BIMB Integrated Annual Report 2019

106 Integrated Annual Report 2019 Group Overview Sustaining The Group Management Discussion & Analysis Group Governance 2019 SECURITIES MARKET PERFORMANCE The challenges faced on the economic front coupled with ongoing domestic political uncertainties was reflected in the 2019 benchmark FBMKLCI which was down 6%, closing at 1,595.72 points. Nevertheless, the FBM Hijrah Shariah Index and the broader FBM Emas Shariah Index recorded positive growth of 0.8% and 3.9%, respectively. Despite the Malaysian market performance in 2019, its dividend yields continue to see a rise as companies have been returning capital to shareholders in the light of declining investments. GLOOMY OUTLOOK FOR 2020 BUT ISLAMIC FINANCE TO ASSERT RESILIENCE Possible Global Recession The global economy is facing a confluence of risks, which is causing severe disruptions on economic activity with significant damage on longer-term development prospects. At the time of writing this report, the COVID-19 outbreak has triggered extreme reactions in financial markets as it grapples with a cascading effect from business disruptions as many countries globally implement restrictive movements and lockdown measures. At the same time, factory shutdowns in China and elsewhere, and fears of more disruption in other parts of the world, have been affecting supply chains. Oil prices collapsed as a price war broke out between the Kingdom of Saudi Arabia and Russia. Coupled with the risks of escalated trade disputes, the upcoming US presidential elections, tightening of central bank policies and the lingering effects of a tepid growth in 2019, a scenario of global recession looks very likely. MANAGEMENT DISCUSSION & ANALYSIS ECONOMIC AND SECTOR REVIEW Malaysia to Face Effects of Economic Challenges Malaysia would be facing economic challenges in the wake of COVID-19, compounded by the adverse reactions from global economic conditions. The overall impact of the outbreak on the Malaysian economy will, however, depend on the duration and spread of the outbreak as well as policy responses by authorities. The landscape we are operating in is unprecedented and it is challenging to predict the economic and financial eventualities with a high degree of precision. BNM has introduced various relief measures to assist those affected by the COVID-19 outbreak and ensure that the financial intermediation function of the financial sector remains intact, access to financing continues to be available and banking institutions remain focused on supporting the economy during these exceptional circumstances. This relief plan encompasses moratorium on repayment and payment financing, financing limits, drawdown on prudential capital and liquidity buffers as well as other measures such as review on financial, statistical and regulatory reporting requirements. BNM had also instituted two OPR cuts in a span of less than three months which brings the rate to 2.5% and most recently, a 100 basis points reduction in SRR from 3% to 2%. The move is expected release a total of RM30 billion liquidity into the system. The Government’s Economic Stimulus Package 2020 and the Prihatin Rakyat Economic Stimulus Package, together with BNM’s measures are aimed to help to cushion the