logo
Upside potential for ringgit

Upside potential for ringgit

The Star18-07-2025
PETALING JAYA: The ringgit is likely to close at RM4.10 against the US dollar by the end of this year and RM4 by the end of 2026, amid a continuous softening of the US dollar and portfolio inflows.
Malayan Banking Bhd (Maybank) head of foreign-exchange (forex) research Saktiandi Supaat said the ringgit's performance in 2025 so far has been supported by a broad decline in the greenback, which stemmed from fading US 'exceptionalism' and tariff-driven concerns on US growth.
He noted that Federal Reserve rate cuts had also been priced in, which in turn made global investors shift away from the United States.
'The broad decline in the dollar will still be on track for the next six months and most of 2026. Generally, tariffs will be the key theme on top of others,' he said at Maybank Investment Bank's second half of 2025 (2H25) Market Outlook virtual media briefing yesterday.
Currently, US$1 equals to around RM4.25.
He reckoned that the ringgit was still fairly valued at this stage, with upside potential.
Ongoing domestic initiatives such as government-linked companies forex conversions, resident investor programmes and promoting the ringgit in cross-border trade are steps in the right direction, he added.
Saktiandi also noted that foreign currency deposits in Malaysia had grown, particularly among corporates.
Meanwhile, Standard Chartered, which also held its second-half market outlook briefing yesterday, expects the ringgit to trade within a narrow range of 4.20 to 4.30 against the US dollar over the next 12 months, also supported by a broadly weak greenback.
Senior investment strategist Yap Fook Hien said the US dollar's weakness had largely been priced in, and the currency is expected to stay soft – at least for the next 12 months.
'Most of the weakening has already happened and we do not expect a bounce back. At the moment, our view is that at least for the next 12 months, it will be weak,' he said at the bank's 2H25 Global Market Outlook briefing.
'But also important to note, we're not looking at a collapse of the US dollar.'
He noted that the US Dollar Index (DXY), which has hovered between 100 and 110 since 2022, slipped below 100 in April amid 'Liberation Day' tariff concerns, and now trades around 98.
Standard Chartered's 12-month target for the DXY is 96.
On the local economy, Maybank group chief economist Suhaimi Ilias said he was maintaining Malaysia's 2025 real gross domestic product growth forecast at 4.1%.
It has been revised downwards twice this year from the original 4.9% as a result of the reciprocal tariff announcement in April and lower-than-expected first-quarter growth.
The prolonged uncertainties plus overhangs in US trade policy and tariff actions, as well as the outcome of Malaysia's negotiations with the United States will continue to be in focus, he said.
'There is still resilience in domestic demand, especially consumer spending and investment,' he said, adding that the country's investment upcycle appeared intact.
Head of equity research Lim Sue Lin said Maybank's year-end FBM KLCI target remained at 1,660 points, 14.4 times the 2026 price earnings ratio.
'Three sector thematics to explore for the rest of 2025 are plantations, utilities/renewable energy and ports,' Lim said.
Although 'neutral' on banks, Lim noted that they remained a 'crucial driver' in terms of the direction of the stock market benchmark index.
Lim is also positive on the consumer, healthcare and real estate investment trust sectors.
'The (newly imposed) sales and service tax will only affect the consumer discretionary sector,' she said, adding that she remained positive on consumer staples.
At its briefing, Standard Chartered Malaysia head of managed investments and advisory Ng Shin Seong added that the narrowing interest rate gap between the United States and Malaysia could support the ringgit, although 'there's just a couple more percent in our 12-month view'.
'There has been a pre-emptive cut in Malaysia's overnight policy rate, and the US Federal Reserve is expected to cut rates further,' he said.
Despite market uncertainty from US trade tensions, Ng said the macroeconomic data for Malaysia remained resilient.
'Once uncertainties are alleviated, that could help the market. Based on the hard data, the country is doing okay.'
Yap said a weak US dollar typically supports equities and favours non-US assets, prompting the bank to upgrade its view on emerging market local currency bonds and Asia ex-Japan equities.
'We expect a soft landing in the United States, which is positive for global equities, but the tilt is towards non-US assets,' he said.
'Asia ex-Japan valuations are attractive, and we prefer China and South Korea due to ongoing stimulus and artificial intelligence developments.'
Within China, Yap said Standard Chartered adopted a barbell strategy, favouring high-dividend state-owned enterprises for stability and technology stocks for growth.
In South Korea, he said improving corporate governance and fiscal stimulus are expected to attract more inflows.
As for Asean, Yap said the region remained defensive and resilient, but may underperform in a strong global rally.
'Asean tends to outperform in weaker markets. At the moment, we prefer other markets for outperformance potential,' he said.
He added that gold and alternative assets remained relevant in a diversified portfolio, especially amid global uncertainties, while reiterating that the US dollar remained the world's most liquid currency despite its weakness.
On tariff developments, Yap said further delays are likely, given the complexity of reaching consensus across multiple countries.
'It's quite likely you'll see a bit more postponement further down the road because to get agreement from so many countries is actually very difficult. Each country has its own specific tariff, and how they calculate that number can be a mystery,' he said.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

KLCI rises mid-morning as Appreciation Package boosts market
KLCI rises mid-morning as Appreciation Package boosts market

The Sun

timea day ago

  • The Sun

KLCI rises mid-morning as Appreciation Package boosts market

KUALA LUMPUR: Bursa Malaysia trended higher at mid-morning, echoing gains across regional markets and boosted by traders' positive response to the government's 'Appreciation Package' announcement yesterday. At 11 am, the FTSE Bursa Malaysia KLCI (FBM KLCI) garnered 1.87 points to 1,531.66 from Wednesday's close of 1,529.79. The index opened 1.26 points firmer at 1,531.05. Market breadth was positive with 375 gainers surpassing 336 losers, while 443 counters were unchanged, 1,362 untraded, and seven suspended. Turnover stood at 1.42 billion shares worth RM626.88 million. In a note, Hong Leong Investment Bank Bhd said the announcements by the government were deemed market-friendly and spurred foreign buying interest. At the same time, it noted that optimism over recent trade agreements with Japan, Indonesia, and the Philippines may catalyse broader United States trade deals ahead of the Aug 1 deadline. The much-awaited announcement by Prime Minister Datuk Seri Anwar Ibrahim included several key initiatives as a gesture of appreciation to all Malaysians, such as the one-off RM100 aid under the Sumbangan Asas Rahmah programme, a freeze on toll hikes for 10 highways, and a targeted subsidy reducing the RON95 fuel price to RM1.99 per litre. Among the heavyweights, Maybank added two sen to RM9.61, PPB was 11 sen better at RM9.41 and SD Guthrie improved five sen to RM4.80, while Petronas Chemicals was flat at RM3.37 and 99 SpeedMart slid two sen to RM2.32. As for the actives, NexG was unchanged at 52 sen, Tan Chong Motor improved 3.5 sen to 91 sen, and DagangNews added 1.5 sen to 30 sen, while TWL and Tanco were flat at 2.5 sen and 91.5 sen, respectively. On the broader index board, the FBM Emas Index was 8.22 points higher at 11,502.77, the FBMT 100 Index rose 9.89 points to 11,264.05, and the FBM Emas Shariah Index was up 5.85 points to 11,522.33. The FBM 70 Index fell 2.21 points to 16,641.88, while the FBM ACE Index reduced 1.03 points to 4,664.02. By sector, the Financial Services Index put on 33.97 points to 17,464.22, the Plantation Index improved 33.03 points to 7,444.47 and the Industrial Products and Services Index rose 0.39 of a point to 155.04, while the Energy Index edged down 1.03 points to 742.15. - Bernama

Bursa opens higher, KLCI breaches 1,530 mark on US-China trade optimism, Anwar's policy boost
Bursa opens higher, KLCI breaches 1,530 mark on US-China trade optimism, Anwar's policy boost

Malay Mail

timea day ago

  • Malay Mail

Bursa opens higher, KLCI breaches 1,530 mark on US-China trade optimism, Anwar's policy boost

KUALA LUMPUR, July 24 — Bursa Malaysia opened higher today, with the benchmark index breaching the 1,530 level after three days of choppy trading, supported by optimism over US-China trade talks and improved domestic sentiment following recent policy announcements. At 9.06 am, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 1.48 points to 1,531.27, from yesterday's close of 1,529.79. The index opened 1.26 points firmer at 1,531.05. Turnover totalled 174.73 million shares worth RM85.33 million. Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said the FBM KLCI closed near the 1,530 level on Wednesday, supported by Prime Minister Datuk Seri Anwar Ibrahim's positive announcements for all Malaysians. 'This is certainly a surprising feel-good factor, possibly intended to ease the Sales and Services Tax burden going forward. Whether this momentum is sustainable remains to be seen, but we expect the index to trade within the 1,530–1,540 range today,' he told Bernama. On the global front, Thong said Wall Street ended broadly higher as confidence grew over the latest progress in trade talks. Meanwhile, the US 10-year Treasury yield eased to 4.384 per cent. In Hong Kong, the Hang Seng Index surged to a three-and-a-half-year high, fuelled by optimism that fresh US-China trade talks are progressing positively, following the recently concluded US-Japan agreement. Among heavyweight counters, Maybank, 99 SpeedMart and SD Guthrie each added three sen to RM9.62, RM2.37 and RM4.78, respectively. PPB rose 17 sen to RM9.47, while Petronas Chemicals gained two sen to RM3.39. Top gainers were led by Nestle, which jumped 60 sen to RM77.50. United Plantations added 20 sen to RM22.00, Hong Leong Industries rose six sen to RM15.96, and Unisem gained five sen to RM2.26. Active counters were led by NexG and TWL, which were unchanged at 52 sen and 2.5 sen, respectively. Sunzen Warrant added half a sen to 10 sen, TT Vision advanced 3.5 sen to 60 sen, while SFP Technologies and Notion Vtec each gained one sen to 20.5 sen and 60.5 sen, respectively. On the broader index board, the FBM Emas Index rose 13.47 points to 11,508.02, the FBMT 100 Index gained 11.75 points to 11,265.91, and the FBM Emas Shariah Index advanced 11.34 points to 11,527.82. The FBM 70 Index was up 21.17 points at 16,665.26, while the FBM ACE Index added 2.25 points to 4,667.30. By sector, the Financial Services Index increased 27.47 points to 17,457.72, the Energy Index dipped 0.92 of a point to 742.26, the Plantation Index rose 16.49 points to 7,427.93, and the Industrial Products and Services Index edged up 0.04 of a point to 155.47. — Bernama

Bursa edges up as value seekers drive selective accumulation
Bursa edges up as value seekers drive selective accumulation

Free Malaysia Today

time2 days ago

  • Free Malaysia Today

Bursa edges up as value seekers drive selective accumulation

KUALA LUMPUR : Bursa Malaysia opened marginally higher today, supported by value-seeking investors engaging in selective accumulation. At 9.06 am, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 0.63 of a point to 1,520.03 from yesterday's close of 1,519.40. At the opening bell, the benchmark index was 0.08 of a point higher at 1,519.48. Turnover stood at 126.93 million shares, valued at RM68.23 million. Rakuten Trade Sdn Bhd equity research vice-president Thong Pak Leng said the FBM KLCI closed lower yesterday in tandem with the weak regional performance. 'However, we expect value-seeking investors to continue supporting the market through selective accumulation. Hence, we anticipate the benchmark index to consolidate within the 1,510–1,520 range today,' he added. On the global front, Thong said Wall Street closed mixed, with the S&P 500 hitting another record high at 6,309.62 (+0.06%) as investors digested a new batch of earnings, including a tariff warning from General Motors. The Dow rose 0.4%, while the Nasdaq slipped 0.39% ahead of key earnings reports from major tech giants. Among the heavyweight counters, Maybank added four sen to RM9.57, Tenaga Nasional was two sen better at RM13.80, CIMB improved one sen to RM6.56, Public Bank lost three sen to RM4.28, while CelcomDigi and Press Metal were flat at RM3.79 and RM5.21, respectively. Active counters were led by NexG, followed by Enproserve, with both accumulating 1.5 sen each to 52 sen and 28 sen, respectively. PRG advanced half-a-sen to 9.5 sen, Eco-Shop added one sen to RM1.32, while EA Holdings was down half-a-sen to half-a-sen. On the broader index board, the FBM Emas Index was 13.04 points higher at 11,432.77, the FBMT 100 Index rose 10.54 points to 11,192.48, and the FBM Emas Shariah Index was up 7.64 points to 11,454.99. The FBM 70 Index gained 41.42 points to 16,597.29, while the FBM ACE Index trimmed 7.19 points to 4,617.41. By sector, the Financial Services Index put on 36.2 points to 17,346.87, the Energy Index edged down 0.46 of a point to 739.71, and the Plantation Index improved 12.40 points to 7,408.55. The Industrial Products and Services Index rose 0.11 of a point to 154.15.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store