KUALA LUMPUR (NewsRise) -- Malaysian shares and the ringgit rebounded Friday, erasing most of the week's losses, as a recovery in global crude oil prices and hopes of further monetary stimulus by the European Central Bank lifted regional sentiment.
Local lenders rose after the nation's central bank slashed the statutory reserve requirement by 50 basis points.
"The SRR cut is aimed at boosting the economy, which has been hit by falling global energy prices," said Krystal Tan, Asia Economist at Capital Economics. "Investment plans in the energy sector have been curtailed and export revenues are slumping."
The nation's benchmark FTSE Bursa Malaysia KLCI rose 1.52% to 1,625.21 points Friday, its largest single-day percentage advance in three-and-a-half months. However, shares chalked their third consecutive weekly decline, eking out a 0.21% loss. The KLCI has slipped nearly 4% this year so far.
The ringgit rose 1.81% to 4.294 Thursday, marking its biggest single-day percentage advance in almost four months and nearly wiping out 2016's losses. The currency chalked its first weekly gain in three weeks, rising 2.3%. For the month, the ringgit had declined 0.09%.
Broad-based advances on the KLCI were led by banks and oil-services major SapuraKencana Petroleum, while Petronas Chemicals Group and MISC were the only stocks to decline Friday.
Global risk sentiment improved after ECB head Mario Draghi said Thursday the authority will review its monetary policy stance next month, spurring speculation of further easing that will likely prop up regional assets.
Concerns of a China-led global slowdown and tumbling crude oil prices have rattled investors in 2016, wiping out trillions of dollars in worldwide equities.
Brent crude oil prices headed for a second session of gains Friday, rising 5.57% to $30.88 per barrel. Oil prices are on course for their first weekly gain this year.
Southeast Asian markets also rose sharply Friday, with Singapore's Strait Times index and Philippine's PSE Composite index gaining 1.75% and 2.03%. Thailand's SET index and Indonesia's Jakarta Stock Exchange Composite rose 1.86% and 0.97%.
In broader Asian markets, Japan's Nikkei 225 index and Hong Kong's Hang Seng rose 5.88% and 2.9%. South Korea's Kospi and China's Shanghai composite index gained 2.23% and 1.25%.
On the KLCI, 27 of the 30 index constituents ended higher, and overall advancing issues outnumbered declining ones 712 to 217.
Foreign investors were net sellers on the KLCI were for the eleventh session Thursday, selling shares worth 264.2 million ringgit ($60.9 million), according to BIMB Securities. Overseas investors have withdrawn almost 2.2 billion ringgit from the Malaysian markets since the beginning of the year.
SapuraKencana Petroleum rose 5.88% to 1.62 ringgit Friday, supported by a rebound in crude oil prices. The nation's biggest oil and gas services company had fallen by over 25% this month till Thursday.
The KLCI Finance index was the best performing sectoral index Friday, as the unexpected SRR cut drove it 1.85% higher, its largest single-day percentage advance in five months.
According to AllianceDBS Research, the SRR cut will be mildly positive as it eases liquidity, but is unlikely to have a significant impact on banks' funding costs.
CIMB Group Holdings and Public Bank, Malaysia's second and third largest banks by assets, rose 4.57% to 4.12 ringgit and 1.9% to 18.2 ringgit. Hong Leong Financial Group rose 3.93% to 13.22 ringgit, while Malayan Banking, the nation's largest lender, rose 1.59% to 8.31 ringgit.
Industrial conglomerate Sime Darby and television services provider Astro Malaysia Holdings rose 3.96% to 7.35 ringgit and 1.59% to 2.56 ringgit on bargain buying after their recent declines. The stocks had declined by almost 9% this month till Thursday.
Gaming conglomerate Genting and diversified food conglomerate PPB Group were also among notable gainers Friday, rising 3.42% to 7.26 ringgit and 3.07% to 16.1 ringgit.
Integrated chemical producer Petronas Chemicals Group and shipping firm MISC were the only stocks on the KLCI to decline Friday, falling 0.14% to 6.9 ringgit and 0.8% to 8.69 ringgit.