Hong Leong IB downgrades its rating on Malaysia's banking sector to neutral from overweight, citing lack of near-term catalysts and rising risks to small and medium-sized enterprises, analyst Raymond Ng says in a note. Banks could see persistent net interest margin pressure, while asset quality could weaken if inflation and geopolitical tensions raise borrowing costs, he says. Potential expansion of the benchmark stock index KLCI to 50 constituents from 30 could also weigh on bank shares, as financial stocks have consistently dominated the index. Ng estimates that the banking sector could see the largest weighting reduction of 623-699 basis points under the proposed expansion. (yingxian.wong@wsj.com)