KUALA LUMPUR: Research houses are predicting 2025 to be another strong year for the ringgit and Bursa Malaysia, with the ringgit holding steady and the local stock market showing promising growth.
Kenanga Investment Bank (Kenanga IB) expects the ringgit to end the year at RM4.45 against the US dollar, helping draw attention to the Malaysian market, and Bursa Malaysia’s barometer index (FBM KLCI) at 1,840 points.
“The first quarter will contain the element of wait-and-see, as a cautious Asean stock market recently reflects the uncertainty on how tariff threats will play out, compounded with higher United States policy rate expectations.
“These two conditions resemble 2018, but this time, Malaysia is better placed in terms of its fundamentals amid structural themes and has been relatively insulated,” it noted.
Kenanga IB said despite the uncertainty, investors may gravitate towards earnings and outlook visibility.
It forecast the consumer sector to enjoy the minimum wage tailwind that dovetails with tourism growth.
“Structurally, artificial intelligence/data centre plays offer demand visibility from global big-tech capex ramp-up.
“We also screen for names that offer good dividend yields at a reasonable valuation, as we believe that investors will likely hunt for value after the recent FBM KLCI pullback. Banks would fall under such a description.”
Kenanga IB said petrochemicals and metals could be more volatile but could profit from demand growth such as China’s stimulus.
Likewise, planters and gloves sectors should see a strong quarterly earnings cadence.
Meanwhile, Public Investment Bank (PIVB) expects the ringgit to average around RM4.45-4.55 in 2025 as the US Federal Reserve remains cautious on further rate cuts, and the FBM KLCI to end at 1,700 points.
“In our view, the more pressing issue is the unsustainably high US national debt. The market is pricing in higher risk premiums for the US Treasury, making it costlier for the US to borrow more.
“At more than 120% of gross domestic product (GDP), the cost of raising more debt has outweighed its benefit in stimulating the economy, as there would be less funding available to finance productive investments,” it said.
It noted that given a high budget deficit of over 6% of the nation’s GDP, the US Department of Government Efficiency is aiming to cut US$2 trillion in government spending, but this may lead to the unfavourable effect of job loss in the public sector.
“While the US dollar is not likely to be replaced as the world’s reserve currency anytime soon, its dominance has eroded in recent years from 70% in 2001 to 58% currently.
“Bond yield is expected to remain elevated, suggesting a stronger US dollar and hence, a weaker ringgit in 2025,” PIVB said.
The investment bank expects President-elect Donald Trump’s policy measures to kick in in the second quarter, impacting global trade and the US domestic economy towards the second half of 2025.
“With the market being a trading-oriented one, we believe market-beating opportunities would come from a bottom-up approach and buying on weaknesses in a heightened risk premium environment, where any announcement of unfavourable policy measures could trigger a kneejerk reaction in the global market.
“We favour companies that rely more on domestically-driven growth and less on the export markets,” it added. – Bernama
