Looking at 1665 at the end of the year? What topics are worth paying attention to
Despite the possibility of a slowdown in US economic growth and inflation data stubbornly delaying the pace of interest rate cuts by the Federal Reserve, market participants are still optimistic that Malaysian stocks will continue to thrive and therefore maintain $FTSE Bursa Malaysia KLCI Index(.KLSE.MY$The target for the end of the year is 1,665 points, and there are 3 major topics worth paying attention to.
MIDF investment bank research analysts pointed out that today's global stock market trends are influenced by several major factors, including geopolitical tension, the slowdown in US economic data, and when the Federal Reserve will cut interest rates.
Analysts pointed out that as an economic leader, any trend and trend in the US will be learned from and amplified. In particular, its economic growth performance in the first quarter made the market worry about whether the Federal Reserve's path to cutting interest rates will be delayed over and over again.
Analysts said that according to the forecast given earlier, the Federal Reserve will start cutting interest rates in the second half of this year, a total of 3 times throughout the year, but due to current trends, it has been forced to revise the forecast and adjust it to the end of this year before starting to cut interest rates, and probably only once this year.
Despite this, analysts are still optimistic about Malaysia's economic prospects. At the same time, they have maintained the Malaysian FTSE Composite Index at 1,665 points this year, and maintained the company's net profit growth expectations.
Continue to be optimistic about the 12 Malaysia Plan
At the same time, analysts continue to be optimistic about the three major investment themes and believe they will continue to strengthen Malaysian stocks.
First, the trade sector will continue to recover, because with the recovery in foreign trade trends, related stocks such as logistics and ports will benefit.
“Furthermore, we expect prices to gradually rise after bottoming out in the middle of last year. Coupled with the fact that freight rates are currently at an affordable level, we believe this will drive a recovery in freight volume.”
Furthermore, analysts continue to be optimistic about the mid-term review of the 12 Malaysian Plans, which can also push construction stocks to receive attention.
Analysts said that according to development expenses given by the government, it is estimated that 90 billion ringgit will be invested every year, which will undoubtedly bring great benefits.
Furthermore, if the government further promotes MRT3 (MRT3), the Penang Light Rail, and the Longxin High Speed Rail (HSR), it is expected to continue to boost performance in the construction sector.
As for the third investment theme, some are in the industrial sector, and analysts said that as the inventory levels of industrial companies continue to decline, this will undoubtedly improve the prospects of the industrial sector.
“Furthermore, the Bank of China continues to maintain interest rates, which is positive for industrial companies, as it helps support a continued recovery in real estate demand.”
To this end, analysts are optimistic about the net profit trend in the industrial sector, because buying sentiment is at a healthy level, and new sales continue to improve, which is expected to further boost future net profit performance.
The Federal Reserve affects the trend of the ringgit
As of April 26, the value of the ringgit had depreciated 3.6% against the US dollar to 4.768. During this period, it also fell once to the 4.805 level, close to the low of 26 years ago.
Analysts said that fortunately, the currencies of Malaysia's major trading partners have all performed well. Coupled with the Federal Reserve's interest rate cuts getting closer, interest in risky assets will change.
Analysts expect that if the Federal Reserve cuts interest rates drastically, then the ringgit and regional currencies will benefit from the return of foreign capital to emerging markets.
Analysts added that if everything goes in a positive direction, the ringgit will strengthen to 4.53 against the US dollar this year, while it will rise to the 4.43 level this year.
However, if the Federal Reserve does not cut interest rates as expected by the market, the ringgit may be forced to continue in a bleak year at that time.
Analysts said that this also means that expectations for the return of foreign capital will be further lost. If other developed economies start cutting interest rates, then emerging markets will bear additional pressure from the long-term strengthening of the US dollar.
However, analysts believe that the Bank of China will continue to keep interest rates unchanged this year, so it is expected that when the ringgit reaches the end of the year, its performance will not deviate significantly from the current level.
“Considering that the Federal Reserve does not cut interest rates and the situation in the Middle East continues to be tense, in the worst case scenario, the ringgit may depreciate to the 4.77 level, while the yen will hover around 4.74.”
Source: Nanyang Siang Pao
Disclaimer: This content is for informational and educational purposes only, and does not constitute any specific investment, investment strategy, or recommendation endorsement. The reader shall bear any risk and responsibility arising from reliance on this content. Always conduct your own independent research and evaluation and consult professional advice if necessary before making any investment decisions. The author and related participants are not responsible for any loss or damage resulting from the use or reliance on the information contained in this article.
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