KUALA LUMPUR: The FBM KLCI turned negative in late-morning trade after bank stocks succumbed to fears over rising competition from digital banks, erasing earlier strong gains on the back of the US Federal Reserve's recent rate hike announcement.

       At 12.30pm, the benchmark index was down 4.93 points to 1,595.5. The overall market also turned into the red with 493 decliners compared with 392 decliners.

       Analysts have opined that the digital banks, which were recently chosen for their licences by Bank Negara, will not pose an immediate threat to conventional banks given their smaller scale of operations and the long gestation period.

       However, Bursa's financial heavyweights were seen tracking backwards headed into midday.

       Maybank dropped seven sen to RM9, Public Bank lost one sen to RM4.58, CIMB shed 10 sen to RM5.10 and Hong Leong Bank was unchanged at RM20.98.

       RHB, which is one of the beneficiaries of a digital banking licence, was also seen falling 10 sen to RM6.15, in line with investor sentiment over the conventional banking business.

       Other sectors under pressure included telcos, which included Asiata down nine sen to RM3.42 and Digi falling 12 sen to RM3.70.

       Maxis rose five sen to RM3.85.

       Petronas Chemicals meanwhile maintained a strong lead on the back of higher crude oil prices, rising 20 sen to RM10.42.

       Smaller peers in the domestic oil and gas sector was also bolstered by the EU's proposed ban on Russian oil.

       Hengyuan Refining added 58 sen to RM6.39 and Petron Malaysia climbed 49 sen to RM5.99.

       Meanwhile, OM Holdings gained 13 sen to RM2.88 on its announcement that it will buy out Cahya Mata Sarawak's 25% stake in the Samalaju smelting project, for 100% ownership.

       Cahya Mata Sarawak was up five sen to RM1.12.

       Among top actives, PUC fell 1.5 sen to six sen, Permaju was flat at 9.5 sen and MN Holdings slid two sen to 22.5 sen.

       Regionally, trading volumes were thin with the Japan and South Korean stock exchanges staying closed for national holidays.

       However, China's composite index leapt 1.1% and Hong Kong's Hang Seng gained 0.7% as investors were assuaged that the Fed rate increases will not be as hawkish as feared.

       Australia's ASX200 was up 0.7%.