Malaysian shares ended lower on Monday, with bank stocks losing ground after the central bank launched a new interest rate system allowing lenders to price their own retail loans, opening up the sector to competitive pricing.
The 100-stock Composite Index closed down 0.61 percent at 870.12 points, the day's low.
Overall volume was a meagre 298 million shares, down from Friday's 364 million.
Decliners led gainers by 507 to 238.
Almost all of Malaysia's 10 lenders fell on the rate news.
Top lender Maybank and Public Bank, two lenders seen as having cost-efficient networks, lost 0.9 percent and 0.7 percent to 10.90 ($2.87) and 3.02 ringgit respectively.
Smaller banks such as Hong Leong Bank, EON Bank, Southern Bank and Affin Bank all fell between one percent and 4.4 percent on fears they might feel the heat when competitors lower retail lending rates to grab market share.
So far, none of Malaysia's, 10 core banks have changed their base lending rates of around 6.0 percent, but analysts expect some move in the months ahead.
The central bank left the pricing system for deposit rates unchanged.
Shares of property firm Mulpha International fell 2.7 percent to 72.5 cents after saying it may buy Australian hotel owner Principal Financial Group Investments Pty Ltd for A$226.5 million cash.
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