Will the SSE Conglomerates Index reach 1665 by the end of the year? What themes are worth paying attention to?

MIDF investment bank analysts pointed out that the global stock market trends are influenced by several major factors, including geopolitical tensions, a slowdown in the USA's economic data, and when the Fed will cut rates.

Analysts pointed out that as the leading economy, any trends and developments in the USA will be borrowed and magnified, especially the first-quarter economic growth performance, causing concerns in the market about whether the Fed's rate cuts will be further delayed.

Analysts indicate that based on the earlier forecast, the Federal Reserve will begin to cut interest rates in the second half of this year. The total number of rate cuts for the year has been adjusted to 3 times, but due to the current situation, the forecast has been updated to start cutting rates at the end of this year, with possibly only 1 cut this year.

Nevertheless, analysts remain optimistic about Malaysia's economic prospects, while maintaining the FTSE Bursa Malaysia KLCI at 1665 points for this year, as well as the expectations for corporate net profit growth.

At the same time, analysts continue to be bullish on 3 major investment themes, believing they can continue to drive the Malaysian stock market strength.

Firstly, the trade sector is expected to continue to recover, as the logistics and port-related sectors will benefit from the improved trends in foreign trade.

"In addition, we expect transport fees to have gradually risen since reaching a low point in the middle of last year, coupled with the current affordable freight rates, we believe this will drive an increase in freight volume."

Furthermore, analysts continue to be bullish on the mid-term review of the 12 Malaysian plans, which is expected to boost the attention on construction stocks.

Analysts stated that according to the government's development expenditure, an estimated 90 billion ringgit will be invested annually, undoubtedly bringing significant benefits.

In addition, if the government further promotes the construction of MRT3, Penang LRT, and the new high-speed rail (HSR), it is expected to continue boosting the performance of the construction sector.

As for the third investment theme, some focus on the industrial sector, and analysts indicate that as industrial companies' inventory levels continue to decline, this will undoubtedly improve the outlook for the industrial sector.

“Not only that, maintaining interest rates is positive for industrial companies, as it helps to support the ongoing recovery of the property market demand.

Therefore, analysts are bullish on the net profit trend of the industrial sector, as buying sentiment is at a healthy level and new sales continue to improve, which is expected to further drive future net profit performance.

As of April 26, the Ringgit has depreciated by 3.6% against the US Dollar, to 4.768 level, and at one point during the period, it slid to as low as 4.805 level, approaching the low point of 26 years ago.

Analysts state that fortunately, currencies of Malaysia's major trading partners have shown good performance, and with the Federal Reserve's approach to lowering interest rates, there will be a change in enthusiasm for risk assets.

Analysts expect that if the Federal Reserve significantly reduces interest rates, then the Ringgit and regional currencies will benefit from the inflow of foreign capital into emerging markets.

Analysts continue to indicate that if everything continues to move in a positive direction, the Ringgit against the US Dollar will strengthen to 4.53 this year, and by the end of the year it will rise to the 4.43 level.

However, if the Federal Reserve does not cut interest rates as expected by the market, the Ringgit may be forced to continue to have a dim year.

Analysts stated that this also means the expectation of foreign capital inflows will further be uncertain, if other developed economies begin to cut interest rates, then emerging markets will bear additional pressure from the long-term strength of the US Dollar.

However, analysts believe that the central bank will continue to maintain interest rates unchanged this year, therefore it is expected that by the end of the year, the Ringgit's performance will not deviate significantly from the current level.

"Considering the Federal Reserve not cutting interest rates, and the ongoing tense situation in the Middle East, in the worst case scenario, the Ringgit may depreciate to the 4.77 level, and by the end of the year it will hover around the 4.74 level."