regional economies are experiencing a
rapid slowdown. The impact of the rapid decline in global
demand on trade, production and investment activities in the
Asian region has intensified…The downside risks to the global
economic outlook have increased significantly.
The Malaysian economy has been adversely impacted by
these global developments... The domestic economic
conditions are expected to continue to remain challenging in
the coming quarters with the continued deterioration in the
global economy… this has raised the risk of an economic
contraction in 2009....
Governor, 27 Apr ’09 OPR cuts have been “front-loaded”. Therefore, if we already
see an improvement expected to take place in the second half
of the year, and certainly further improvement going into next
year, we should have done most of what we need to do now.
Both global and local economies are expected to improve by
the second half of the year.
MPS, 29 Apr 2009 The global economic conditions deteriorated further in the first
quarter of 2009. Major advanced economies are still
experiencing a deepening economic contraction. Regional
economies have also recorded a sharp economic slowdown in
the first quarter. While the near-term economic outlook will
continue to remain weak, the implementation of large stimulus
measures by several countries has increased the prospects for
economic conditions to improve in the second half of the year.
The (Malaysian) economy, therefore, is expected to record a
marked contraction in the first quarter of 2009. These
conditions are expected to prevail until the second quarter of
the year. Nevertheless, some signs of moderation in the pace
of decline in economic activity have emerged. The current
assessment is that the domestic economy is expected to
improve in the second half of 2009, supported by stabilisation
in global economic conditions and the larger impetus from the
implementation of the fiscal stimulus measures.
Going forward, the implementation of the fiscal stimulus
measures, and the accommodative monetary environment
following the previous reductions in the OPR, will provide
support to domestic economic activity.
Source: BNM, Media Reports
30 April 2009 Page 2 of 4

3. Overnight Policy Rate
BNM’s policy focus now will be on credit access and financial
sector liberalization. Having dealt with the cost of credit part, we
expect BNM to focus on ensuring access to credit with recent
measures such as the RM5b Working Capital Guarantee Scheme
(WCGS) and RM5b Industry Restructuring Loan Guarantee Fund
Scheme (IRLGFS) that was part of the RM60b 2nd economic stimulus
package. BNM will also be overseeing the execution of the recently
announced financial services liberalization over the next two years.
Globally, interest rate cuts still taking place up to this month. Our
measure of the weighted average global benchmark interest rate has
fallen steadily since Oct ’08 and is now at its lowest of 2.244% since
the database began in 1999 amid further interest rate cuts by major
and regional central banks.
Weighted Average Global Benchmark Interest Rate (% p.a.)
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
Nov-04
Jan-99
Jun-05
Jan-06
Jul-02
May-01
May-08
Mar-00
Feb-03
Mar-07
Oct-00
Apr-04
Oct-07
Aug-99
Dec-01
Sep-03
Aug-06
Dec-08
Based on the average of 45 central banks’ benchmark interest rates, weighted by the
respective country’s GDP
Source: Bloomberg, Maybank-IB
Interest Rate Cuts by Key Central Banks, Apr ‘09
Country (Benchmark Interest Rates) Current Rate Date Change
(% p.a.) (bps)
Eurozone (Repo Rate) 1.25 2 Apr ‘09 -25
Denmark (Lending Rate) 2.00 3 Apr ‘09 -25
Indonesia (Reference Rate) 7.50 3 Apr ‘09 -25
Australia (Cash Target Rate) 3.00 7 Apr ‘09 -25
Iceland (Repo Rate) 15.50 8 Apr ‘09 -150
Thailand (Repo Rate) 1.25 8 Apr ‘09 -25
Chile (Overnight Rate) 1.75 10 Apr ‘09 -50
Philippines (Overnight Rate) 4.50 16 Apr ‘09 -25
Turkey (Interbank Rate) 9.75 16 Apr ‘09 -75
Mexico (Overnight Rate) 6.00 17 Apr ‘09 -75
Pakistan (Discount Rate) 14.00 20 Apr ‘09 -100
Canada (Overnight Rate) 0.25 21 Apr ‘09 -25
Sweden (Repo Rate) 0.50 21 Apr ‘09 -50
India (Reverse Repo Rate) 3.25 21 Apr ‘09 -25
India (Repo Rate) 4.75 21 Apr ‘09 -25
Brazil (Lending Rate) 10.25 29 Apr ‘09 -100
New Zealand (Reference Rate) 2.50 30 Apr ‘09 -50
Source: Bloomberg
30 April 2009 Page 3 of 4

4. Overnight Policy Rate
Definition of Ratings
Maybank Investment Bank Research uses the following rating system:
STRONG BUY Total return is expected to exceed 20% in the next 12 months; high conviction call
BUY Total return is expected to be above 10% in the next 12 months
HOLD Total return is expected to be between above 0% to 10% in the next 12 months
FULLY VALUED Total return is expected to be between -10% and 0% in the next 12 months
SELL Total return is expected to be below -10% in the next 12 months
TRADING BUY Total return is expected to be between 10-20% in the next 6 months arising from positive newsflow e.g. mergers and
acquisition, corporate restructuring, and potential of obtaining new projects. However, the upside may or may not be
sustainable
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The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are
only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not
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Some common terms abbreviated in this report (where they appear):
Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings
BV = Book Value FV = Fair Value PEG = PE Ratio To Growth
CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio
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CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset
DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity
DPS = Dividend Per Share NTA = Net Tangible Asset ROSF = Return On Shareholders’ Funds
EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital
EBITDA = EBIT, Depreciation And Amortisation P.A. = Per Annum YoY = Year-On-Year
EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date
EV = Enterprise Value PBT = Profit Before Tax
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30 April 2009 Page 4 of 4