Skip to main content

Featured Post

Market Daily Report: Bursa Malaysia Ends Higher In Line With Most Regional Markets

KUALA LUMPUR, Sept 20 (Bernama) -- Bursa Malaysia ended higher on Friday in line with most Asian markets, mirroring gains from Wall Street, where investors welcomed the US Federal Reserve's substantial interest rate cut. The FTSE Bursa Malaysia KLCI (FBM KLCI) rose by 3.17 points, or 0.19 per cent, to 1,668.82 at the close from Thursday's close of 1,665.65. It opened 5.03 points higher at 1,670.68, trading between 1,668.48 and 1,674.04 throughout the session. In the broader market, gainers outpaced decliners 732 to 468, while 465 counters were unchanged, 850 untraded and 32 suspended. Turnover swelled to 4.19 billion units worth RM5.97 billion, from Thursday's 3.99 billion units worth RM4.08 billion. UOB Kay Hian Wealth Advisors head of investment research, Mohd Sedek Jantan, noted the FBM KLCI's gains were led by utilities, logistics, and banking stocks, reflecting improved market sentiment. Additiona
Post a Comment

MIER Sees Ringgit Fairly Valued at 3.90-4.20 Against the US Dollar

 

The Malaysian Institute of Economic Research (MIER) has stated that the ringgit is currently undervalued but is fairly valued between 3.90 and 4.20 against the US dollar. This assessment comes after a period of underperformance by the ringgit, which was trading at 4.34 to the dollar at the time of the report.

Key Insights:

  1. Fair Value Indicators: MIER’s valuation is supported by indicators such as the Nominal Effective Exchange Rate (NEER) and Real Effective Exchange Rate (REER), both of which suggest that the ringgit's fair value lies within the 3.90-4.20 range against the US dollar.

  2. Potential Impact of US Rate Cuts: The report highlights that a cumulative 100 basis points rate cut in the US federal funds rate in 2024 could narrow the interest rate differential between the US and Malaysia to 125-150 basis points. This could be favorable for the ringgit as investors might diversify their holdings in search of better returns.

  3. Supportive Domestic Factors: Domestic economic factors such as fiscal reforms aimed at reducing the budget deficit, strong GDP growth expected to reach or exceed 5% in 2024, and robust foreign direct investment are seen as supportive of the ringgit’s value. Additionally, the repatriation of funds by government-linked companies and a sustained current account surplus driven by exports in electronics, tourism, and services further bolster the currency's outlook.

  4. Foreign Investment Inflows: Foreign investments into Malaysia’s equity and bond markets have shown positive trends. After an outflow of RM823.6 million earlier in the year, the equities market saw an inflow of RM1.3 billion in July. In the bond market, foreign inflows reached RM874.6 million in the first half of 2024.

  5. Exchange Rate Forecast: MIER expects the ringgit to appreciate to between 4.20 and 4.25 by the end of 2024, improving from 4.59 at the end of 2023. However, the continued strength of the US dollar may keep the ringgit’s average exchange rate around 4.60-4.64 against the dollar, slightly higher than the 4.56 average in 2023.

Conclusion: While the ringgit is currently undervalued, various economic factors, both domestic and international, suggest that it is fairly valued between 3.90 and 4.20 against the US dollar. With expected improvements in the economic outlook and foreign investment inflows, the ringgit may see gradual appreciation by the end of the year, although the strong US dollar could temper these gains.

Labels:

Comments

Post a Comment

Popular posts from this blog

INTC Share Watch and News

Stock Info Market Monitor Company Profile Intel Corporation designs, manufactures, and sells integrated circuits for computing and communications industries worldwide. It offers microprocessor products used in notebooks, netbooks, desktops, servers, workstations, storage products, embedded applications, communications products, consumer electronics devices, and handhelds. The company also offers system on chip products that integrate its core processing functionalities with other system components, such as graphics, audio, and video, onto a single chip. It also provides chipset products that send data between the microprocessor and input, display, and storage devices, such as keyboard, mouse, monitor, hard drive, and CD or DVD drives; motherboards that has connectors for attaching devices to the bus, and products designed for desktop, server, and workstation platforms; and wired and wireless connectivity products, including network adapters and embedded wireless cards used to translat
1 comment
Read more

Analysts See Asset Resilience of Bank of Chengdu Benefiting Hong Leong Bank

Analysts predict that the asset quality of Bank of Chengdu, in which Hong Leong Bank Bhd holds a 19.76% stake, will remain robust due to its strict risk management policies and proactive measures. Key Takeaways: Strong Risk Management Practices : According to CIMB, Bank of Chengdu has adopted a conservative risk culture, performing thorough assessments of location, developer reputation, project viability, and management integrity before financing property projects. The bank closely monitors early warning signals like construction progress, sales progress, budget overruns, and fund usage by developers to mitigate potential risks. Proactive Measures Against Property Slowdown : The bank's precautionary measures allowed it to reduce exposure to problematic property loans and exit risky loans before China's property market slowdown. This conservative approach is expected to benefit Hong Leong Bank by minimizing potential asset quality concerns. Continued Optimism and Buy Recommendat
Post a Comment
Read more

Investors Keep Buying US Junk Debt Despite Weak Protections

  When US-based construction material supplier Wilsonart issued a junk bond to raise US$500 million (RM2.13 billion) for an acquisition this summer, a research firm warned potential investors about the bond's weak protections. The bond’s covenants could allow the company to move valuable assets to another entity and raise more money, potentially disadvantaging bond investors, according to Covenant Review , a research firm. This warning comes amid growing concerns in credit markets as more companies engage in practices like "liability management exercises," where they borrow more against the same assets. These practices, often favoring some creditors over others, have been dubbed "creditor-on-creditor violence," prompting some creditors to unite to protect their interests. Despite the warnings, investors eagerly purchased Wilsonart's offering, underscoring a paradox in US credit markets. While investors face the consequences of weak covenants, they continu
Post a Comment
Read more