BERNAMA – The ringgit is no longer perceived as undervalued after breaching the MYR4.35 level against the US dollar, said UOB Kay Hian Wealth Advisors head of investment research Mohd Sedek Jantan.
However, Mohd Sedek anticipates the currency will continue its upward trajectory, potentially reaching MYR4.25 per greenback by year-end.
He said the ringgit’s value is now primarily driven by market dynamics, dictated by supply and demand forces.
Speaking to Bernama, he said foreign investors are likely to keep accumulating ringgit-denominated assets into next year, in anticipation of the Federal Reserve beginning to cut interest rates next month.
Given recent developments in the United States, he forecasts a 25-basis-point rate cut this year, followed by three cuts totalling 75 basis points in 2025.
Mohd Sedek observed that foreign funds’ interest in Bursa Malaysia surged on August 16 and is expected to maintain momentum.
“Foreign investors will continue to increase their holdings in blue-chip sectors, particularly financials, as a rate cut would significantly benefit this industry.
“With lower yields on fixed-income assets such as bonds, investors may be drawn to dividend-paying stocks. Malaysian banks, known for consistent dividend payouts, could attract substantial investment inflows,” he said. He added that the recent earnings season, which saw banks reporting stronger profits, has also contributed to increased interest in their stocks.
Yesterday, Maybank announced an 8.2-per-cent rise in net profit to MYR2.53 billion for the second quarter (Q2 FY2024), up from MYR2.34 billion in the same period last year, driven by higher revenue of MYR17.17 billion compared to MYR16.13 billion previously.
Public Bank’s net profit rose to MYR1.78 billion in Q2, up from MYR1.61 billion a year ago. Its revenue increased to MYR6.69 billion for the quarter, from MYR6.26 billion previously.
Bank Islam Malaysia posted a slightly higher net profit of MYR137.16 million in Q2, versus MYR136.13 million a year ago.
In contrast, RHB Bank’s net profit fell to MYR722.31 million during the quarter, down from MYR808.70 million in Q2 FY2023.
